There are a great number of people that are interested in investing in order to make a tidy profit. There are many ways to invest and many ways to make profits by investing. One method that has been gaining in popularity is that of the Forex trading system. If you are unsure of what this is, let me explain. Forex stands for foreign exchange. A Forex trading system is defined as the simultaneous exchange of one countries currency for another countries currency. If you would like more information, please let this be your guide to learning a Forex trading system.

The Forex trading system involves trading some of the world's most major currencies. These are: the dollar, yen, British pound, Swiss franc, and the Euro. The way the exchange rates of these types of currencies change is based on economic growth. An example: Sometimes the Dollar is worth more than the British pound because the United States was in a period of economic growth while Britain was on the decline. This can be because the unemployment rate was declining in the United States, while on the rise in Britain. Another example: the export rate is up in Asia so the yen is worth more than the Swiss franc where the export rate is down. Economic growth changes daily, so the value of these currencies changes daily. You need to learn to watch for these changes in order to make any money with the Forex trading system.

The Forex Trading system is much larger than that of all U.S. stock markets combined. In fact, the Forex Trading system makes about 1.9 trillion dollars each year. This is 30 times larger than the U.S. stock markets. Also, Forex trading is done throughout the entire world, so it is available 24 hours a day, unlike the U.S. stock markets.

You can learn the Forex trading system for free online at various websites. Many websites offer a free demo account and free Forex trading System training. This way you can practice everything you learn for free, without investing or losing any real money. Then when you get a feel for the Forex trading system, many websites offer a free 30 day trial or free trades to new investors. It is best to utilize some of this free training and the free demo accounts before you start investing your own money.

Now that you understand the Forex trading system a little better, you may wish to get out there and start investing. There is a lot of money to be made, or lost. Be careful and make sure you get the proper training first. With the right frame of mind, you may be able to make some healthy sums of cash through the Forex trading system!

For me, fibonacci is my favourite tools to use in trading. Understanding a fibonacci a will be great benefit and also give a great profit in forex trading. Look at the vidoe below and hope you will get an idea to trade using fibonacci retracement. I believe whatever forex platform you choose, it will be have a fibonacci to use in your chart.

One of the capital attempt of applying abstruse assay to forex trading in a assisting address is that you appetite to see assorted confirmations for an access point afore you absolutely access the market.

If you are authoritative trading decisions based aloft arresting candlestick formations on a continued appellation chart, it would additionally be astute to analysis with a cardinal of added indicators aback you get a buy arresting in adjustment to accomplish abiding that there are no contradictions. In this commodity we are activity to focus on how Fibonacci retracement levels accompany with abutment and attrition levels, and how you can use these two altered abstruse indicators in affiliation with anniversary added in adjustment to crop authentic bazaar access signals.

Let's alpha by defining what both of these types of indicators are. Fibonacci retracements are based on the cardinal 1.618 (also alleged the Golden Ratio) that is begin in all accustomed alike systems from flowers to the animal anatomy to the banking markets. Over the years it has been accurate that aback the amount of a bill brace has a ample move and again retraces aback in the administration of the antecedent value, it is statistically added acceptable to backlash at the levels of 38.2%, 50%, and 61.8% of the aboriginal amount move.

The way that abounding traders use Fibonacci retracement levels is to actuate aback to access and aback to avenue the forex market. A Fib retracement can accord a buy arresting aback the amount hits one of the three Fib ethics and again rebounds, or it can appearance that the bazaar is 'running out of steam' and it is time to avenue aback the amount approaches one of the three Fib ethics and again falls. While Fib levels can be accomplished indicators, it is never astute to access into a barter based on these ethics alone.

Support and attrition levels are appealing abundant absolutely what they complete like: Abutment levels are the amount ethics beneath the accepted amount abstracts that the bazaar will tend to backlash off of, and attrition levels are absolutely the aforementioned except they are aloft the accepted amount data. Abutment and attrition levels can action able forex access signals aback the amount break through an accustomed level, as aback this happens the amount has a addiction to abide affective in that direction.

S&R levels and Fib retracements are both able trading accoutrement individually, but aback you amalgamate them calm the trading signals become abundant stronger and added reliable. As mentioned above, a Fib retracement can accord a able bazaar access arrangement aback the amount retraces a accustomed movement and again switches administration about one of the three capital Fib values.

As a accepted aphorism of deride aback trading the forex market, the best the time anatomy of a chart, the added reliable the trading signals that are generated. So if you happened to be attractive at a 4-hour or 8-hour blueprint and you saw a able Fib retracement signal, the way that you could affirm this arresting application abutment and attrition levels is to see whether the Fib amount is additionally a absolute S&R level.

If the amount bounces off the S&R level, this is not as able an adumbration for bazaar access as aback the amount passes through an accustomed level, because already the amount crosses an accustomed abutment or attrition akin again it has a addiction to abide affective in that direction.

Why Successful Traders Use Fibonacci Techniques.

Let’s start with looking at support and resistance. Support and resistance levels on bar charts are a major component in the study of technical analysis. Many traders use support and resistance levels to identify entry and exit points when trading markets. When determining support and resistance levels on charts, you should look at the key Fibonacci percentage "retracement" levels.

