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Learn about fibonaci

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  • Learn about fibonaci

    Know about fibonaci which is also one tool for traders to analyze the market, this tool was introduced by an italian Leonardo Fibonacci was born around 1170, as a young boy, Fibonacci is very fond of mathematics and arithmetic. He studied the tribal system of Hindu and Arab numerals, where he found that the system was simpler than the Roman system, and more easily calculated.

    And at the age of 32 years 1202 he began to introduce the system of numbers (hindu-arab) to the plains of Europe. Fibonacci also introduced the arithmetic system that we still use today, namely the base 10 digits, empty, comma, decimal and fractional.

    And many more mathematical models and equations found by Fibonacci. Among the best known later is the so-called series or Fibonacci sequence.

    The Fibonacci series comes with the following series: 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144 ...

    This series of numbers is obtained by starting at 1 followed by 2 and then adding 1 + 2 to get 3. Then, adding 2 + 3 to get 5, and so on.
    The interesting thing is if you calculate the ratio after the first few numbers it will always get a decimal value of .618
    Example: 55/34 = .6176
    Example: 144/89 = .6179

    The next interesting thing
    example: 34 / (1 + 1 + 2 + 3 + 5 + 8 + 13 + 21 + 34) = .38
    example: 89 / (1 + 1 + 2 + 3 + 5 + 8 + 13 + 21 + 34 + 55 + 89) = .38

    Looking at the interesting phenomenon of this Fibonacci series, then it is trying to apply in forex trading. And after calculated and formulated (you do not need hard to find it, leave it to the experts) then get the value

    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

    Fibonacci is already so popular for traders. So now almost all trading platforms have the Fibonacci calculator facility, which will automatically calculate and stay used only.

    Fibonacci Retracement Levels
    The function of this level is as a Support & Resistance information, which usually traders will open buy / sell after the price touches the points of that level

    Fibonacci Extension Levels
    Traders generally use this level position to determine the point where they must take take profit.

    Some things to note are:
    * This Fibonacci level works only when there is a trend
    * To be able to use Fibonacci you must determine the lowest and highest price swing / range.

    Let's look at the example of the exercise:

    Here we will try to use Fibonacci to predict, when and a good price for open buy. The trick is to know the Fibonacci retracement level, all you need to do is to draw from the lowest swing point (swing low) and the highest swing point (swing high).

    Then it will be seen As you can see from the chart, the retracement level is 0.7955 (23.6%), 0.7764 (38.2%), 0.7609 (50.0%), 0.7454 (61, 8%), and 0.7263 (76.4%).

    So here we are waiting for a prediction scenario that the price will fall to the retracement levels which also means the support level. Then the price back up again to move according to the original trend. Well let's observe the next price movement.

    The price is moving past the 23.6% level, then it bounces up at 28.2% but we see that the candle closing price can not pass the 38.2% level, so it is likely that this is the support level. We confirm some time whether the price is moving up. If yes, immediately do open buy.

    How to draw the fibonaci line in the chart?

    To install the Fibonacci retracement indicator on the chart, there are two things you need to pay attention to:

    When the price is falling or on bearish trend, put the Fibonacci retracement indicator by dragging it from the swing high point to the swing low point. While the trend is uptrend, put the Fibonacci retracement by dragging it from the swing low point to the swing high point.

    To trading using Fibonacci retracement, the basic concept is the same as using support and resistance. Fibonacci retracement levels are considered as support and resistance levels. The Fibonacci retracement level above the price is considered a resistance, and the Fibonacci retracement level that is below the price is considered a support level.

    Do a buy in the support area, and sell in the resistance area. When buy, you can use the level above the area where the buy as a take point profit and vice versa, while it is selling you can use the level below the area where the sell as a take profit point. Stop loss can be placed above the high swing area when it sells or below the swing low area when buy, or you can put it in a certain level area.

    Of course in practice not as simple as in the theory described above, because in forex trading also applies that the performance of the past time does not guarantee will give the same results in the future, That's why some traders also though they have used fibonaci but still use other indicators as supporters, and it also depending to each trader to create a combination to using other indicators as a companion of fibonaci retracement

    And of course the experience in using this trading tool also depends on each trader, using fibonaci and drawing the fibo line from swing high to swing low it also depends on the timeframe chosen, and this timeframe selection depends on the trader's style itself, but mostly the trader uses the fibo line on the H1 and H4 timeframes.

    Utilizing the fibo line to determine the support and resistance area is also good and helps the trader in making the trading plan, by placing the target and stop loss on the area of ​​the fibo line
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