Learning to Use Fibonacci Retracements

By Ahmad Hassam

Many traders and investors use Fibonacci ratios to project future levels of support and resistance calculated on previous price moves in forex markets. In simple words, past price movements in the forex market determine where the Fibonacci levels will be calculated.

Fibonacci analysis is an exercise in identifying and determining the support and resistance during both the trend retracement and the trend continuations. It is based on a series of numbers and ratios derived from the Fibonacci sequence. This remarkable sequence was discovered by an Italian mathematician Leonardo Pisano.

The sequence begins with the three numbers 0, 1 and 1. After that, the next number in the sequence is obtained by adding the previous two numbers. For example, by taking the first two numbers 0 &1; the next number obtained is 0+1=1 and by taking the next two recent numbers, 1 & 1; the next number obtained will be 1+1=2. So the Fibonacci sequence develops like this: 0,1,1,2,3,5,8,13,21,34,55.

The fascinating and interesting property about this sequence is that the ratio of numbers at specified intervals is consistently the same, no matter how high you go in the sequence. We get two very important ratios. These two ratios appear over and over again in nature such as pine cones, shells, sunflowers etc. These two important ratios are also used in currency markets.

The first ratio is 38.2%. It is calculated by dividing any number in the Fibonacci sequence by the number two places higher in the sequence. For example, in the above Fibonacci sequence, divide 21 by 55 (55 is two places higher than 21) you get 21/55=38.2%.

The second important ratio is 61.8% obtained by dividing any number in the Fibonacci sequence by the next number in the sequence. For example, divide 34 by 55 (the next number), you get 34/54=61.8%.

Trends in currency markets dont go in a straight line. Up trends never go straight up and down trends never go straight down, the price will always trace along the way as buyers and sellers enter and exit the markets. The important question in every investors mind is how far these retracements will penetrate into the previous price movement. This is where the Fibonacci ratios become useful and is extensively applied.

Most investors use the three additional ratios of 0%, 50% and 100% in conjunction with the two primary Fibonacci ratios to round out the retracement analysis tools. Two secondary Fibonacci ratios (161.8% and 261.8%) are also used in the trend continuation projections. The secondary ratio 161.8% is obtained by dividing any number in the sequence by the number preceding it. In the sequence dividing 55 by 34 gives 55/34=161.8%. Similarly the ratio 261.8% is obtained by dividing any number in the sequence by the two numbers preceding it. Divide 55 by 21, you will get 55/21=261.8%.

These ratios are used by forex traders in making entry and exit decisions. The ratio 38.2% is used as an entry point in a trending market and the ratio 0% as the exit point. The important question is why markets react to these levels. Dont forget, markets are just people buying and selling. So if many people start believing in a thing, it becomes a self fulfilling prophecy. Since most of the traders use Fibonacci ratios in setting their entry and exit targets, the markets starts reacting to these levels. - 23196

About the Author:

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading and swing trading stocks and currencies. Learn Forex Nitty Gritty. Read about Trend Forex System. Try Netpicks Forex Signal Service.

Say Goodbye to Your Losses With A Forex Education

By Bart Icles

Even though a lot of companies and individuals claiming to be experts in the forex market and in forex trading are offering what they say are excellent forex education, a lot of forex traders still do not really win in the forex market. About 70 percent of forex traders lose in trading, big time.

The reason why seventy percent of forex traders lose despite having availed of a forex education is because not a lot of the theories that you learn from it really works. Individual traders have individual needs that are unique. These needs cannot really be defined properly by joining or availing of the usual forex education classes offered by thousands, even millions, of companies.

To be able to do forex trading the right way, you should look for the following characteristics in the forex education that you will be choosing:

1. Find a free forex education or a cheaper forex education that will give you the different options that you need to know so that you can develop your own forex trading strategy. Developing your own strategy will enable you to make steady profits.

2. A great forex education should teach you that the right strategy, the right amount of confidence, and the most rigid discipline is the secret to having a long term forex trading success.

3. The forex education that you should be taking should be able to teach you a forex trading method or strategy that is east to execute and understand. That way, it will be east for you to track every single thing when you trade. 4. The forex education should be able to inculcate in you a discipline that you will hold on to no matter what. Face it, in forex trading, you are bound to lose at some point. Trying to recoup your losses right away might make you lose your control, which may result to more losses instead of more profits. A lot of people lose in forex trading simply because they cannot stick to their strategy or because they do not really understand the ins and outs of it or a combination of both. A good forex education will be able to help you avoid both.

5. You should avoid a forex education that will teach you to do short term trading with short term successes. This type of trading will just make you lose and lose some more.

You should always keep in mind that the best type of forex education is made available for free. The internet has made that possible. When you avail of one, you should check testimonies or comments about it first so that you can gauge whether you will be successful or not if you follow it. - 23196

About the Author:

When learning to trade forex know it starts with a desire to learn and a drive to become a great trader. When you learn forex trading online it takes dedication and a good teacher. But once you learn how to trade and do so successfully your life will change and you have options and financial resources you never had before.

401k and IRA Retirement Plans: Begin Today!

By Gary Nagy

Savings for retirement in a 401K plan is a very smart idea and you should begin making contributions as soon as possible. 401K retirement contributions are made through your employer so if you are self employed you should start an IRA or Individual Retirement Account. Employees make contributions directly from their salary and this money is not taxed. Make sure you follow all IRA rules and 401k rules, as they have some variances. The IRS actually came up with the name 401K as it was from the code that originally created the retirement funds.

There are many advantages to using a 401K; such as making contributions before taxes are taken out you actually reduce the amount you will pay on your salary. All contributions to the retirement account are tax-free until they are withdrawn.

