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Despite being technical analysis indicators, the powerful Fibonacci tools are widely used even by fundamental analysis traders. Unlike the common lagging indicators, they can predict future price levels . I leave the debate of whether this is a self-fulfilling prophecy or a bias toward a law in nature to others. Those tools will be explained in this article one by one.
Fibonacci was a thirteenth-century talented mathematician who described the numerical series now named after him. In the Fibonacci sequence of numbers, after 0 and 1, each number is the sum of the two prior numbers. Hence, the sequence is as follows: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610 and so on extending to infinity. Each number is approximately 1.618 times greater than the preceding number.
This figure 1.618 is called Phi or the Golden Ratio. The inverse of 1.618 is 0.618. The golden ratio appears everywhere in Nature from the micro scale to the macro scale. Things that are based on this divine proportion are beautiful and shapely and things that do not contain it look ugly and seem suspicious and unnatural.
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MohadAjaj avatar
MohadAjaj 28 Feb.

great explanation

Mohamed16 avatar
Mohamed16 28 Feb.

good article

corneliu avatar
corneliu 28 Feb.

good luck!

VALTRAD avatar

Тема действительно освещена развёрнуто.

Nihad avatar
Nihad 28 Feb.

Very informative. There is no magic in it, the secret lies in that from long time ago floor and pit traders used it as Support & Resistance levels. Therefore, traders all around the world respects these levels fully. You will always find the price action is very slow when approaching any level, that's respect

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INTRODUCTIONThe only way to explain an event is with maths. When I can't explain something from a mathematical point of view, my brain goes in stall. In this world there are only two things that we can't mathematize: the religious ones (belief in God), and interactions between people (friendship, love, hate, etc...). Some people are sure that even emotions are just expression of complex mathematical elaborations of impulses in our bodies and blah blah.... but markets are done by numbers, so there is no doubt: we are into something that can be explained with maths.This quick introduction is to point out that if you think that trading is an art, or is a "belief", just try to put an image of a Monet, and a price chart in the same screen, and find the differences. Or try (for example) to sell something randomly because you believe it will go down, or because you believe it will not go so much up to stop you out, then after one trading month, let me know your results. LEONARDO PISANO (1170 - 1250) Was born in the year 1170 to Guglielmo Bonacci, a wealthy Italian merchant directing a trading post in North Africa (actual Algeria). When Leonardo was young, he travelled with his father t…
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scramble avatar
scramble 29 Sep.

Yes true, there are many ways to use fibs!

Myprox4x avatar
Myprox4x 29 Sep.

can u write on quantitative strategy and rest of the strategies in trading.??

scramble avatar
scramble 29 Sep.

uhm, i'm actually sharing my knowledge about markets.. so i think this will not happen anytime soon! :)

scramble avatar
scramble 29 Sep.

@daddypapi: i missed the point about e.waves :/... it's very similar you are right! the difference is that i simply don't consider at all any wave count or any prediction. Simply buy or sell according to a respected (or broken) 61.8% fib.

charmtrader avatar

Great really know what you are saying :D

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