Fibonacci Numbers and Golden Ratio

Fibonacci Numbers and Golden Ratio

        For those who are not already familiar with the name Fibonacci, you may remember hearing something about it in 2006, when the movie The DaVinci Code appeared in theaters. When Jacques Saunière was found murdered at the Louvre Museum in Paris, the strange position that this deceased character was placed in mimicked the famous painting of the Vitruvian Man by Leonardo da Vinci. This painting has been known to illustrate how Fibonacci ratios appear in the human form. The film also piqued the curiosity of some people when the characters in the film started talking about Fibonacci numbers as part of a clue or code of some sort. For myself, I only chuckled and thought, “It’s about time someone is taking Fibonacci seriously.”    

     The Fibonacci number series and the properties of this series were made famous by the Italian mathematician Leonardo de Pisa. The Fibonacci number series starts with 0 and 1 and goes out to infinity, with the next number in the series being derived by adding the prior two. For example, 55 + 89 = 144, 89 + 144 = 233, 144 + 233 = 377, and so on (see the following number series): 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987 . . . out to infinity What is most fascinating about this number series is that there is a constant found within the series as it progresses toward infinity. In the relationship between the numbers in the series, you will find that the ratio is 1.618, or what is called the Golden Ratio, Golden Mean, or Golden or Divine Proportion. (For example, 55 x 1.618 = 89, and 144 is 1.618 times 89.) Take any two consecutive numbers in the series after you get beyond the first few and you will find the Golden Ratio. Also note that the inverse or reciprocal of 1.618 is 0.618. There are quite a few Web sites that are devoted to this number series and its properties. Just type the word Fibonacci into your favorite search engine and you’ll be amazed at the wealth of information that exists on this subject. The Golden Ratio can be found in many different places.

        The 1.618 ratio is used in architecture in what is called the “golden rectangle,” as it is known to be pleasing to the eye. There are actually plastic surgeons who use these ratios to help them sculpt faces of “perfect proportion.” You can also find the ratio in nature. It can be seen in flowers, the nautilus shell, ammonite fossils, and many other places. What I find to be most fascinating is that this ratio shows up in the pentagram , which is known as a symbol for hidden occult knowledge. It occurred to me that maybe the ratio within the pentagram held a hidden secret to the market! At one point in my education,

     I actually studied Jewish mysticism. One of my teachers from a Golden Dawn temple in California handed me a copy of a Disney cartoon called “Donald in Mathmagic Land,” saying that I might enjoy it. Another student had brought it to his attention, as Donald Duck had a pentagram inscribed on his hand in this Disney cartoon. In this cartoon, which was produced to teach children about math, Donald Duck was on an adventure in Mathmagic land, where he visited with Plato and Pythagoras, talked about “secret mathematical societies,” and learned about the Golden Section.

     The cartoon illustrated where the ratios of 0.618 and 1.618 exist in nature and architecture. This cartoon, which Disney released in 1959, is still available via the Internet, and it is well worth watching. The quote at the end of the cartoon was from Galileo, “Mathematics is the alphabet in which God has written the universe.” I believe this to be true. If you study the “code” of the Fibonacci numbers and the ratios derived from this number series long enough, I think you will begin to agree with, or at least understand, that statement. This is not something that should just be blindly accepted because I have found it to be true. It is something that you must discover and then prove to yourself on your own journey! What is important to most traders is that applying these ratios can help identify key support and resistance zones in the market, and therefore determine key trading opportunities or setups. I will show you how to apply these ratios in any market with adequate data. Thus, the application can give you a huge edge as a trader, if you use the techniques properly

you must need to read to be a good Forex trader 

step 1        Applying fibonacci ratios to the price axis ot the market

step 2        Fibonacci Price Retracements

step 3     Fibonacci Price Extensions

step 4     Fibonacci Price Projections or Objectives

step 5     Fibonacci Price Cluster Setups: Trade Setup 1

step 6      Symmetry—The Power Tool: Trade Setup 2

step 7    The Two-Step Pattern Setup: Trade Setup 3

step 8      Triggers and Indicators

step 9    The Ideal Trade Setup

step 10  From Analysis to Trade Entry—Putting It All Together

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What is Forex Trailing Stop and How to Use Trailing stop

Forex Trialing Stop what and How to Use it

Forex Trailing Stop what and How to Use it

   Forex Trailing Stop are a more advanced type of stop loss order that can reduce the risk on your trade as the trade progresses. It does this by adjusting itself to a more favorable rate as a trade moves in a trader’s favor.While this type of order is not necessary knowledge to becoming a successful trader, Trailing Stop have applications in various trading techniques and it’s a good concept to learn.

There are two main types of Trailing Stop that you will encounter, Dynamic and Fixed-Step. You can choose either type when placing a market order or an entry order after clicking the Advanced button, seen below. To test out these different type of orders yourself, register for a FREE Forex trading demo account.

