Trading the forex market with the fibonacci calculator has been very beneficial to many traders in the market, and will still be useful to a lot more traders in years to come. With all the complexities that the forex market presents, it would be extremely difficult to trade the market without trading tools such as the fibonacci calculator. In this article, we will discuss how the fibonacci calculator can help investors make the right calls with regard to when to enter a position, when to exit, and when to apply what forex orders.
AN OVERVIEW OF THE FIBONACCI CALCULATOR
The fibonacci calculator is a forex trading tool used preferably in a trending market environment to detect before time, the right time to either buy or sell securities. A trending market is one perceived to be moving on a particular direction over a period of time. One typical trait of a trending market is that is has “ups” and “downs”. The price goes up and then comes down after it gets to an up point (known as resistance). The price of the security keeps going down until it gets to a particular down point (known as support) before it starts to move up again. So support and resistance is a characteristic of a trending market; and the support and resistance values are the value needed by the fibonacci calculator to calculate further support and resistance (in a predictive kind of way).
To use the fibonacci calculator, simply enter the recent support and resistance values in the calculator to produce the fibonacci retracement values. With these retracement values, trades can be patterned to maximize the predicted prevailing condition of the market.
WHEN TO ENTER AND EXIT THE MARKET
Here, you may need an indicator in place to tell you when to enter the market. Trading with the fibonacci calculator can tell when to enter the market. Like you already know, this tool is best for a trending market. When the price is up, it is not a good time to enter the market because, according to the fibonacci retracements, the price will still come down. As predicted by the tool, you can wait for the price to come down, at which point you can buy into the market at a low cost.
The same applies to exiting the market. If you are looking to make profits from a short term trade, you can always sell of your securities when the market price moves up. The best of it is that you can tell, from the fibonacci calculations, the expected resistance level; which is the best point for you to sell off your securities.
You do not have to sit and watch to level trying to find out when the market price will come down. You can always put in a forex indicator to alert you when the price has gotten to the level specified.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.