{"id":9554,"date":"2022-10-12T07:50:18","date_gmt":"2022-10-12T07:50:18","guid":{"rendered":"https:\/\/mdr.foobrdigital.com\/?p=9554"},"modified":"2022-10-12T07:50:18","modified_gmt":"2022-10-12T07:50:18","slug":"fibonacci-trading","status":"publish","type":"post","link":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/2022\/10\/12\/fibonacci-trading\/","title":{"rendered":"Fibonacci Trading"},"content":{"rendered":"\n

We will be using Fibonacci ratios<\/strong> a lot in our trading so you better learn it and love it like your mother\u2019s home cooking.<\/p>\n\n\n\n

Fibonacci is a huge subject and there are many different Fibonacci studies with weird-sounding names but we\u2019re going to stick to two: retracement<\/strong> and extension<\/strong>.<\/p>\n\n\n\n

Let us first start by introducing you to the Fib man himself\u2026Leonardo Fibonacci.<\/p>\n\n\n\n

\"Fibonacci\"<\/figure>\n\n\n\n

No, Leonardo Fibonacci isn\u2019t some famous chef. Actually, he was a famous Italian mathematician, also known as a super-duper uber ultra geek.<\/p>\n\n\n\n

He had an \u201cAha!\u201d moment when he discovered a simple series of numbers that created ratios describing the natural proportions of things in the universe.<\/p>\n\n\n\n

The ratios arise from the following number series: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144\u2026<\/p>\n\n\n\n

This series of numbers is derived by starting with 0 followed by 1 and then adding 0 + 1 to get 1, the third number.<\/p>\n\n\n\n

Then, adding the second and third numbers (1 + 1) to get 2, the fourth number, and so on.<\/p>\n\n\n\n

After the first few numbers in the sequence, if you measure the ratio<\/strong> of any number to the succeeding higher number, you get .618<\/strong>.<\/p>\n\n\n\n

For example, 34 divided by 55 equals .618.<\/p>\n\n\n\n

If you measure the ratio between alternate numbers you get .382<\/strong>.<\/p>\n\n\n\n

For example, 34 divided by 89 = 0.382 .<\/p>\n\n\n\n

You have now just experienced the Fibonacci Sequence!<\/p>\n\n\n\n

\"Fibonacci<\/figure>\n\n\n\n

Fibonacci Sequence<\/strong><\/h2>\n\n\n\n

A Fibonacci sequence<\/strong> is formed by taking 2 numbers, any 2 numbers, and adding them together to form a third number.<\/p>\n\n\n\n

Then the second and third numbers are added again to form the fourth number.<\/p>\n\n\n\n

And you can continue this until it\u2019s not fun anymore.<\/p>\n\n\n\n

The ratio of the last number over the second-to-the-last number is approximately equal to 1.618<\/strong>.<\/p>\n\n\n\n

This ratio can be found in many natural objects, so this ratio is called the golden ratio<\/strong>.<\/p>\n\n\n\n

It appears many times in geometry, art, architecture, and even on Sonic the Hedgehog.<\/p>\n\n\n\n

\"Golden<\/figure>\n\n\n\n

The golden ratio is actually an irrational number, like pi, and is often denoted by the Greek letter, phi<\/strong> (\u03c6<\/strong>).<\/p>\n\n\n\n

Okay, that\u2019s enough mumbo jumbo.<\/p>\n\n\n\n

With all those numbers, you could put an elephant to sleep. We\u2019ll just cut to the chase; these are the ratios you HAVE to know:<\/p>\n\n\n\n

Fibonacci Retracement Levels<\/h2>\n\n\n\n

0.236, 0.382, 0.618, 0.764<\/p>\n\n\n\n

Fibonacci Extension Levels<\/h2>\n\n\n\n

0, 0.382, 0.618, 1.000, 1.382, 1.618<\/p>\n\n\n\n

You won\u2019t really need to know how to calculate all of this. Your charting software will do all the work for you.<\/p>\n\n\n\n

However, it\u2019s always good to be familiar with the basic theory behind the indicator so you\u2019ll have the knowledge to impress your date.<\/p>\n\n\n\n

Fibonacci retracement levels work on the theory that after a big price moves in one direction, the price will retrace<\/em> or return partway back to a previous price level before resuming in the original direction.<\/p>\n\n\n\n

Traders use the Fibonacci retracement levels as potential support and resistance areas<\/strong>.<\/p>\n\n\n\n

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 tend to become a self-fulfilling prophecy.<\/p>\n\n\n\n

Traders use the Fibonacci extension levels as profit-taking levels<\/strong>.<\/p>\n\n\n\n

Again, since so many traders are watching these levels to place buy and sell orders to take profits, this tool tends to work more often than not due to self-fulfilling expectations.<\/p>\n\n\n\n

Most charting software includes both Fibonacci retracement levels and extension level tools.<\/p>\n\n\n\n

In order to apply Fibonacci levels to your charts, you\u2019ll need to identify Swing High and Swing Low points.<\/p>\n\n\n\n

A Swing High<\/strong> is a candlestick with at least two lower highs<\/em> on both the left and right of itself.<\/p>\n\n\n\n

A Swing Low<\/strong> is a candlestick with at least two higher lows<\/em> on both the left and right of itself.<\/p>\n","protected":false},"excerpt":{"rendered":"

We will be using Fibonacci ratios a lot in our trading so you better learn it and love it like your mother\u2019s home cooking. Fibonacci is a huge subject and there are many different Fibonacci studies with weird-sounding names but we\u2019re going to stick to two: retracement and extension. Let us first start by introducing you to the Fib man […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[835],"tags":[],"_links":{"self":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/9554"}],"collection":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/comments?post=9554"}],"version-history":[{"count":0,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/9554\/revisions"}],"wp:attachment":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/media?parent=9554"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/categories?post=9554"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/tags?post=9554"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}