The Fibonacci numbers Golden ratio

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The Fibonacci numbers Golden ratio can be used to describe the proportions of everything from nature to smallest building blocks. This is used by many successful investors to pick trends in the charts.

The Fibonacci numbers Golden ratio can be used to describe the proportions of everything from nature to the smallest building blocks, such as atoms, to the most advanced patterns in the universe, such as unimaginably large celestial bodies. Nature relies on this innate proportion to maintain balance, but the financial markets also seem to conform to the Fibonacci Numbers "golden ratio." Here we take a look at some technical analysis tools that have been developed to take advantage of the Fibonacci Numbers Golden Ratio.

The Mathematics
Mathematicians, scientists, and naturalists have known the Fibonacci Numbers Golden ratio for years. It is derived from something known as the Fibonacci sequence, named after its Italian founder, Leonardo Fibonacci (whose birth is assumed to be around 1175 AD and death around 1250 AD). Each term in this sequence is simply the sum of the two preceding terms (1, 1, 2, 3, 5, 8, 13, etc.).

But this sequence is not all that important; rather, it is the quotient of the adjacent terms that possesses an amazing proportion, roughly 1.618, or its inverse 0.618. This proportion is known by many names: the golden ratio, the golden mean, PHI, and the divine proportion, among others. So, why is this number so important? Well, almost everything has dimensional properties that adhere to the ratio of 1.618, so it seems to have a fundamental function for the building blocks of nature.

Prove It
Take honeybees, for example. If you divide the female bees by the male bees in any given hive, you will get 1.618. Sunflowers, which have opposing spirals of seeds, have a 1.618 ratio between the diameters of each rotation. This same ratio can be seen in relationships between different components throughout nature.

Try measuring from your shoulder to your fingertips, and then divide this number by the length from your elbow to your fingertips. Or try measuring from your head to your feet, and divide that by the length from your belly button to your feet. The results the same, somewhere in the area of 1.618. The fibonacci numbers golden ratio is seemingly unavoidable.

So we then transalate this to finance and stocks. The markets have the very same mathematical base as these natural phenomena. Below we will examine some ways in which this ratio can be applied to finance, and we'll show you some charts to prove it.

The Fibonacci Numbers Golden Ratio Studies and Finance
When used in technical analysis, the fibonacci numbers golden ratio is typically translated into three percentages: 38.2%, 50%, and 61.8%. However, more multiples can be used when needed, such as 23.6%, 161.8%, 423%, and so on. There are four primary methods for applying the Fibonacci sequence to finance: retracements, arcs, fans, and time zones.

1. Fibonacci Retracements
Fibonacci retracements use horizontal lines to indicate areas of support or resistance. They are calculated by first locating the high and low of the chart. Then five lines are drawn: the first at 100% (the high on the chart), the second at 61.8%, the third at 50%, the fourth at 38.2%, and the last one at 0% (the low on the chart). After a significant price movement up or down, the new support and resistance levels are often at or near these lines.

2. Fibonacci Arcs
Finding the high and low of a chart is the first step to composing Fibonacci arcs. Then, with a compass-like movement, three curved lines are drawn at 38.2%, 50%, and 61.8%, from the desired point. These lines anticipate the support and resistance levels, and areas of ranging.

3. Fibonacci Fans
Fibonacci fans are composed of diagonal lines. After the high and low of the chart is located, an invisible vertical line is drawn though the rightmost point. This invisible line is then divided into 38.2%, 50%, and 61.8%, and lines are drawn from the leftmost point through each of these points. These lines indicate areas of support and resistance.

4. Fibonacci Time Zones
Unlike the other Fibonacci methods, time zones are a series of vertical lines. They are composed by dividing a chart into segments with vertical lines spaced apart in increments that conform to the Fibonacci sequence (1, 1, 2, 3, 5, 8, 13, etc.). These lines indicate areas in which major price movement can be expected.

Conclusion
Fibonacci Numbers Golden Ratio studies are not intended to provide the primary indications for timing the entry and exit of a stock; however, they are useful for estimating areas of support and resistance. Many people use combinations of Fibonacci Numbers Golden Ratio to obtain a more accurate forecast. For example, a trader may observe the intersecting points in a combination of the Fibonacci arcs and resistances. Many more use the Fibonacci studies in conjunction with other forms of technical analysis. For example, the Fibonacci studies are often used with Elliott Waves to predict the extent of the retracements after different waves. Hopefully you can find your own niche use for the Fibonacci Numbers Golden Ratio, and add it to your set of investment tools.


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Forex Day Trading Technical Indicators

Forex Day Trading Technical Indicators are tools used by the traders to make a prediction for various factors involved in their day-to-day trading. These technical indicators may prove to be profitable if used in proper context.

