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Fibonacci - Who Was He And How Could He Improve My Stock Trading Profits? |
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Written by Forex Man
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Fibonacci - Who Was He And How Could He Improve My Stock Trading Profits?
By Chris Towland
The word Fibonacci means a lot of things to a lot of different people. For mathematicians, Fibonacci is an important number sequence. For some painters, sculptors, and other visual artists, Fibonacci is a principle theory of the arts. For traders, businessmen, economists and the like, Fibonacci is a system that can efficiently predict market trends. Yet, for most of us, Fibonacci sounds incredibly complex and something that we'd rather not discover. But what exactly is Fibonacci? What does it mean and for what is it used?
Fibonacci, which means son of Bonacci, is actually a nickname used by the famous Italian mathematician and businessman Leonardo Pisano. Bonacci, on the other hand, is the nickname of his father and it means 'good natured' or 'simple'. While Fibonacci was born in Italy, he spent most of his childhood years in Bugia (now Bejaia), a Mediterranean port in Algeria where his father, Guilielmo, worked as a consul for the merchants of Pisa. It is in Bugia where he learned the Arabic numeral system, and later as he traversed the rest of the Mediterranean world, he learned more of the Arabic mathematical system and its practical uses.
In 1200, Fibonacci ended his travels and returned to Europe. There he wrote a number of books that disclosed the mathematical skills he had learned in his Mediterranean travels. Among his works that were published are the Practica Geometriae, Flos, Liber quadratorum, Di minor guisa, and his commentary on Book X of Euclid's Elements; the last two mentioned, unfortunately, are already lost. His Liber quadratorum, or Book of Squares, is probably his most magnificent book, but it was not his most popular work. His most popular work was rather the Liber Abaci, his first book that was written in 1202 where he introduced to the Europeans the Arabic numerical and mathematical system. In this book, he also taught the Europeans how to use such mathematical system in accounting and in trading. Most importantly, it is in the Liber Abaci where he introduced the Fibonacci numbers and sequence for which he is best remembered today.
The Fibonacci numbers, or sequence, was first used in Liber Abaci as a solution to a problem regarding the ideal population of rabbits. It is a recursive number sequence that starts with 0 and 1, and the succeeding numbers being the sum of the two numbers preceding it. This number sequence efficiently predicted the ideal growth of the population of rabbits. Later, mathematicians and scientist discovered that the Fibonacci number sequence has a lot of other uses aside from just predicting the population growth of rabbits. They have discovered that the Fibonacci sequence, in fact, occurs in many various patterns of nature.
What started out as a way of counting rabbits has now found a large number of other uses and applications. And as our present day scholars continue to study about the Fibonacci sequence, more and more uses for it continue to be discovered. Today, there are a variety of applications where the Fibonacci sequence, and its derivatives, are being used. It has found use in many computer programs. A ratio derived from the Fibonacci sequence, called the Golden Mean, has been considered by ancient Greeks to be the ideal aesthetic ratio and is now being widely used by many visual artists in their works. The Fibonacci trading system, which is an efficient way of predicting future trends in the world financial markets, has also become popular to expert traders and aspiring traders as well.
Who in the past might have known that such a simple number sequence like the Fibonacci numbers would have a great impact on a lot of things today? Maybe, not even Fibonacci himself.
About the Author: To learn more about how you can use Fibonacci to accurately predict major stock market turning points, visit Fibonacci Trading at http://www.fibonacci-trading.com
Source: www.isnare.com
Permanent Link: http://www.isnare.com/?aid=3374&ca=Finances
Fibonacci Forex Trading
Leonardo Fibonacci And Forex Trading
By Joel Teo
Forex trading uses something that is called Fibonacci ratios, and these are used a lot. These ratios are just a fraction of the studies done on Fibonacci. Leonardo Fibonacci was an Italian mathematician who became famous for discovering a simple number series that created ratios which described the proportions of things that exist in the universe. This series of numbers starts with two ones, and then the next number is the sum of the two numbers that precede it. These ratios are used in Forex trading, and they make up a large percentage of subjects in Forex. Leonardo Fibonacci was called the greatest mathematician of the Middle Ages, as he contributed greatly to the developement of numbers, and the algebra concept was based on his work in math.
