Since so many traders watch these same levels and place buy and sell orders on them to enter trades or place stops, the support and resistance levels become a self-fulfilling expectation.

Traders use the Fibonacci extension levels as profit taking levels. Again, since so many traders are watching these levels and placing buy and sell orders to take profits, this tool usually works due self-fulfilling expectations.

Most charting software includes both Fibonacci retracement levels and extension level tools. In order to apply Fibonacci levels to your charts, you’ll need to identify Swing High and Swing Low points.

A Swing High is a candlestick with at least two lower highs on both the left and right of itself.

A Swing Low is a candlestick with at least two higher lows on both the left and right of itself.

Let’s take a closer look at Fibonacci retracement levels…

Bookmark It

If you measure the ratio between alternate numbers you get .382. For example, 34 divided by 89 = 0.382 and that’s as far as into the explanation as we’ll go.

These ratios are called the “golden mean.” Okay that’s enough mumbo jumbo. Even I’m about to fall asleep with all these numbers. I’ll just cut to the chase; these are the ratios you have to know:

Fibonacci Retracement Levels
0.236, 0.382, 0.500, 0.618, 0.764

Fibonacci Extension Levels
0, 0.382, 0.618, 1.000, 1.382, 1.618

You won’t really need to know how to calculate all of this. Your charting software will do all the work for you. But it’s always good to be familiar with the basic theory behind the indicator so you’ll have knowledge to impress your date.

Traders use the Fibonacci retracement levels as support and resistance levels.

Bookmark It

Basic of Fibonacci

We will be using Fibonacci ratios a lot in our trading so you better learn it and love it like your mother. Fibonacci is a huge subject and there are many different studies of Fibonacci with weird names but we’re going to stick to two: retracement and extension.

Let me first start by introducing you to the Fib man himself…Leonard Fibonacci.

Leonard Fibonacci was a famous Italian mathematician, also called a super duper uber geek, who had an “aha!” moment and discovered a simple series of numbers that created ratios describing the natural proportions of things in the universe

The ratios arise from the following number series: 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144 ……

This series of numbers is derived by starting with 1 followed by 2 and then adding 1 + 2 to get 3, the third number. Then, adding 2 + 3 to get 5, the fourth number, and so on.

After the first few numbers in the sequence, if you measure the ratio of any number to that of the next higher number you get .618. For example, 34 divided by 55 equals 0.618.

Bookmark It

Today… things are much easier… but are they better? YES AND NO…
and this is very important, so please pay close attention…

Computers are great… they cut down the work load and they do things much faster. They process information 1

Forex MegaDroid

million times (or much more) than human beings can.

And that’s a HUGE plus when you are designing Forex systems. The computer can see what the eye can’t see… or better yet, the computer can find what the naked eye can’t find.

Great… so what’s the problem?

Well… and pay VERY, VERY close attention here: computers are just computers… they work with the data that we humans feed them with… they operate on software that we humans design…

In plain English… THEY CAN’T THINK!

It’s our job as humans to think… we then pass the “thought” to the computer and there is where the perfect combination lies!

Now… the QUALITY of “thought” we pass onto the computer is the difference between it producing outstanding results and just normal, average results.

Now, what is “quality of thought” in Forex trading?

EXPERIENCE… A LOT OF EXPERIENCE TRADING MANUALLY!

That’s right… in order for you to tell the computer what to do, what to process… what type of methods to implement… you have to have had enough experience in LEARNING how the Forex market behave.

Forex MegaDroid

In the same way that you cannot walk into a kitchen without cooking experience and play the “chef” role, you have to “grow” as a visual and manual Forex trader to “feel” market characteristics before you can design an extremely profitable Forex robot…

Listen closely… any idiot can come and design a Forex robot… that’s easy. Just go on Google and type “Forex robot” (well, you probably have by now!)… see how many results you see.

How many of these robots were designed with true Forex trading strategy design experience?

How many of these robots have a built-in strategy that derives from the designer actually knowing how the Forex market works… having true long term trading experience….

Or better yet…

How Many Of These Robots Have Been Designed By People That Actually Understand That A Truly Profitable Strategy Is One That Is Accurate In EVERY SINGLE Market Condition?

Bookmark It

FOREX (FOReign EXchange market) is an international foreign exchange market, where money is sold and bought freely.

Forex Auto Money

In its present condition FOREX was launched in the 1970s, when free exchange rates were introduced, and only the participants of the market determine the price of one currency against the other proceeding from supply and demand.

As far as the freedom from any external control and free competition are concerned, FOREX is a perfect market. It is also the biggest liquid financial market. According to various assessments, money masses in the market constitute from 1 to 2 trillion US dollars a day. (It is impossible to determine an absolutely exact number because trading is not centralized on an exchange.) Transactions are conducted all over the world via telecommunications 24 hours a day from 00:00 GMT on Monday to 10:00 pm GMT on Friday. Practically in every time zone (that is, in Frankfurt-on-Main, London, New York, Tokyo, Hong Kong, etc.) there are dealers who will quote currencies.

Forex Auto Money

Bookmark It