In this review, I will discuss the background and history of Fibonacci numbers, and I will spotlight The Golden ratio. After doing this, I will also emphasize three tips associated with money administration, which help you increase your revenue.
Exit and entry points are significant in Foreign exchange trading. To fully understand them appropriately, a deal must be aware of resistance and support levels. Percentage retrenchment levels from Fibonacci that build on the theme of Fibonacci’s number sequence system and the Golden ratio are vital for traders in the Forex community. Fibonacci’s definition of the trading methodology is based on basic levels between high and low (between 100% and 0%). Yesterday, low and high, weekly low and high, monthly low and high, etc., are used as basic levels 0% and 100%. Between those levels, we can add more basic levels using the Fibonacci sequence.
Learn more in detail articles on Fibonacci expansion levels.
Fibonacci sequence in forex
Fibonacci levels are the 23.6%, 38.2%, 50%, 61.8% and sometimes 76.4% for some strategies. The most important levels are 38.2% and 50% because, in this range, the breakout is most common. 61.8% level is excellent for support or resistance.
Right, let’s learn this terminology.
What are the golden ratio and Fibonacci numbers?
The Fibonacci sequence was first found in the book produced by Leonardo Fibonacci long ago in the year 1202. The book detailed the Arabic-Hindu numerical problems with an answer. The exact problem described in the book was “from one pair, how many rabbits can be produced.” If a pair delivers a new pair every 30 days, then the productivity level can be improved.
Trading golden ratio means that traders need to find previous high or previous low on the wished trading chart (daily high or low, weekly high or low, etc.), and then to analyze significant retracement price levels typically translated into percentages such as 23.6, 38.2%, 50%, and 61.8% on the chart. Thus, the golden ratio trading strategy represents traders buying or selling assets using retracement and expansion levels for stop loss, entry price, and target price.
Please see the video for more information:
The Golden Ratio
After the opening, few numbers in the Fibonacci series, the ratio that will appear after every more significant number will equivalent to .618, while the lowest number will be 1.618. These two actual numbers are known as the Golden ratio.
The proportions of this ratio are exciting and valuable for human beings’ sensory faculties, as seen in music, art, biology, and architecture. For instance, galaxies, sunflowers, molecules, and hurricanes are examples of the golden ratio.
Considerable Retrenchment Levels
- Fibonacci shows us how to stop loss levels: 38.2% and 62.8% are crucial retrenchment levels. Together with these, you will find a few other important values, like 33%, 75%, and 50%.
Listed below are the top three tips for earning money with Fibonacci numbers:
Any trader can apply these numbers to make a stop loss level. For example, if at least three price levels of Fibonacci numbers appear with a different and tight spot, a dealer can put a stop loss either under or above the place to settle down things.
The Fibonacci numbers can also help the dealer even if they aren’t in the right spot; if they have messed up the support area, they can close up and change the price.
- The Fibonacci determines Position size.
Position size can also be determined by the Fibonacci, which relies on the level of risk you take in your deal. For example, if the prices are precisely on a required level, then at that time, you would probably wish to have multiple positions that could move your price further.
- Fibonacci defines targets
In Fibonacci numbers, you can take advantage of it to profit when the pattern has finished in a price zone. This objective will assist the traders in being analytical in their strategy.