For example, a technical indicator may make forecasts on the direction at which a particular currency pair may head next. They can also help you to determine where to enter or exit the trades. If these indicators are used correctly, they can make you earn a lot of money.

Moving Averages are probably the most commonly used Forex Day Trading Technical Indicator. Other popular indicators are, Bollinger Bands, Pivot Points, MACD, etc.

Many forex traders may think that by simply downloading the indicators and then mechanically applying them it into their trading will ensure the profitability, which is just a myth. You must realize that there is a lot more to using indicators than just asking them to generate buy/sell signals or pin-point exact entry points.

For example, the moving average methods are to show the direction of the trend. The most common are the simple 200day ma, 100day ma, 50day ma, 35day ma and 21day ma. But don’t forget, they are only valid on daily graphs. According to the experts, a signal can be considered to be good when the 50day ma is crossed by the 13day ma.

The moment it happens, one must trade in the direction of the cross. The problem with this is that these types of ‘crosses’ do not occur often enough for traders to exploit them. This can even lead to a situation where traders are seeing what they thought was a cross now finds to be reverse and uncross. The situation may also force you to chase for trying to anticipate a cross. And all these are required if you wish to be in touch with the live market.

Other problems with forex day trading technical indicators involve issues with the quotes and prices given to you by your broker. Forex brokers are the market makers and different brokers will give you different quotes and prices at a specific point of time. A different price could lead to a situation where different traders, trading the same market have the same indicators giving them different responses.

Finally, you should remember that these indicators were developed when real time information did not exist. Therefore, try to figure out the limitations of day trading technical indicators and realize that technical analysis should incorporate just one part of your trading strategy.

A recent survey showed that a mere 26% of all traders use technical analysis and indicators, compared to 41%, who said they use fundamental analysis. Your trading must be backed with studies and analysis of the market and other resources and not solely by day trading technical indicators.

11 Advantages Of Mini Forex Trading

Mini Forex Trading
11 Advantages Of Mini Forex Trading
By: Abhishek Agarwal
The forex industry has seen the entry of many traders with limited capital.Traders who are comparatively new to the online forex trading business are also able to sustain the risks involved.

The traders were exposed to the world of currency trading with not that high a risk with the development of Mini forex trading accounts that requires a minimum account size of $300. Also, the mini forex trading account holders can trade 1/10 currency lots instead of the entire currency lots.With smaller lot sizes, the traders are exposed to real life trading with comparitively lesser market and risk exposure because,the value of one mini pip is the same as one dollar.

The traders are exposed to the trading and are made aware of the reliability and the quality maintained in the trade practices and also the stability of the forex trading.Individuals who are wanting to develop their own strategy and build on their confidence in this particular industry will be benefited by mini forex account trading.

The advantage of mini forex trading is that, the traders in this segment have the liberty to enjoy the benefits that are applicable to the full size holders as well.

1. Mini forex trading uses the exact same state of art resources and tools as that of standard account.

2. The traders will continue to be exposed to the world's biggest liquid market.

3. Traders receive a complete free streaming, live and double sided quotes

4. It provides immediate fill reports

5. The trades are not commission based and the traders are able to check their accounts live.

6. Another important advantage in case of mini forex trading is that the traders are able to create a strategy on forex trades and they also improve their discipline and at the same time, not giving more importance to their profits and losses.

7. A trader can fixate on the fluctuations of his equity, if he can trade a full size currency of 100,000 units. This can be done by traders who have small balances.By doing so, the decision making capacity of the trader can get affected, as it is highly based on the emotions of the traders.

8. The traders usually do not close out those trades that do not result in profits, as they continue hoping that the market would infact favour them.It is the instinct of the traders to make immediate profits with the market movement, rather than maximising gains by allowing free flow of profits.

9. The training methods developed in case of mini forex trading, gaining the confidence of a particular trader who is successful, helps one to sustain the distractions, pressure and the anxiety in case of occurrence of any P&L swing.

10. It is not always necessary to use all currency units when starting a mini forex trading account. The lots can be utilized as and when required when a trader builds his confidence level, in order to increase his profits. The lot of 10,000 is available for a trader to customise the size per deal that might suit his needs and requirements.

11. Another good point in case of mini forex trading is that, a trader would not be too stressed out in case of a loss. It depends on the trader's ability to stick to his strategy and to maintain discipline in order to perform well in the future. For example, a loss of 50-pip on a position of 100,000 EUR/USD is the same as $500 loss, however, it would only be $50 in case of a 10,000 EUR/USD with respect to a mini account.

One has to have the guts and the will power to face losses in a forex trading industry;however,if one can perform making use of the platform that is similar to the standard account, why not go for mini forex which gives an individual it's unlimited benefits.