Learn Forex: Two Types of Forex Trailing Stop

Dynamic Forex Trailing Stop

The dynamic option is the most common trailing stop. This will adjust our stop every 0.1 pip that the trade moves in our favor. For example, let’s say we set our dynamic stop initially at -10 pips and then the trade moves in our favor 1 pip. Our stop would move 1 pip from -10 pips to -9 pips. The further the trade moves in your favor, the further our stop will move, pip for pip (actually, to be more exact, it will move in 0.1 pip increments).

You can see that this would reduce our risk on the trade the further the trade moved in our favor, because that would result in a smaller stop loss. But let’s say the trade does not go in our favor, what happens then?

Absolutely nothing. A trailing stop will only move in one direction and that is in our favor. So if a trade goes against us, our stop will not move further away. Our stop also won’t give up any ground it might have gained from a prior positive price move either. It will stay at its “high water mark” until it is hit or until the trade is closed out, canceling the stop order.

Fixed-Step Forex Trailing Stop

The fixed option is very similar to dynamic, except it will only trail in fixed increments of pips. When selected, there is a 2nd field we can change. This is our fixed amount of pips we want our stop to move. So rather than having a stop trail every 0.1 pips like the dynamic trialing stop, we can have it trail every 10 pips, 20 pips, 50 pips, whatever we would like.

This results in a slower Trailing Stop that waits for a certain number of pips to be accrued before moving that amount of pips. For example, let’s say we had a -50 pip stop loss that we set to trail with a fixed-step of 10. Our stop will stay at -50 until the price moves in our favor a full 10 pips. Once +10 pips of floating profit is reached on the trade, our fixed-step stop would jump from -50 to -40. Our stop would then stay at -40 until the price moved in our favor another 10 pips up to +20 pips total. In which time our stop would move from -40 to -30, and so on.

Stop losses are an important part of money management. If you would like to learn how to better use stops, limits and other managing orders

see the videos to learn more about Trailing Stop

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  4 Things to Consider When   Planning Your Trade Exits

     Traders tend to focus a lot of their time and energy on their trade entries. In fact, if you

browse through online communities and forums, you’ll notice that majority of trade discussions revolve around entries.

But while it’s very important to know how and when to enter a trade, it’s equally crucial to know when to exit. Most people have a detailed plan and set rules on how to enter the market, but newbie traders often overlook the importance of having an exit strategy.

In this week’s edition of Pip psychology, I’ll be sharing a few tips on how to develop your exit strategy.

 

“Begin with the end in mind.”

Even before you enter a trade, you should already have your exit strategy laid out. Ask yourself the following questions:

1. How much are you willing to risk?

We here at BabyPips.com believe that risk management is one of the most important aspects of trading. To make money (and avoid losing money), you have to learn how to manage your risk. That’s how you separate traders from gamblers.

You should ALWAYS know how much of your account you’re putting on the line. Make sure that you only risk an amount that you’re comfortable with losing.

2. Where will you cut your losses?

Proper stop loss placement can make or break your trade, so it’s something you should consider even before you jump into the market. Make sure you place your stop loss appropriately and give your trade enough room to breathe.

For tips on how to set stop losses, check out the School of Pipsology’s lesson on chart stops.

3. What events may invalidate your trade?

To say that the markets are unpredictable would be an understatement. Unforeseen events always pop up and they often spark a ton of volatility.

However, there are those which we already know about. Economic reports and speeches by key officials are usually scheduled ahead of time. Their outcomes tend to affect markets in the same way that unforeseen events do. So why not prepare for them?

Always know what the market consensus is and the kind of behavior and reaction you should anticipate. Make contingency plans for when an event comes out differently than expected. Most importantly, be prepared to make adjustments to your trade when necessary.

4. How long do you plan to hold the trade?

For the record, you don’t necessarily have to set a time limit for your trades. However, it’s good to set expectations on how long you will keep it open.

Long-term traders, for example, may hold their trades for weeks, months, or even years. Usually, their trades depend more on fundamental factors that affect markets for a longer period of time. Being conscious of the time would help a swing or position trader keep track of market conditions.

Meanwhile, short-term traders can benefit from this practice in helping them assess whether a trade idea is still valid or not. Perhaps the consolidation on a particular pair has been going on longer than expected and it may be better to just close your trade early.

As you can see, young Padawan, exiting a trade is just as important as pulling the trigger, so put the same amount of time and analysis into it. Having a detailed exit strategy will not only keep you from making impulsive trading decisions and keep your emotions in check, but it can help you manage your risk and stay profitable in the long run.

Always remember to begin with the end in mind.

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Top and Best Ways to Make Money Online Free

Top and Best Ways to Make Money Online Free

    I'm going to tell you about all kinds of legitimate ways to make money online

Forex trading

Revenue share and ptc

Selling online as a affiliate

Mini jobs

Youtube adsense

Forex trading 
    The Forex (Foreign Exchange) Market is the largest market in the world. It is the market where currencies are traded. Each day, more than 4 trillion dollars are exchanged.

top 10 common mistakes read the article 

Top 20 Forex Tips for all traders

Top 15 motivational quotes from best traders

Revenue share and ptc 

     Revenure sharing is in Internet marketing is also known as cost per sale, in which the cost of advertising is determined by the revenue generated as a result of the advertisement itself. This method accounts for about 80% of affiliate marketing programs

PTC sites are nothing but paid to click sites where you can join & get paid for viewing the ads. If you work 5-7 minutes on one website daily then you can earn money

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Affiliate marketing

    Affiliate marketing is the process of earning a commission by promoting other people's (or company's) products. You find a product you like, promote it to others, and earn a piece of the profit for each sale that you make.

