The Fibonacci Ratios

The Fibonacci Ratios

Submitted by adil on Wed, 11/27/2013 - 14:50

The Fibonacci Sequence entails a series of numbers� in which the next numerical figure is the summation of the previous two i.e. 0,1,1,2,3,5,8,13,21,55,89,144,233. The sequence has been in existence since the 6^th century.

Fibonacci ratios and Binary options

The implementation process of Fibonacci ratios is more or less an application other than an indicator. The Fibonacci sequence can be used to measure the stock market.� For many years, the numbers have been used to provide targets for price movements. Since the theory can be applied to retracement, it can be used to predict when the next market move will occur. For effective application of Fibonacci, traders must be able to establish a strong trend. When trading online, Fibonacci ratios can be used as a great indicator.

According to Leonardo Fibonacci, he believed that the stock market resembled nature since they both had force controlling them. Therefore, he came up with these ratios to help traders predict future support and resistance levels of assets.� �

The Fibonacci Resistance line

In order to be successful in the stock market, traders should be in a better position of making use of the standard Fibonacci resistance tool. When determining the price actions and patterns in an underlying market, it important to make the most out of the Fibonacci ratios.

As a trader, you'll find that Stops, Limits, Puts and Calls are usually found near the Fibonacci lines. This however does not mean that the Fibonacci lines do predict the future trends in the underlying market. Instead, the Fibonacci lines are normally used as useful markers to indicate where resistance and support will be.

In a scenario where binary options are being traded, the weekly/daily and four-hour times price charts can be an ideal time period to use. This is because, during that time, the market usually tries to react and change to even risks making predictions with Fibonacci ratios spot on.

Applying the use of Fibonacci lines in binary options� �������

• Start by identifying a weekly/daily chart and then locate the appropriate Fibonacci line.
• Apply the Fibonacci line then go ahead and determine the exact point where the price is in relation to the Fibonacci ratios.
• Select the binary option strike price that you want to trade and determine which binary strike price is near the Fibonacci line.

The underlying outcome of using the Fibonacci lines is very valuable to a trader. This is because; the connection between binary options strike price and the Fibonacci lines can help verify whether the intended strike price is the best price for trading. ��