Fibonacci Forex trading is popular and the Fibonacci number sequence is relied on by many traders to enter and exit currency trends. Let’s look at Fibonacci theory in more detail and how it can help you make Bigger Forex profits…
The Fibonacci number sequence has its origins in the Liber Abaci, a book written by Leonardo Fibonacci a brilliant Italian mathematician in 1202. The original problem the number sequence solved was this:
How many pairs of rabbits can be generated from a single pair, if each month each mature pair brings forth a new pair, which, starts to produce from the second month?
The resulting Fibonacci numbers 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, are the result of the following equation. If Fn is the nth Fibonacci number, then successive terms are formed by addition of the previous two so Fn+1 = Fn + Fn-1, F1 = 1, F2 =. The ratio of any number to the next larger number is 62%, the inverse of 62% is 38%, and these numbers are considered to be important retracements in currency trends.
Fibonacci Forex trading is based upon using these retracements and others to get better market timing. Many claim the sequence represents mathematical order in the markets but does it work?
Of course it doesn’t!
If Fibonacci was alive today, he would probably be horrified by the way his theory is being used for something it was never intended. Sure you can see the retracements work sometimes but pick any number you like and that will work sometimes as well.
The theory is not mathematical as it doesn’t work ALL the time and this is the definition of a mathematical theory.
This should be obvious to anyone, as markets don’t move to certainties they only move to probabilities. There is no hidden Mystical order to market movement which the far out investment community claim.
Don’t get me wrong, Fibonacci was a brilliant thinker but his theory has no place in Forex trading. Always keep in mind the theory was used to solve a problem to do with the copulation of rabbits and to base your Forex trading on this theory is a mistake.
Forget those that tell you markets move to some hidden order – they don’t and never will – Why?
Because humans make a price and there not predictable so, get yourself a good Forex trading education and base your Forex trading strategy on trading the odds.
Forget Fibonacci Forex Trading, as there are better ways to lead you to currency trading success.
Source by Kelly Price