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Fibonacci Numbers and its relationship with Gann trading

Monday, 20 January 2014

Many traders make great use of the sequence of the Fibonacci number as a trading tool and between those traders, W D Gann. This is because the Fibonacci number sequence and golden ratio is very important in nature.
Gann achieved a lot of profits and won millions through using the numbers, so any trader can use it and maximize his profits.
So how they applied to trading?
Fibonacci numbers and the Golden Ratio:
Leonardo Fibonacci writes and creates the Fibonacci and they are named as his name in 1202, it introduced the Hindu-Arabic numerals to Europe for the first time, in which Europe was still using the roman ones.
There are two Fibonacci percentage retracement levels which are considered the most important ones for trader 38.2 % and 62.8%. And there are other important percentages 75 %, 50 % and 33 %.
1 – Fibonacci numbers define exit numbers:
We can place a stop loss above the tight zone which denotes support and resistance if three or more Fibonacci price levels come together in that area.
So it give important areas that act as support and resistance , and in this way it allowed trader to get pre-defined in a disciplined manner exit points.
2 – Position size is decided by Fibonacci levels:
By Fibonacci numbers you can define the size of position taken, when you prepared to take the risk which is depending on trading, because the distance from stop is difference on all traders in monetary terms.
3 - Profit objectives are defined by Fibonacci numbers:
Traders can use Fibonacci numbers for profit objectives once a pattern completes against a Fibonacci price area.
So you as a professional trader can use Fibonacci numbers to achieve two things, first, allow you to have specific stop loss and profit objectives in advance.

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