Fibonacci Trading is the basis of many forex trading strategies which is used by a big number of professional forex traders around the globe. Every year many billions of dollars are profitable traded based on this trading technique.
Fibonacci was an Italian mathematician and he is best remembered by his world famous Fibonacci sequence. The definition of this sequence is that it is formed by a series of numbers where each number is the sum of the two preceding numbers; 1, 1, 2, 3, 5, 8, 13 ... But in the matter of Forex trading what is more important for the trader are the Fibonacci ratios which are derived from this sequence of numbers, i.e. .236, .50, .382, .618, etc.
These ratios are mathematical proportions mainly in many places and structures in nature as well as in man made creations.
Forex Trading can greatly profit form this mathematical proportions due to the fact that the oscillations observed in Forex charts where prices are visibly changing in an oscillatory pattern follow Fibonacci ratios very closely as indicators of resistance and support levels; maybe not to the last cent but close to that.
Fibonacci price points or levels for any Forex pair can be calculated forward so that a trader will know when to enter or exit the market if the forecast which is given by the Fibonacci Forex day trading strategy he uses fulfills its predictions.
Many people try to make this analysis complicated to scare away many new traders that are just beginning to understand how the Forex market works and how to make profit in it. But this is not how it has to be. We can not say that it is a simple concept but it is quite understandable for any trader once he or she has understoof the basics and has had some practice trading using Fibonacci levels along with other indicators which will help to improve the accuracy of the entry and exit point for every trade.