Category: Forex

Fibonacci sequence is a unique order of numbers from classical statistics that is today applied to nature, advanced mathematics, trading, and agile development. Read on to understand more about the Fibonacci sequence and its application to agile development. 

Understanding Fibonacci Sequence

In the Fibonacci sequence, a number occurs from adding the previous two numbers before it beginning with zero. The numbers, in this case, are as follows. 

0, 1, 1, 2, 3, 5, 8, 13….

The Fibonacci Sequence Origin 

Leanardo Pisano Bogollo whose nickname was Fibonacci introduced this technical indicator in 1202. He belonged to an eminent Italian family between the 12th and 13th centuries. Due to his roots, mathematics played a crucial role in the business. He traveled across India and the Middle East during which mathematics ideas charmed him. Fibonacci made the following critical inputs to Western mathematics.

He popularized the Hindu techniques of number writing in Europe that is 0,1,2,3 instead of Roman numerals.

While the series of numbers seemed irrelevant, the Fibonacci sequence would later be named after him. 

What led Fibonacci into discovering this sequence? He suggested the following question. 

If a pair of rabbits is placed in an enclosed area, how many rabbits will be born there if we assume that every month a pair of rabbits produces another pair and that rabbits begin to bear young two months after their birth?

Beginning: at the beginning, no rabbits exist seeing that the previous pair of rabbits is yet to get pregnant and give birth

During the first month: a pair of rabbits is born, that is 1

During the second month: another pair of rabbits is born seeing that the previous pair are yet to mature and bear young ones.

During the third month: two pairs of rabbits breed while a pair is yet to mature, meaning that two rabbit pairs are born. 

During the fourth month: three rabbit pairs breed while two pairs are yet t mature meaning that three rabbit pairs are bred, and the sequence continues.

While Fibonacci’s question regarding rabbits is not realistic, the sequence is evident, like is the case in a series of sunflower seeds and the shape of hurricanes and galaxies. 

The Fibonacci Finance and Studies

As we have seen above, there is an exclusive ratio that can define the quantity of everything. Financial markets often depend on this ratio, which is also known as the golden ratio. When applied in technical analysis, this golden ratio translates into the following percentages: 61.8%, 50%, and 38.2%. Still, traders can use more multiples as the need arises. Application of the Fibonacci sequence can occur as follows.

·        Fibonacci Arcs

Identifying a chart’s low and high is the inaugural step towards creating Fibonacci arcs. Using a compass-related movement, you can then draw three arched lines at 38.2%, 50%, and 61.8% from the preferred point. These lines forecast the resistance and support levels and trading ranges. 

·        Fibonacci Retracements

Fibonacci retracements utilize horizontal lines to highlight areas of resistance or support. Positions are determined through the chart’s low and high points. Drawing of the lines begins at the inaugural 100%, which is the highest point of the chart. The second and third points lie at 61.8% and 50%. The fourth line lies at 38.2% while the final one lies 0% which is the lowest part of the chart. After a considerable up or down price movement, the new resistance and support levels are near or at these lines. 

·        Fibonacci Fans

Fibonacci fans comprise of diagonal lines. After identifying the low and high sections of the chart, a hidden horizontal line is marked across the correct point. The hidden line is then split into 38.2%, 61.8%, and 50%. Lines are highlighted from the far left section of these sections. These lines display areas of resistance and support. 

·        Fibonacci Time Zones

Time zones are different from other Fibonacci methods because they are an array of vertical lines. They are created by splitting a chart into sections with vertical lines separated in increments that adapt to the Fibonacci sequence. Each line displays a time where major price fluctuations are likely. 

Finally

Fibonacci studies do not offer the basic indications for predicting the entry or exit of a position. However, the numbers are crucial for determining the areas of resistance and support. 

Forex, foreign exchange in full refers to the act of performing legal trading transactions on various world’s currencies. It is a diversified world market in which all world’s currencies trade-off with each other. According to statistics Forex is the largest liquid market globally.

The liquidity of Forex means more money is flowing across the trade off-market as more buyers and sellers participate in Forex activities. As competition to earn more profits through the search for competitive pricing increases more clients and brokers join the Forex bandwagon.

The growth of Forex has been on the upward trajectory ever since its inception believed to hold the world’s most liquidity status. It is an exciting financial marketplace that is ever-growing. The growth pushing factor is that you trade at your own convenience.

The liquidity status of Forex globally is thought to have a turnover of more than $6 Trillion daily. This is larger than even combined turnovers of the world’s stock and bond markets.

Why You Should Consider Trading Forex

Do you want to earn money in a legal way? Try out Forex. There are many reasons why an investor should consider trading in Forex. Primarily, the underlying factor is making money that is legit and well deserved.

Not only are you making extra money but also that you are growing your trading experience by having to share trading platforms with the world’s best of the best trading investors. Some of the reasons to consider while trading Forex includes:

Low cost

In all circumstances, trading Forex involves the use of less financial resources. Both from investing your money, the transaction cost involved is very minimal compared to other physical and local conventional trading transactions.

