Author Topic: Fibonacci Level Analysis  (Read 3135 times)

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Toshi

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Fibonacci Level Analysis
« Reply #-1 on: December 27, 2009, 04:07:33 PM »
The Fibonacci levels  are useful (like all trading indicators). They do not work as a standalone system of trading and they are certainly not the “holy grail”, but can be a very effective component of your trading strategy.

Pakinvestorsguide

Fibonacci Level Analysis
« Reply #-1 on: December 27, 2009, 04:07:33 PM »

Toshi

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Re: Fibonacci Level Analysis
« on: December 27, 2009, 04:10:48 PM »
What is Fibonacci and how it can be helpful in trading?

Leonardo Fibonacci was a great Italian mathematician who lived in the thirteenth century who first observed certain ratios of a number series that are regarded as describing the natural proportions of things in the universe, including price data. The ratios arise from the following number series: 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144 ……
This series of numbers is derived by starting with 1 followed by 2 and then adding 1 + 2 to get 3, the third number. Then, adding 2 + 3 to get 5, the fourth number, and so on.
The ratios are derived by dividing any number in the series by the next higher number, after 3 the ratio is always 0.625. After 89, it is always 0.618. If you divide any Fibonacci number by the preceding number, after 2 the number is always 1.6 and after 144 the number is always 1.618. These ratios are referred to as the “golden mean.” Additional ratios were then derived to create ratio sets

Toshi

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Re: Fibonacci Level Analysis
« Reply #1 on: December 27, 2009, 04:23:04 PM »
Fibonacci Retracement Levels

Price Retracement Levels
0.236, 0.382, 0.500, 0.618, 0.764


This set of ratios is used as price retracement levels and is used in trading as possible support and resistance levels. The reason we have this expectation is that traders all over the world are watching these levels and placing buy and sell orders at these levels which becomes a self-fulfilling expectation.
In an uptrend, the general idea is to go long the market on a retracement to a Fibonacci support level. The price retracement levels can be applied to the price bar chart of any market by clicking on a significant Swing Low and dragging the cursor to the most recent potential Swing High and clicking there. This will display each of the Retracement Levels showing both the ratio and corresponding price level. Let’s take a look at some examples of markets in an uptrend. The same points made by these examples are equally applicable to markets in a downtrend.

Market often finds at least temporary support at the Fibonacci Retracement Levels – not always, but often. It should be apparent that there are a few problems to deal with Fibonancy.
1)First, there is no way of knowing which level will provide support. The 0.236 level seems to provide the weakest support, while the other levels provide support with approximately the same frequency.

2)Second, the market will not always resume its uptrend after finding temporary support, but instead continue to decline below the last Swing Low.

3)Thirdly, placement of stops is a challenge – it is probably best to place stops below the last Swing Low, but this requires accepting a high level of risk in proportion to the likely profit potential in the trade.

The concluding point is, there is no one right way to do it, and consequently it becomes a guessing game.

Toshi

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Re: Fibonacci Level Analysis
« Reply #2 on: December 27, 2009, 04:28:05 PM »
Fibonacci Price Extension Levels

Price Extension Levels
0, 0.382, 0.618, 1.000, 1.382, 1.618


This set is used as price extension levels and is used in trading as possible profit taking levels. Again, traders all over the world are watching these levels and placing buy and sell orders to take profits at these levels which becomes a self-fulfilling expectation.

In an uptrend, the general idea is to take profits on a long trade at a Fibonacci Price Extension Resistance Level. The Price Extension Levels can be applied to the price bar chart of any market by clicking on a significant Swing Low and dragging the cursor to the most recent Swing High. Then by clicking on the Swing High and back down to the retracement Swing Low and clicking there. This will display each of the Extension Levels showing both the ratio and corresponding price level.

Again, the point is that there is no one right way to do it, and consequently it becomes a guessing game.

Toshi

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Re: Fibonacci Level Analysis
« Reply #3 on: December 27, 2009, 04:30:16 PM »
Conclusion

The key to an effective trading system is to integrate a few indicators (not too many) that are applied in a way that is not obvious to most observers. All successful traders know it’s how you use and integrate the indicators (including Fibonacci) that makes the difference. The lesson learned here is that Fibonacci Levels can be a useful tool, but never enter or exit a trade based on Fibonacci Levels alone.

Offline Learner7

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Re: Fibonacci Level Analysis
« Reply #4 on: December 27, 2009, 04:32:00 PM »
Fibonacci Retracement Levels

Price Retracement Levels
0.236, 0.382, 0.500, 0.618, 0.764


This set of ratios is used as price retracement levels and is used in trading as possible support and resistance levels.