Fibonacci retracement levels are used by Forex traders as support and resistance levels. Hundreds of thousands of Forex traders see the same support and resistance levels, and they place sell and buy orders on the levels to place stops or enter trades. The Fibonacci extension levels are used by Forex traders as profit taking levels. Almost all software that is used for charting Forex includes tools for both Fibonacci extension level and retracement level. However, in order for you to apply the Fibonacci levels to your tradings, it is imperative that you identify the Swing High and Swing Low points.
Leonardo Fibonacci was famous for mathematics, and his mathematics are famous in Forex trading. There are numerous Fibonacci principles that are applied when dealing with the Forex trading market, and using these principals can greatly improve your ability to make an informed decision when you are trading on the forex market. Fibonacci ratios are applied to targets, as well as numerous other factors in Forex trading.
If Leonardo Fibonacci had not been the mathematical genius that he was, Forex trading might not exist today and the world would be a completely different place. Fibonacci numbers and ratios are an important part of Forex trading and analysis. Fibonacci retracement level and Fibonacci extension level are a tool used by traders in the Forex market to help them control the risks and profits of trading in the Forex market. Leonardo Fibonacci has made a very important contribution to the world of market trading, and his contribution is used in the Forex market on a daily basis by hundreds of thousands of traders.
Copyright ? 2007 Joel Teo. All rights reserved.
About the Author: Joel Teo writes on various financial topics including Las Vegas Real Estate . Learn about Las Vegas Real Estate Investment at http://www.RealEstateInvestment101.com
Source: www.isnare.com
Permanent Link: http://www.isnare.com/?aid=169420&ca=Finances |
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System 2012 | Signal System For EUR/USD |
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Written by Forex Man
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How to Use Technical Indicators -- Part 1,2 |
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Written by Forex Man
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Technical Analysis: How to Use Technical Indicators -- Part 1
By Mostafa Soleimanzadeh
There are dozens of technical indicators, how to choose good stock indicators? Technical indicators are used to know when to enter or exit a trade. If you know how to enter and exit a trade, you can easily make profits. That is why choosing good stock indicators are important.
Some of stock market indicators are more common and useful than others. Also you need a few of them to trade not all off them.
In this article I try to describe two oscillators:
Moving Average Convergence/Divergence (MACD)
Relative Strength Index (RSI)
What are oscillators?
Oscillators are indicators that are usually computed from prices and tend to cycle or "oscillate" within a fixed or limited range.
Moving Average Convergence/Divergence (MACD)
MACD is computed by subtracting a longer moving average from a shorter moving average. MACD is used with a signal or trigger line, which is a moving average of MACD. If MACD and trigger line cross, then this indicate that a change in the trend is likely. MACD developed by Gerald Appel.
The MACD smoothes data, as does a moving average; but it also removes some of the trend, highlighting cycles and sometimes moving in coincidence with the market .
Relative Strength Index (RSI)
RSI measures the relative changes between up-moves or down-moves and scales its output to a fixed range, 0 to 100. RSI is an oscillator and Welles Wilder devised it.
The formula for calculating RSI is:
RSI = 100 -- [100/ (1+RS)]
Where: RS is average of N days up closes, divided by average of N days down closes and N is predetermined number of days that usually chosen 14.
RSI can use as an overbought/oversold indicator. A buy signal is when the RSI moves below a threshold, into oversold territory, and then crosses back above that threshold, usually 30 is taken for oversold threshold. A sell is signaled when the RSI moves above another threshold, into overbought territory, and then crosses below that threshold, usually 70 is taken for overbought threshold.