Two Fibonacci percentage retracement levels that are most important in market analysis are 38.2% and 62.8%. Most market technicians will track a "retracement" of a price uptrend from its beginning to its most recent peak. Other important retracement percentages include 75%, 50% and 33%. For example, if a price trend starts at zero, peaks at 100, and then declines to 50, it would be a 50% retracement. The same levels can be applied to a market that is in a downtrend and then experiences an upside "correction."

These numbers were derived by Leonardo Fibonacci da Pisa, a famous 13th century mathematician. Fibonacci discovered a number sequence called "the Fibonacci sequence." That sequence is as follows:
1,1,2,3,5,8,13,21,34 and so on to infinity. Adding the two previous numbers in the sequence comes up with the next number.

Importantly, after the first several numbers in the Fibonacci sequence, the ratio of any number to the next higher number is approximately .618, and the next lower number is 1.618. These two figures (.618 and 1.618) are known as the Golden Ratio or Golden Mean. Its proportions are pleasing to the human eyes and ears. It appears throughout biology, art, music and architecture.

Here are just a few examples of shapes that are based on the Golden Ratio: playing cards, sunflowers, snail shells, the galaxies of outer space, DNA molecules… Even our own body has Fibonacci numbers, (2 hands, 5 fingers each segmented into 3 parts), the size of fingers, limbs, facial features have Fibonacci relationships. William Hoffer, in the Smithsonian Magazine, wrote in 1975: "The continual occurrence of Fibonacci numbers and the Golden Spiral in nature explain precisely why the proportion of .618034 to 1 is so pleasing in art. Man can see the image of life in art that is based on the Golden Mean."

The element that is most fascinating about Fibonacci numbers and the Golden Ratio as they are applied to technical analysis of markets, is that these principles are a reflection of human nature and human behavior. Successful traders realize that trading is both art and science. The longer you are trading and the more you study the behavior of markets, the more you should realize that human behavior patterns and market price movement patterns are deeply intertwined.

Why Fibonacci Analysis Works.

Let’s look at risk and greed. Each person has his or her own tolerance for risk and level of greed. If a trade is losing value and the loss becomes unbearable, we close the trade and stop the pain. At that point we have reached our risk/pain tolerance.

The same applies to profits. In a winning trade, we eventually reach a point when we must close the trade, the profits are too great to be risked, so we lock in our profits when we reach our greed tolerance level. Our risk/greed tolerance is different from most other traders, and can also vary based on many factors.

If we take a crowd of traders, say 50,000 of them, and get an average of their risk/greed tolerance, we would arrive a defined risk/greed tolerance value for that group. We can only guess, but if we did the same for a different group of 50,000 traders we would probably arrive at a very similar average risk/greed tolerance value. Because most traders are human, we could rationally conclude that the average risk/greed tolerance level for any large group would be about the same as another group.

If we do the same for large groups of short-term traders and then large groups of long-term traders, we would have some valuable information about where these groups would translate their risk/greed tolerance into action. Knowing where the short-term and long-term traders' risk-greed tolerance coincides is very valuable. Where they coincide would be a profitable place to trade, since the market action would be more predictable.

That is exactly how successful traders apply Fibonacci ratios to trading.

The markets tell us where the groups of traders have reached their risk/greed tolerance levels - these levels are reflected in the prices of trading instruments very clearly. With that information, we can calculate the probable future action of traders. This helps determine optimum entry points and profit objectives.

Fibonacci analysis therefore is a leading indicator. Applying fibonacci analysis properly you should be able to determine probable turning points in the market before the price gets there.

Conclusion

Why does Fibonacci analysis work? Because we are human, part of nature, and because Fibonacci numbers are everywhere in nature. The more you study the behavior of markets, the more you should realize that human behavior patterns and market price movement patterns are deeply intertwined. At least as a minimum, the Study of Fibonacci techniques will help you become a much better and rounded trader.

It is easy to find Fibonacci ratios in price charts, however one warning: knowing which ones are more likely to be profitable is not as easy. Trading with only a basic understanding of Fibonacci techniques is dangerous.

Fibonacci was the nickname of the person whose real name was Leonardo Pisano and he developed the now famous Fibonacci sequence of numbers. He was born in Pisa in the 12th century. He observed the Great Pyramid of Gizeh in Egypt and created this sequence of numbers. He was a genius mathematician who came up with this sequence.

The sequence tells you that the third number is effectively the sum of previous two numbers.

The sequence is something like this

1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144 and so on.

Now the real value of this sequence lies in the fact the ratio or the proportion of adjacent terms is 1.618 or the inverse is .618. This ratio is known as the golden ratio or the divine ratio. This divine ratio is really divine in terms of giving out a suitable analysis to a given issue and has been applied in many situation including stock and forex markets.

Fibonacci ratios describe the relation between trend and countertrend markets. That mans that 38%, 50 % and 62% are main numbers that form the primary pullback numbers. The way to apply them is to apply these percentages to a particular trend in each direction and then try to predict how the countertrend will act.