Mini jobs

   Mini jobs online are simple and quick tasks for online job seekers and employers. Get paid by completing mini jobs online or get your own submitted jobs done fast

Youtube Adsense

   In order to earn money from your monetized videos, see your earnings in YouTube Analytics, and be paid once you reach the payment threshold, you need to associate an approved AdSense account with your YouTube account. You can create a new AdSense account or associate an existing one

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Top 15 motivational quotes from best traders

Top 15 motivational quotes from best traders 

      Trading is a lot like riding a roller coaster. Although it obviously is fun and exciting, there will be times when you feel scared, nervous or even powerless. When these bad times come, it’s important to not panic or give up. One excellent thing to do during these troubling times is read some motivational quotes from traders who have been in your shoes and know the path to success.

1. "Money is made by sitting, not trading.” – Jesse Livermore

2.  “Throughout my financial career, I have continually witnessed examples of other people that I have known being ruined by a failure to respect risk. If you don’t take a hard look at risk, it will take you.” – Larry Hite

3. “Letting losses run is the most serious mistake made by most investors.” – William O’Neil

4. “[Michael Marcus – another top trader] taught me one other thing that is absolutely critical: You have to be willing to make mistakes regularly; there is nothing wrong with it. Michael taught me about making your best judgement, being wrong, making your next best judgement, being wrong, making your third best judgement, and then doubling your money.” – Bruce Kovner

5. “That cotton trade was almost the deal breaker for me. It was at that point that I said, ‘Mr. Stupid, why risk everything on one trade? Why not make your life a pursuit of happiness rather than pain?’” – Paul Tudor Jones

6. “The elements of good trading are: (1) cutting losses, (2) cutting losses, and (3) cutting losses. If you can follow these three rules, you may have a chance.”– Ed Seykota

7. “When I get hurt in the market, I get the hell out. It doesn’t matter at all where the market is trading. I just get out, because I believe that once you’re hurt in the market, your decisions are going to be far less objective than they are when you’re doing well… If you stick around when the market is severely against you, sooner or later they are going to carry you out.” – Randy McKay

8. “Frankly, I don’t see markets; I see risks, rewards, and money.” – Larry Hite

9. “When I became a winner, I said, ‘I figured it out, but if I’m wrong, I’m getting the hell out, because I want to save my money and go on to the next trade.’” – Marty Schwartz

10. “I always define my risk, and I don’t have to worry about it.” – Tony Saliba

11. “The key to trading success is emotional discipline. If intelligence were the key, there would be a lot more people making money trading… I know this will sound like a cliché, but the single most important reason that people lose money in the financial markets is that they don’t cut their losses short.” – Victor Sperandeo

12. “I think investment psychology is by far the more important element, followed by risk control, with the least important consideration being the question of where you buy and sell.” – Tom Basso

13. “If I have positions going against me, I get right out; if they are going for me, I keep them… Risk control is the most important thing in trading. If you have a losing position that is making you uncomfortable, the solution is very simple: Get out, because you can always get back in.” – Paul Tudor Jones

14. “I learned early that there is nothing new in Wall Street. There can’t be because speculation is as old as the hills. Whatever happens in the stock market today has happened before and will happen again. I’ve never forgotten that.” – Jesse Livermore

15. “Learn to take losses. The most important thing in making money is not letting your losses get out of hand.” – Marty Schwartz

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click here to get our past post top 20 trading tips

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Top 20 Forex Tips for all traders

Top 20 Forex Tips for all traders

Here are 20 Forex tips that you can use to avoid disasters and maximize your potential in the currency exchange market.

1  Know yourself. Define your risk tolerance carefully. Understand your needs
2  Plan your goals. Stick to your plan
3  Choose your broker carefully
4  Pick your account type, and leverage ratio in accordance with your needs and expectations.
5  Begin with small sums, increase the size of your account through organic gains, not by greater      deposits.
6  Focus on a single currency pair, expand as you better your skills.
7  Do what you understand
8  Do not add to a losing position
9  Restrain your emotions
10 Take notes. Study your success and failure
11 Automate your trading as much as possible
12 Do not rely on forex robots, wonder methods, and other snake oil products
13 Keep it simple. Both your trade plans and analysis should be easily understood and explained.
14 Don’t go against the markets, unless you have enough patience and financial resilience to stick to a long term plan
15 Understand that forex is about probabilities
16 Be humble and patient. Do not fight the markets (because you cannot fight with market you only can trade)
17 Share your experiences. Follow your own judgment
18 Study money management
19 Study the markets, fundamentals, and technical factors leading the price action.
20 Don’t give up.

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