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How Does the Fibonacci Sequence Work?

The Fibonacci sequence is a powerful tool that can be easily implemented to perfect your trading routine.
Modern Times Apr 26, 2019
Forex trading is a lucrative wing of the market that you can leverage to see extraordinary returns on your investment. With a little practice and a bold trading strategy, anyone can maximize their profits to see great returns day after day.

Forex is unique in that trading can be done at all hours of the day – unlike the strictures of traditional stocks.

How the Market Runs

The forex market is an exciting place to be. On this exchange, rather than buying stock in a company, you trade currencies. Currency trading has the potential to net extreme gains.

Here, leverage is used to buy in at a high value, so when the price increases by a few cents, your earnings are magnified by a factor of 100 or even 1000.

Strategy to Hedge Losses

Loss is a constant in the market. No matter the commodity, it cannot continue to experience pricing gains indefinitely.

Finding a strategy that works for you is a must if you are to continue to see upward momentum in your portfolio. The first step here is to make yourself familiar with a few favorite price pairs’ trending movements.

Applying the Fibonacci Principles

Once you feel confident in your ability to visually inspect price pairs, it’s time to begin trading with a real, metric driven approach.

Utilizing simple math with fibonacci trading is an excellent way to capitalize on a trending currency. The premise here is that growth – or decline – tends to find confluence at these natural levels.

So What Is the Fibonacci Sequence?

The Fibonacci sequence is simply an observation of nature. The concept is that all things form and grow within the golden ratio or the golden spiral: think a conch shell.

This is an exponential and predictable growth calculation that sees landmark values along an algorithmic plane. Believe it or not, our understanding of this phenomenon is centuries old!

When to Apply It to Your Trades

The Fibonacci sequence is a powerful tool that can reveal friction to price movement if designated correctly.

It is best used in trending markets; that is, Fibonacci numbers are most relevant when viewing a commodity on the move. This can be helpful for identifying selling points for profit or as a stop loss target.
The forex market is ripe for profits. Currency trading is nearly always open and prices are constantly fluctuating and brimming with life.

All this adds up to a market that can net you serious cash — if you know what you are looking at. Utilizing well-established mathematical principles is a great way to give yourself the edge you need to strike big.