Additionally there are pension laws in place that protect the retirement account as it is viewed as a personal investment. You don't have the guarantee against loss like you would with a fixed annuity. Though these laws are designed to help.

A few of the disadvantages are that you cannot access the money in your 401K until you are 59 1/2. If your employer does contribute to your 401K then only your contributions will be going towards your investment, like is the case with IRA accounts. Also a 401K is not insured by the Pension benefit guaranty corporation. Like is often the case with a fixed annuity.

There are many different investments you can make in your 401K. It is suggested that when starting you invest in stock but you can also invest in money market funds, bonds, maturities and more. You have control over your investments and can change your investments every time another contribution is made. Financial experts suggest being more aggressive when you're younger and have a longer time horizon, as most individuals are too conservative. Towards the end of the 401K term you want to be a bit more selective, but to make money you need to invest in stocks. Stocks do very well when you are buying and selling in the long term.

There are rules for a 401K and they differ depending on your pay bracket. 401k rules state that you can make both before tax contributions and after tax contributions. There is a maximum before tax 401k limits and the money needs to be deposited in a specific amount of time, usually 7 days before the end of the month.

After-tax contributions have a different set of 401k or IRA rules and these funds can be easier to withdraw then pre-tax money. There are also additional rules for highly compensated employees and low-income employees. These laws were put into place so the top executives would not design a 401K that was only advantageous to them. The 401K from companies must be a good plan for the majority of the employees in the company. So highly compensated individuals actually have different rates.

It's important to note that retirement accounts like IRA's are individual accounts; so taking title is an easy choice. When evaluating your other accounts, especially joint ownership accounts, you should take a look at the many choices. It may be more beneficial to set up a joint tenancy or tenants in common account rather than a community property account, for example. The simple act of setting up title can have big implications.

The 401K differs slightly from the IRA account, but they share many similarities. You can take an IRA deduction, just like a 401k. Roth IRA rules differ in that you can't take an IRA deduction, but you get to withdrawal the funds tax free in retirement. It is possible to take a 401k loan for yourself, but there are some drawbacks. These 401k loans can be used to purchase a house, medical expenses or paying for education. - 23196

About the Author:

If you are in one of the nine community property states you'll want to consider the way you take title. This is one of those personal finance issues that should always be considered.

Getting Started with Foreclosure Investing

By Andre J. Keaton

If you're thinking about how to get a good deal in the housing market, or if you've been longing to buy the home of your dreams and only have a tiny budget, then a foreclosed home might be the right solution for you.

While foreclosures are devastating to some, there are those who benefit greatly from such financial situations. Buying foreclosure homes have already proven to be a great way to earn quite a bit of money for many foreclosure investors.

These foreclosed homes can be found in various foreclosure listings from banks, government agencies, and other financial institutions. You will not run out of options in properties to invest in as these lists are often updated, sometimes daily with new listings.

You can check out several online sites for listings of these foreclosed homes. These listings could also be printed and posted in the offices of the financial institutions or published and distributed to the public.

You can participate in foreclosed home auctions and bid on any number of foreclosures. You can even send letters of intent to purchase to banks who have foreclosed homes.

The process to purchase a foreclosed home will vary from state to state. There are other differences, of course, such as how to purchase a property which has been seized by the government. You will save yourself lots of time if you acquaint yourself with the different processes before you begin to get into the business of purchasing foreclosed homes.

In today's market there are so many foreclosed properties, and the sales prices are lower than they ever have been before. Now is definitely a good time to invest in foreclosed property.

If you take care to handle each step properly, investing in foreclosures is the perfect way to maximize the returns on your extra cash. Instead of watching your money disappear with inflation, you will make a good return on your investment when you purchase a foreclosed property. - 23196

About the Author:

Are you thinking of entering the business of investing in foreclosure homes? Would you like to know more about foreclosure property, REO, foreclosure auctions or other potential investment properties? Find out all the secret information that will make you better in foreclosure investing!

What Is the South African Krugerrand Mini Gold Coin - Should I Buy It?

By Christina Goldman

Is the South African Krugerrand Mini Gold Coin is an authentic gold bullion coin? It is similar to the very popular South African Krugerrand gold bullion coin but perhaps it is a ripoff of the very popular South African Krugerrand Gold Coin?

You are still sane so don't worry. What you have just encountered are authentic reproductions of the bigger Krugerrand gold bullion coins. What makes them very appealing to collectors and stockholders as well are its pragmatic renditions of the much expensive version.

Since gold is once more climbing to levels that have never been experienced before, acquiring the South African Krugerrand Mini Gold Coin and adding it to the list in your portfolio would be a great move. And why is that? You see the mini gold coins have a weight of an approximated .50 grams. It has a 10mm approximated size in diameter.

It gets better when you find out that their composition rates actually varies from 6K to as high as the original 22K. If you have plans on taking some, it is best to follow the golden rule in buying by the volume. The more pieces you buy, the lower the pricetag goes right?

Keep in mind that you could have stumbled upon a fair deal in the internet but be cautious with its veracity. There are no silver Krugerrands in the market. Don't let these folk trick you into purchasing these products. It is best to educated yourself on the coin's identity like for the oz mini ; it has 150 reeds ; 140 for the and 1/10 ounces.

Before you bring the gold coins home to show to your folks, it might be best to do your own research first to make certain you are bringing home pieces of the South African Krugerrand Mini Gold Coin and not gold covered chocolate mini coins. - 23196

About the Author:

You can find great prices and selection on the unique South African Krugerrand Mini Gold Coin at: http://GoldKrugerrand.net