The hard part of the Fibonacci sequence is to check out where to trade and use the Fibonacci sequence. If you try to use this on an absolute bottom low or high you will get good results but if you apply the grids on Elliot wave start formation which is the double bottom or double top then you will be get correct results and you will begin to realize the genius of Fibonacci. A lot of expert traders use this to get a handle on the inefficiencies in the market and make profit from them. 

There are softwares available in the markets which help you hone you Fibonacci trading skills. Make sure to learn all the technical stuff before you trade. Also merely learning the technical stuff will not be of help if you are trying to make money using the currency trading. You need to understand several other factors for the same like the economic indicators namely the leading and the lagging indicators.

Make the bets of this sequence to locate opportunities in the forex market and help get the best of the other traders.

Tip 1. Gamblers go to casino. All unproved, spontaneous actions in Forex trading — are a part of pure gambling.

Any attempt to trade without analysis and studying the market is equal to a game. Game is fun except when you are losing real money...

Tip 2. Never invest money into a real Forex account until you practice on a Forex Demo account!

Allow at least 2 month for demo trading. Consider this: 90% of beginners fail to succeed in the real money market only because of lack of knowledge, practice and discipline. Those remaining 10% of successful traders had been sharpening and shaping their skills on demo accounts for years before entering the real market.

A good demo account to start practicing with could be, for example FXDD,FXCM,IBFX.

Tip 3. Go with the trend! 
Trend is your friend. Trade with the trend to maximize your chances to succeed. Trading against the trend won't "kill" a trader, but will definitely require more attention, nerves and sharp skills to rich trading goals.

Tip 4. Always take a look at the time frame bigger than the one you've chosen to trade in. 
It gives the bigger picture of market price movements and so helps to clearly define the trend. For example, when trading in 15 minute time frame, take a look at 1 hour chart; trading hourly would require obtaining a picture of daily, weekly price movements.

If a trend is hard to spot — choose a bigger time frame. Up and down market patterns are always present. Always make sure you know the dominant trend, unless you are a scalper. Scalpers have no need to spend their time studying big trends, what's happening in the market here and now (during 5-10 minute time frame) should be of only importance to a Forex scalper.

Tip 5. Never risk more than 2-3% of the total trading account. 
One important difference between a successful and an unsuccessful trader is that the first is able to survive under unfavorable conditions on the market, while an unsuccessful trader will blow up his account after 5-10 unprofitable trades in the row.

Even with the same trading system 2 traders can get opposite results in the long run. The difference will be again in the money management approach. To introduce you to money management, let's get one fact: losing 50% of total account requires making 100% return from the rest of money just to restore the original balance.

Tip 6. Put emotions down. Trade calm. 
Don't try to revenge after losing the trade. Don't be greedy by adding lots of positions when winning.

Overreaction blocks clear thinking and as a result will cost you money. Overtrading can shake your money management and dramatically increase trading risks.

Tip 7. Choose the time frame that is right for you. 
Choosing wise means that you are comfortable and have time enough to analyze the market, place and close orders etc. Some people can't wait for hours for the price to make a move,  they like action and therefore prefer smaller time frames. On the contrary, for others 10-15 minutes is a hustle to be able to make the right decision. 

With the amazing growth of the forex market, you are going to see an astounding amount of traders lose all their money. Unfortunately, they haven't followed the simple steps I have laid out for you. Go through these steps and give yourself the greatest opportunity to achieve your goals.

1. Have Faith In Yourself

To reach the level of elite forex trader, you must trust in yourself and your forex trading education. You must be willing to make all your trading decisions, instead of relying on someone else's thoughts or ability (or lack of). Of course, you will prepare yourself fully before every risking any money.

2. Accept Your Learning Curve

Unless you are a veteran trader, you will lose money trading the Forex market. This is a near certainty. I don't say this to talk you out of trading. In fact, quite the opposite. You will be trading against others that fall to this reality day in and day out. You, however, will not risk a dime until you have learned the skills you need to make money trading the forex.

3. Decide What Type of Trader You Are

There are many ways to trade the forex. They range from very active to very patient. You must decide which style suits you best. The best time to learn this about yourself is while you are trading a demo account. There is no need to allow your learning curve to cost you money.

4. Get Educated

Education is the shortest path to elite forex trading. Regardless of your ultimate goals, you will reach them quicker with a great forex trading education. Take some time to review different options before deciding on who to trust with your forex trading education needs. A forex seminar will help shorten your learning curve drastically.

5. Continue to Get Educated

In order to achieve and retain elite forex trading skills, you must constantly be adding to you knowledge base. Your education should never end. In fact, one of the key points to look for in an elite forex trading course is ongoing education. It's nice to have an ongoing relationship with the person/people helping you to achieve your goals.

What separates an elite forex trader from all others is their desire and ability to be independent. Many traders are willing to follow signals, systems, strategies, or anything else you may call them. By taking this approach, however, these traders are only as good as the people they follow.

An elite forex trader will lead. Their decisions will be calculated and analyzed to near perfection. They will make decisions with no hesitation, and handle the growth of their account in a predetermined, intelligent fashion. Take your trading to their level and you will never look back.

by: Eddie Yakubovich

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