Welcome to the Investors Trading Academy talking
glossary of financial terms and events. Our word of the day is “Fibonacci Indicator
Forex Trading Strategy” One of the most famous and popular forex trading
strategies is Fibonacci, named after the famous Italian mathematician. Considered as a medium-long
term trading strategy, we use it to follow repeating support and resistance levels. History
shows that the market moves in waves and Fibonacci takes advantage of this fact. Fibonacci ratios
can help us identify potential resistance and support levels on the financial charts.
The most common ratios are 61.8%, 50% and 31.8%. The Fibonacci numbers and ratios have
been famous among mathematicians and artists for hundreds of years. They represent many
things in nature and in financial markets and can be used as great analytical tools.
No math is required to use these numbers as the trading platforms do all the calculations
for us. All that we must do is make a decision based on these lines which appear on the graph.
The ‘Fibonacci indicator’ Forex trading strategy is one of the most well-known and
commonly used long term Forex trading strategies. This method relies on what is called a ‘Pullback’
and to fully understand how it works we must discuss the more fundamental concept ‘the
trend’. When we look at each price change individually it is very hard to explain them
and find a pattern as there are so many of them. Looking at the bigger picture allows
us to see trends on a larger scale.