Article Source: http://www.articlestoreprint.com

Abhishek has an uncanny insight into Trading! Visit his website www.Trading-Masters.com and download his FREE Trading Report and learn some amazing Trading tips and tricks for FREE. His tips would save you thousands and make you better at Trading! But hurry, only limited Free copies available! www.Trading-Masters.com

Forex made easy for everyone

Forex Made Easy for Everyone
Forex made easy is as simple as you would want it to be. The foreign exchange market is a worldwide market and according to some estimates is almost as big as thirty times the turnover of the US Equity markets. That is some figure to chew on. Forex is the commonly used term for foreign exchange. As a person who wants to invest in the forex market, one should understand the basics of how this currency market operates. Forex can be made easier for beginners to understand it and here's how.

Foreign exchange is the buying and the selling of foreign exchange in pairs of currencies. For example you buy US dollars and sell UK Sterling pounds or you sell German Marks and buy Japanese Yen. Why are currencies bought or sold? The answer is simple; Governments and Companies need foreign exchange for their purchase and payments for various commodities and services. This trade constitutes about 5% of all currency transactions, however the other 95% currency transactions are done for speculation and trade. In fact many companies will buy foreign currency when it is being traded at a lower rate to protect their financial investments. Another thing about foreign exchange market is that the rates are varying continuously and on daily basis. Therefore investors and financial managers track the forex rates and the forex market it on a daily basis.

Those who are involved in the forex trade know that almost 85% of the trading is done in only US Dollar, Japanese Yen, Euro, British Pound, Swiss Franc, Canadian Dollar and Australian Dollar. This is because they are the most liquid of foreign currencies (can be easily bought and sold. In fact the US Dollar is most recognizable foreign currency even in countries like Afghanistan, Iraq, Vietnam etc).

Being a truly 24/7 market, the currency trading markets opens in the financial centers of Sydney, Tokyo, London and New York in that sequence. Investors and speculators alike respond to the ever-changing situations and can buy and sell simultaneously the currencies. In fact many operate in two or more currency market using arbitrage to gain profits (buying in one market and selling in another market or vice versa to take advantage of the prices and book profits).

While dealing in forex, one should have a margin account. Quite simply put if you have US$ 1,000 and have a forex margin account which leverages 100:1 then you can buy US$ 100,000 since you only need 1% of the US$100,000 or US$1,000. Therefore it means that with margin account you have US$ 100,000 worth of real purchasing power in your hand.

Since the foreign currency market is fluctuating on a continuous basis, one should be able to understand the factors that affect this currency market. This is done through Technical Analysis and Fundamental Analysis. These two tools of trade are used in a variety of other markets such as equity markets, stock markets, mutual funds markets etc. Technical Analysis refers to reading, summarizing and analyzing data based on the data that is generated by the market. While fundamental Analysis refers to the factors, which influence the market economy, and in turn how it would affect the currency trading. Of course there are other economic and non economic factors which can suddenly affect the trading of the forex markets such as the 9/11 tragedy etc. One needs to have a shrewd acumen and a few number crunching abilities to strike gold in the forex market.

by Brian Kolewe

Forex Trend Line Book. Series of Free Forex ebooks

How to draw a valid Forex trend line? What is it used for..? And many other things Forex traders should know about.

Forex Trend Line book covers rules, purposes and advantages of using trend lines in Forex charts.

Trend line is our guide that helps to identify main price direction during a certain period of time.
If placed correctly it will provide answers to:

Where to enter the market?
What direction to enter: up or down?
When to exit or be prepared to exit?

To start our learning journey, at first let's take a look at the bigger picture of the market using Forex charts. To obtain this bigger market picture, traders would need to simply zoom out their charts a little bit or switch to a larger time frame.

Once done it should become obvious where the market is going: it is either heading up or down. If it is still difficult to tell market direction, and it seems that the market currently moves sideways, traders need to zoom out even more.

Now it is just about common sense. If you are an intra day trader, you will focus on current price direction. Position traders which hold their position for days, weeks, months or longer, will need to obtain a bigger (weekly, monthly, yearly) picture of the market moves.

For example, to trade Forex on intra day basis (hold on to positions throughout a day for few hours, several minutes or so) traders need to look at hourly Forex charts or 30 minute or even smaller charts to get an idea of a current short term market direction.

Let's assume that we saw the market price going up, and the overall picture was telling us that we are in an uptrend. In the uptrend our trend line will be placed below the pattern formation. (In a downtrend our trend line will rest on the top of the pattern formation).

There are several important points on a chart that help us to draw a trend line in Forex.
We call them A-B-C-D points.
So:
1. Find big enough picture to visualize current market move.
2. Look for ABCD points.
3. Draw a trend line through A and C points.
4. The more A, C and following additional points the line will touch — the more accurately it will work.