| In the stock market today, when trading stocks, | | | | multiply it by one of the Fibonacci ratios that you are |
| most traders will utilize a number of different | | | | interested in. Again, take the result and subtract it |
| methods for forecasting how prices or markets will | | | | from the swing point high. This will give you the |
| move. Technical analysis is widely used using stock | | | | Fibonacci levels. |
| charts to provide past data on a stock volume and | | | | This can be very time consuming and many may get |
| prices. There is another method which uses the | | | | confused when drawing the grid. There is software |
| Fibonacci ratios with charts in order to highlight | | | | available that can do all this for you. One such tool is |
| support and resistance points on stock charts. Most | | | | the T-3 Fibs Protrader. It was designed and |
| technical analysts will use 5 Fibonacci ratios to find | | | | developed to work with "trade station", which is a |
| the point s where a stock may reverse in direction. | | | | stock charting program. It will allow you to easily |
| Analysts have seen that if a stock shows a large | | | | identify the support and resistance points in a stock |
| increase in price going from low to high, and then | | | | pick using Fibonacci methods. This will allow you to |
| reverses direction, the stock will find natural support | | | | get in or out of a stock at the best possible time. It |
| levels that directly correspond with price increase | | | | is important to have this edge when you are |
| multiplied by each Fibonacci Ratio. | | | | investing in the stock market. Many traders have |
| At the point where the stock begins to pull back, | | | | given up using Fibonacci levels to trade manually |
| you can plot the Fibonacci replacement levels on a | | | | because they have not researched or learned how to |
| chart to look for signs of reversals. To locate the | | | | do it properly. |
| Fibonacci patterns on the chart, draw a Fibonacci grid | | | | With all things, the key to success is to learn how to |
| using the swing points. Draw a grid from the swing | | | | utilize any tools effectively. Fibonacci levels can play a |
| point high to the swing point low, and then calculate | | | | crucial role in your decision making when buying or |
| the range between the swing point high and the | | | | selling. Many investors and traders have also been |
| swing point low. Once you have the result, you | | | | quite successful using Fibonacci levels on charts. |