Individuals who would like to get into stocks or commodities have to learn trading through the Fibonacci trends. They have to distinguish the primary trend which moves in a direction and the secondary trend which may move exactly in the other direction opposite to it. Traders also have to watch the retracement levels of the primary trend especially on specific points such as at 38.2%, at 50% and also at 61.8% respectively. It is at any of these points where retracements may be expected.
Trading through the Fibonacci trends also include other Fibonacci levels where resistance may be expected. These points are at 75%, at 78.6% and at 88.7%. Traders will have to analyze the price movements as it hits any of these points in order for them to determine if the counter move will continue or will stop and start retracing the primary move. Traders have to pay attention especially to significant changes in the prices as they may expect retracements to happen especially after a sharp change in price that is accompanied by large volume of stocks or commodities. However, traders also have to be keen in identifying the highest as well as the lowest points in the primary trend.
Trading through the Fibonacci trends may also be more effective if it is used together with other techniques that traders can combine with it. Traders expect that the stocks or commodities will have to pull back at certain levels before actually reversing its direction. Traders may understand this concept better through the use of charts where they can readily have the data that they need in analyzing the primary and the secondary trends.
Trading through the Fibonacci trends may seem complicated and difficult but traders have to keep their minds open and start understanding how it works. This is an effective tool that may help them to determine when they can consider buying or selling their stocks or commodities. Traders today do not have to do their analysis of the market by manually plotting the trends but they only have to learn how to make use of programs that are designed to do the calculations and the charting for them.
What they really have to learn about is how to interpret their data correctly so that they may be able to make the right trading decision. Trading through the Fibonacci trends may provide indicators for traders to identify the best possible time when they can enter or when they have to exit the stocks or the commodities markets.
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