Investment in the forex market can yield good results provided you are well acquainted with the trading skills. There are many technical indicators that are used in the forex market for predicting market movements. One such technical indicator is Fibonacci system of forex trading.

“Golden mean” or Fibonacci ratios

The Fibonacci ratios are named after an Italian mathematician who is known for developing the Fibonacci sequence. The Fibonacci series consists of the numbers 1, 1,2,3,5,8,13. The sequence is obtained by adding the 2 preceding numbers. However, in forex trading, the Fibonacci ratios are needed.

You basically need to know the following figures for trading currencies in the forex market.

Fibonacci Extension Levels – 0, 0.382, 0.618, 1.000, 1.382, 1.618

Fibonacci Retracement Levels – 0.236, 0.382, 0.500, 0.618, 0.764

The Fibonacci Retracements are the points that will indicate when the currencies will return to their original position after a large move. In forex trading, there are many forex charts. These charts show changing prices and they usually follow an oscillating pattern. The oscillations take place according to the Fibonacci sequence. And the oscillating patterns indicate support as well as resistance levels.

Some of the other technical indicators used in the forex trading include Moving averages, Elliot Wave theory, Momentum, Pivot point, Bollinger bands, Stochastics, Relative Strength Index (RSI) and Moving Average Convergence/Divergence etc.

The forex market is one of the largest financial markets where the trading volume is quite high. Trading of currencies usually take place in pairs. And at any point of time at least one trading center remains open for business. Forex trading covers all the major time zones.

Forex trading offers many advantages. And if you have a trained and experienced trader to guide you, the return you get from the forex market will be quite high. Some of the benefits of forex trading include the following –

• High profitability
• You can start trading with a small amount
• Liquidity is high
• The trading centers are open round the clock
• You can limit your chances of losing money by making use of stop loss orders.