But Leonardo da Vinci and Leonardo Fibonacci are very different people.

Fibonacci is respected as one of the greatest of Italian mathematicians. He lived from 1175-1250, and is famous for his significant role in advancing the field of mathematics. One of his seemingly simple accomplishments was to bring the decimal system to the west.

Fibonacci enjoyed examining patterns, and in doing so, discovered one of the most famous of all mathematical patterns that we call the Fibonacci Sequence. It’s actually quite simple. Begin with zero, and every following number in the sequence is the result of adding the two numbers before it:

Here is the sequence: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89. . .

As a renaissance man, Fibonacci applied mathematics to nature. He noticed that this pattern was highly prevalent in the biological world. Everywhere he went, he discovered it represented in geometrical form.

All right. I realize you’re busy trading money. How does this all relate to improving your Forex trading profits? You’d be surprised. The Fibonacci sequence relates to natural growth, and given that there is nothing supernatural regarding the exchange of money, the ratios are found in currency fluctuations.

Let’s get to the point. Write down these three numbers:  0.618, 0.382, and 0.500. I could introduce different ones, but this is a good place to start.

When determining “retracement levels,” traders use the listed numbers to plan their buy/sell orders. This is how it all comes together:

Imagine a currency pair or a stock that is increasing in value. Eventually, we know that it will reach a plateau, experience a small plunge, and finally continue its way up. The stage in which it takes a plunge is where the Fibonacci sequences is factored in.

If you follow downward plunges carefully enough, you’ll see that they work according to the sequence. For those that manage to predict the pattern, they can jump in right at the point where the temporary plunge bottoms out.

The platform that you are already using is probably capable of charting the Fibonacci sequence. Sketch out the graph from low to high, and you’ll see that the retracement levels will be mechanically charted.

Nevertheless, you can’t simply expect to trade as soon as you see the graph land on a Fibonacci number. You cannot forget that many other things that have to be factored in.

For starters, you will not know the retracement level where the price bottoms out. Of the three numbers above, you could make a huge mistake and take a big hit. At the same time, you can easily pick the wrong high points.

Moreover, as much as many swear by it, the Fibonacci sequence is sometimes better in theory than in practice. There is no silver bullet in this game, but the Fibonacci sequence is something to consider. If you have any questions, call your broker and make him work that commission.

Fibonacci Numbers for Forex Trading is a post from: Forex Trading Reviews

Beginning with the nature of fundamental analysis, it is important to remember that it is extremely complex. Additionally, this form of analysis is used for those that are looking into the future,  rather than for those focusing on short-term trends. Some traders, however, employ the strategy of trading on the basis of short term news releases. There are patterns to be found, and short term success is possible through this method.  When looking for currency value indicators, focus on Durable Goods, (CPI), (PMI), Retail sales, and Non-Farm Payrolls.

These are some of the reports to focus on, but they are far from the only valuable information relevant to your strategy. Besides for official reports, there are other sources of information that can serve as value indicators. Keep your eyes open for commentary, quotes, and other unofficial communication that have a powerful effect on the markets. These sources of information can be bear just as much influence as official reports. Pay attention to the discussions regarding interest rates, confidence, and inflation. What is said is very valuable and most certainly has an effect.

It is wise to pay attention to the overall attitude regarding specific issues. Focus on the language that is used to describe market trends, interest rates, etc. Less than positive sounding language out of the Federal Reserve Chairman’s mouth can be just as much of an indicator as an official report. The Humphrey Hawkins Hearings and well as the Federal Open Market Committee are two of the most important meetings you need to be on top of.

Although it is extra work, the very act of reading over these reports and reacting to the commentary can offer Forex traders with an incredible advantage. This type of fundamental analysis can help them understand long-term trends while at the same time, allow some traders that are quick on the trigger to take short-term profits. In short, pay attention to what important people are saying.

The only way you can do this, is to know when, where, and what they are saying. In order to employ the fundamental strategy, you need to know the economic calendar, and keep it around everywhere you go. If you are basing your strategy on these reports, then you simply cannot miss one. Know when they are being released. Ask your broker for more information. This is what they do, and they can even provide you with immediate access over the internet to these meetings.

Technical Analysis focuses on analyzing price trends. Forex markets never close, and are open twenty-four hours a day, which explains the difference between Forex and equities. If Forex, you are dealing with continuous action. Thus, the technical analysis has to adjust to this new timeframe, and some of the forms used are Pivot points, Elliot Waves, Parabolic SAR, and Fibonacci. After familiarizing yourself with the details, you can decide on your approach. The best advice is to go with what makes you feel the safest. Discuss your options with your broker. Good luck!

Basic Forex Analysis Strategies is a post from: Forex Trading Reviews