Using of these Technical Indicators
Oscillators are used as an overbought/oversold indicator. A buy is signaled when the oscillator moves below some threshold, and then crosses back above that threshold. A sell is signaled when the oscillator moves above another threshold, and then crosses below that threshold.
Oscillators have the potential to provide good entry and exit points. So they have the potential to provide a high percentage of wining trade. Also they have some weaknesses; some of them can easily become stuck at one of their extremes, or don't capture some trends.
By Mostafa Soleimanzadeh. Find Free Basic and Advanced Stock Investing Articles in his website.
Article Source: http://EzineArticles.com/?expert=Mostafa_Soleimanzadeh
http://EzineArticles.com/?Technical-Analysis:-How-to-Use-Technical-Indicators---Part-1&id=358734
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Technical Analysis: How to use Technical Indicators - part 2
By Mostafa Soleimanzadeh
In the previous article I described two technical indicators: Moving Average Convergence/Divergence (MACD), and Relative Strength Index (RSI). Don't worry you can find link to complete article in the bottom of this article. Also, you can subscribe to our free Newsletter for new updates.
In this article I'll describe two technical indicators: an oscillator that is Stochastic Oscillator and Bollinger Bands indicator.
As I mentioned before, Oscillators are technical indicators that tend to cycle or "oscillate" within a fixed or limited range, and Momentum in general term means strongly movement of prices in a given direction.
Stochastic Oscillator
The Stochastic Oscillator is a momentum indicator, it indicates whether the market is moving to new highs or new lows or is just meandering in the middle. This indicator is based on George Lane's observations.
The Stochastic Oscillator is plotted in two lines Fast %k and Fast %D.
The formula is:
Fast %k = 100 * [( C - L (n) ) / ( H (n) - L (n) )]
Where:
C is the most recent closing price.
L (n) is the low of n previous trading day (or bar).
H (n) is the high price of the same n previous day (or bar).
Usually n is chosen 14.
A 3-period (day or bar) moving average is taken from Fast %k and called Fast %D. Fast %D is used as a signal line in the same way that the moving average of the MACD is used as a signal line for the MACD.
Stochastic Oscillator is plotted in two lines but, usually these lines cross each other many times. Now to smooth the chart, a 3-period moving average is taken from Fast %D and called Slow %D (Also, Fast %D is called Slow %K), so the smoothed chart is plotted with Slow %K and Slow %D.
Using of Stochastic Oscillator
1- Oscillators are used as an overbought/oversold indicator. A buy is signaled when the oscillator moves below 20, and then crosses back above 20. A sell is signaled when the oscillator moves above 80, and then crosses below 80.
2- Also, when %K crosses above or below %D, Buy and sell signals can be given. But, may be crossover occurs frequently in short periods and causes bad results. This using isn't very common.
Bollinger Bands
John Bollinger created Bollinger Bands in the 1960s; Bollinger Bands are used to determine support and resistance levels. This indicator consists of three lines; the middle line is an exponential moving average of price data and the two outside bands are equal to the moving average plus or minus standard deviation.
Standard Deviation is a statistical measure that indicates volatility of price. The bands will expand when price becomes volatile and they will contract during less volatile periods.
Using of Bollinger Bands
1- Bollinger Bands are used to determine the boundaries of market movements. If a market moved to the upper band or lower band, then there was a good chance that the market would move back to its average. In the other words, when price closes to upper band, market is overbought and when price closes to lower band, market is oversold.
2- Another using of Bollinger bands is that to indicate up-trends and down-trends. If price deflects off the lower band and crosses above moving average then price fluctuate between upper band and moving average, it comes to indicate upper price target. It is reverse for indicating lower price.
Simply click the link to read complete article:Using of Technical Indicators
By Mostafa Soleimanzadeh. Find Free Basic and Advanced Stock Investing Articles in his website.
Article Source: http://EzineArticles.com/?expert=Mostafa_Soleimanzadeh
http://EzineArticles.com/?Technical-Analysis:-How-to-use-Technical-Indicators---part-2&id=362882
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