Fibonacci Numbers - Forex and Making Huge Profits

By: Monica Hendrix
The Fibonacci number sequence and Fibonacci retracements are a tool used by forex traders to help enter and exit trading signals for better market timing and bigger overall profits. Here you will find all you need to know about using Fibonacci numbers and retracements for bigger profits.

Leonardo Fibonacci was a famous Italian mathematician, who lived in the 13th century Italy The Fibonacci sequence was first printed in the Liber Abaci, in 1202.

The Book introduced Hindu-Arabic numerals to European mathematics to replace Roman numerals but the number sequence was actually devised to solve this problem:

How many pairs of rabbits would be produced from a single pair, if each month each pair produces a further pair, which, from the second month, started producing more rabbits again and so on.

Here is the sequence that solved the problem.

Each number is the sum of the two preceding numbers; 1, 1, 2, 3, 5, 8, 13...

When applied to currency trading it's the ratios derived from the sequence, that are used on forex charts and they are 236, .50, .382, .618, etc.

These Fibonacci retracements can be used to spot support in the market and devotees of the sequence use them to enter trading signals.

The two Fibonacci percentage retracement levels which are considered the most critical are: 38.2% and 62.8%.



Other significant ones are: 75%, 50%, and 33%.

So by buying these retracements you can make bigger profits as devotees of Fibonacci claim that they work to a scientific law - But can you make money doing this?

Of course you can't, its one of the most ridiculous theories to be used in forex ever and simply doesn't work.

This is not to in anyway deride the work of Leonardo Fibonacci he was a talented man a brilliant mathematician, but the levels have nothing to do with trading!

Were Leonardo Fibonacci alive today, would probably be bemused at the way his theory has been applied to an area it was NEVER supposed to be applied to.

The myth that the Fibonacci number sequence can be applied to trading has been sold by vendors who see a good story and sell it.

It's mystical and appeals to the far out investment crowd - the losers and the dreamers.

These vendors sell forex trading systems based upon it and of course they don't work. These vendors claim the sequence is part of natural law, which says that human psychology is constant and therefore repeats itself in line with the numbers.

Human nature is not predictable and NOT scientific in anyway, humans don't conform to natural law their beings that are emotional and unpredictable.

Try them and see if they work.

They do sometimes - but pick any retracement level you like and that works sometimes - but that's not scientific! To be scientific by definition it must work ALL the time.

If it's scientific it should work ALL the time! This is common sense and we all know this from school but still huge numbers of forex traders believe they work and pay for their folly with losses

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