The power of Fibonacci

The Fibonacci retracement tool is very popular among traders. Understanding how the tool is used and to what extent it can be trusted is important to any trader who wants to benefit from the ancient mathematician’s scientific legacy.

It was during his travels with his father that the Italian Leonardo Pisano Fibonnacci picked up the ancient Indian system of nine symbols and some other mathematical skills that would lead to the development of Fibonacci numbers and lines.

One of the Italian’s works, “Libre Abaci” (1202), contained some practical tasks that were related to merchant trade, price calculations and other problems that needed to be solved as a matter of their everyday activities.

An attempt to solve a sum about the propagation ability of rabbits gave birth to the system of numbers that Fibonacci is known for today. A sequence in which each number is the sum of the two numbers that precede it seems to be nature’s underlying principle behind life’s many events and phenomena.

Leonardo Fibonacci also applied his life-inspired theory in conjunction with geometrical constructions. It is this marriage of concepts that continues to be used by traders to help them cash in on their investments.

The coinstreet trading club uses the fibonacci retracement tool on a daily basis to asses good entry and exit positions. The tool provides levels of structure from which a short term retracement is likely to bounce. In a sequence of higher highs and higher lows (bullish trend) you can use the fibonacci retracement tool to look for a long position. Usually price will retrace to one of the fibonacci levels and go right back up making new highs. This will result in a position where you are buying low and have an opportunity to sell high.

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