Fibonacci Retracement is my most favourite tool. 8)

Offline 007

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Re: Fibonacci Level Analysis
« Reply #5 on: December 28, 2009, 08:46:27 PM »
VERY NICE explanation but if its not too much trouble plzz post charts and diagrams as well

anyways thanks repped ;D

SC

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Re: Fibonacci Level Analysis
« Reply #6 on: January 08, 2010, 09:45:41 PM »
A simple series of numbers can sometimes get misinterpreted (promoted) to be something magical. Personally, I see no value in the actual numbers that make up the Fibonacci series (a series developed by an Italian mathematician (Fibonacci) in the thirteenth century to help understand the propagation of rabbits). First I must say that I do value the ratio of the numbers that are expanded in a Fibonacci-like series (1,1,2,3,5,8,13,21,34,55,89,…). That ratio is 0.618 (and its reciprocal 1.618), often called the golden ratio because of its wide occurrence in nature. Here is a fact: the actual numbers in the Fibonacci series have little to do with the ratio. Any two numbersexpanded in the same manner will produce the same “golden” ratio. Here is a test:

Try it with 2 and 19. Add them together, and then add the total to the previous number just like in the Fibonacci series (21921, 192140, 214061, etc.). Expand this until you get to some four-digit numbers so that the accuracy will be acceptable (2, 19, 21, 40, 61, 101, 162, 263, 425, 688, 1113, 1801, 2914, 4716,. . .).

The last two numbers in this sequence are the two numbers that I will use for this example: 2914 and 4716. Now divide the first number by the second number, and you will get 0.618. This is exactly the same as with the one obtained using the Fibonacci series of numbers. So why did I pick 2 and 19 for this example? Hint: the second letter in the alphabet is B. Think about it. What is the nineteenth letter? And that is what numerology is all about. One last thing, the Fibonacci series also failed at understanding or predicting the propagation of rabbits. It is the ratio that is important, not the actual numbers in the series. So, when you hear someone say they are going to use a 34-day moving average because 34 is a Fibonacci number, you can immediately begin to have reservations about the rest of his analysis.

Source: The Complete Guide to Market Breadth Indicators by Gregory L. Morris
« Last Edit: January 08, 2010, 09:48:26 PM by SC »

Offline Ahmedkhan

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Re: Fibonacci Level Analysis
« Reply #7 on: November 02, 2015, 02:48:35 PM »
Mere khayal mai Fiboncci Analysis sab se behtreen hain trading karne mai magar hume ise learn karna hoga sahi tarike se tab hi ja kar hum kuch faida utha sakte hain ise. Maine ya sab Baby Pips se seekha ha aur ab shukar ha k mujhe OctaFX broker mila ha jis ka matlab ha k mai aram se job he learn karta hon woh execute kar sakta hon kiu k yahan boht hi acha demo contest ha cTrader jis mai practice bhe hojati ha aur motivation bhe high rehta ha inaam ki waja se.

Offline SimonKatich

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Re: Fibonacci Level Analysis
« Reply #8 on: December 04, 2015, 05:30:14 AM »
Fibonacci Level ko analysis karna boht hi difficult ha magar agar hum ya properly learn karle to ya kafi zada profits de sakta ha is lia hume careful rehna chaiya aur jab tak puri tara se learn nahi karle kabhi ise use nahi karna chaiya. Main Ahmed k sath agree karonga k OctaFX waqai mai boht hi zabardash company ha jo hum har tarike se madad karti ha khas tor pay in ka latest demo contest Southampton Supreme Game jo sirf 90 minutes ka ha magar prizes 1000 USD k above hain.

Offline Ahmedkhan

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Re: Fibonacci Level Analysis
« Reply #9 on: February 11, 2016, 02:12:50 PM »
Mere khayal se Holy Grail to kuch nahi ha agar hume yahan profit kamana ha to ya cheez to dimagh se nikal denie chaiya. Mai khush naseeb hoon k mujhe OctaFX jesa broker mila ha jahan ya 24 ghante market ki updates dete rehte hain aur agar ise follow kare sahi tara se to hum hamesha profit kama sakte hain jese mai kama rah hon peechle 6 mahino se aur ab trading karne mai maza hi alag ata ha mujhe.

Offline SameerKhan

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Re: Fibonacci Level Analysis
« Reply #10 on: Today at 12:46:42 PM »
Ise trading kafi achi kar sakte hain hum magar sirf ek masla ha k hume pura idea hona chaiya kiu k yahan koi guess work nahi chalta. Mai Alpari broker k sath kam kar rah hoon aur yahan behtreen educational section ha jis se mai boht hi zada achi tara se earning kar sakta hoon samajh k. Aur boht sare tools majood hain jese k tradaron ka videshee mudra kailakyooletar aur is k ilawa bhe hum in k daily market analysis parh sakte hain ya PAMM account istemal kar sakte hain aur khud se bhe trading kare to bhe faida ha 99% bonus milta ha.

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