Most Forex trading accounts trade with no or little commissions with no exchange of data or license fees. In more general terms, the retail transaction fees for biding are less than 0.5% under usual market conditions.

With the low cost involved, many other players are finding a keen interest to participate in Forex. Arguably, any Forex traders appreciate the less cost involved as compared to the traditional form of currency trading.

Availability

Essentially, Forex trading never stops. Forex is ever available for 24 hours across all the global time zones. You can participate in trading Forex at nearly any time of your convenience but not limited to time and place.

The main reason for having Forex being 24 hours a day is because the corporate, government and private investors who require currency exchanges are equally distributed across the globe. This makes trading an endless activity.

Leverage Abilities

Forex trading provides for leveraging. This means that you can invest as much investment in the trading market as you desire. For instance, contrary to the general market providing 1:2 leverage ability, Forex provides a whooping 1:50 leverage ability.

That is fifty times higher leveraging ability more than the general trading market. This has had investors rushing to participate in it with the hopes of reaping in higher profit margins.

High Liquidity

The forex market is gigantic and enormous in liquidity terms. The high liquidity terms allow the trading players to trade in any currency type. The robust financial features and characteristics create a financial ripple effect that is seeing an increased leveraging and trading component to increase tremendously.

Some Forex Trading Elements you Should Know

Fibonacci Retracements

They are the trading pinpointers that Forex traders use to find appropriate locations to place orders. They are used to market entry and taking stop-loss orders and profits. They are used in Forex trade to trade off by identifying the resistant levels of currencies in the trading realm.

Technical Oscillators

They are Forex trading tools that use mathematical tools to analyze each different figure including High, low, closing, and opening prices. As a result, technical oscillators are plotted graphically as chart patterns.

Conclusion

Are you thinking of a flexible, robust way of earning legit money? Try out Forex trading. Learn more about the impact Forex is creating on the financial investment and create an extra source of income for your financial closet. Learning Forex techniques for trading is not difficult, it only requires taking time to understand the trends and financial factors associated.

Selection of a forex broker and opening a live account requires that you first choose the prime forex exchange account. The selection of a trading account will have an impact on your trade as it determines how much profit or loss you incur in the trades that you enter.

There is a need for you to understand how to select the best forex trading account. During the selection process, there are factors that you must put into consideration. These factors are vital in ensuring you get the most out of a trading account. They are as follows.

Factors to Put into Consideration Prior to Opening a Foreign Exchange Account

There are numerous elements that one must look into when choosing a forex account for trade. Such factors influence your decision and they comprise trading methods, level of forex trade experience, and your starting capital. However, there are more significant factors that you have to consider when choosing the best forex exchange account. This applies to all traders regardless of their status. Those factors are as follows.  

1.           Transaction costs (spreads plus commission)

A number of people trade the forex market to earn a profit. The trades you make may yield more profit than losses at the end of the day. However, as you enter into correct trades to earn profits, you must also ensure that you get to hold onto the profits once the trade is complete. The factor that determines whether you get your profits wholesome is the type of forex trade account you picked to trade with. That is because trading accounts vary based on the transaction costs, spreads, and commissions they attract per trade.

A spread is a difference between the market’s asking and the  bidding price of a currency. It is measured in pips and fluctuates throughout the day based on the liquidity supply plus demand of your trading instrument. A spread is a transactional cost. A commission on the other hand is charged by the forex brokers for performing trades on your behalf.

The higher the transactional costs, the more difficult it would be to enjoy immense profits from your trades. Therefore, select an account that will attract a minimal transactional cost. It is vital that you consider how much the transaction costs on an account are, and how much commission the broker charges for every trade performed in the account. 

2.           Trading software plus platform

It is frustrating having to deal with slow and non-responsive software when you want to execute an urgent trade. Trading software or platforms provides access to the forex market where the trades are executed. Therefore, you want to have software that will give you fast, reliable access to the forex market so that you are able to execute and follow up on a trade.

The most common trading software is Meta Trader 4 and Meta Trader 5. They are more preferred by brokers as they are efficient and rarely have down time. The two trading software provide charts plus broker incorporation for a single click trading. Moreover, the two have free indicators plus charting apparatuses, real-time marketplace information, volatility security settings, expert advisors, plus mobile trading.

Hence, ensure that you pick a trading account that utilizes the best software to experience a great trade experience.  

3.           Range of markets available

Your trading account should give you access to international markets. That way, it becomes easier for you to diversify your forex trade and consider investing in other financial securities. For instance, you may consider trading in CFDs, stocks, commodities, and bonds.

Therefore, consider opening a live account with a broker who has access to international markets where you will stand to profit more.

Conclusion

Before opening an account with a broker, consider transactional costs, trading software, plus the range of markets the account will expose you to. The transactional costs should be minimal to ensure you enjoy great profits, whereas the trading software should be efficient enough to ensure the trade runs smoothly and still gain access to additional trading features. Finally, a good trading account has access to the international markets, which have numerous trading securities. This enables you to practice portfolio investment, which enables you to diversify risk.