Copyright 2005 Timothy Rohrer The foreign exchange market, also knows as FOREX, originated in 1973 has become the largest e-currency trade market in the world today. FOREX trading occurs 24 hours a day, 5 days a week. The FOREX market offers a unique trading opportunity to those seeking a substantial profit in a market that trades over 1.2 trillion dollars each day. FOREX market...

What's the .382 Fibonacci Ratio in Forex Trading?

Adrian Pablo

It was mentioned in a past article that Fibonacci forex trading is the basis of many forex trading systems used around the world by profitable forex traders. These systems are all based on the famous Fibonacci ratios (.236, .50, .382, .618, etc.) and each of them can specialize in a particular ratio along with other minor indicators in order to make the pinpointing of the entry and exit levels as accurate and profitable as possible.

One of the widely used Fibonacci ratios is the 0.382 ratio. As it can be easily seen on any forex chart, currency prices are continually changing and they follow an oscillatory pattern with peaks and valleys. The limit of the peak is usually called a resistance level while the valley is usually called a support.

In order to find the 0.382 ratio level what you do is, first; measure the size of the drop or rise over your time of interest. Once you have that value you multiply this by 0.382. Now depending on what you are looking at, a rise or a drop on the price of the particular "currency pair" you are trading, you will add the last value you calculated to the total drop or subtract the value from the total rise.

These operations will give you the 0.382 Fibonacci ratio level, either for a rise or a drop on the chart you are analyzing. Once you have the value you can then start planning the strategy you will follow in order to make a high probability profit from this valuable information. For the 0.382 ratio level calculated for a recent rise in the "currency pair" exchange price, your calculated level will be a highly probable support and for the case of a level calculated for a recent drop of the prices your level will be a highly probable resistance.

Knowing this ahead of the market and having the proper secondary indicators, will give you a huge advantage over most forex traders, and that's something any trader would like they could count on. That's why Fibonacci trading is so widely accepted over the world, and of course, why it's so profitable and successful.

Free chapters of a forex day trading system can be downloaded at http://www.1-forex.com in case you are interested in learning more about Fibonacci forex trading.
About the Author

Adrian Pablo; Forex trader and freelance writer.

>> http://www.1-forex.com

The latest information and news on Forex Trading:

Yahoo! News Search Results for forex

IntegrityFX announces Live Forex Training for Middle East (AME Info)
IntegrityFX, LLC (IntegrityFX) announced today that it would begin offering Live Forex training in Dubai beginning in May 2009.
Mini Forex Accounts (PIZZAHEROS)
High leverage and low margin in these mini forex accounts play a very important role in magnifying trading gains as well as losses. Mini forex trading accounts come with lower account minimums than of regular accounts, which enables small investors to day trade in foreign currencies.
RBI earns $6 b from forex kitty (The Economic Times)
Despite the central bank?s foreign exchange horde dipping $23.4 billion during April-September 2008, the Reserve Bank of India (RBI) has managed to improve its earnings from forex reserves by about 30% over the same period a year ago.
Forex hedging rewards banks (The Star)
MALAYSIAN banks dealing in hedging instruments, particularly that involving foreign exchange (forex), are reporting profits in this area over the past two quarters.
FOREX-Euro falls broadly as euro zone inflation slides (Reuters via Yahoo! Ma...
* Euro hits 3-week lows vs dollar, sterling
Yahoo! News Search Results for currencies

Currencies: Euro under pressure as inflation slows and PMI falls (Market Watch)
The euro extended losses versus the U.S. dollar and other major currencies Tuesday after inflation data and a closely watched gauge of economic activity reinforced expectations for aggressive rate cuts by the European Central Bank.
Emerging-Market Currencies May Extend Drop, Morgan Stanley Says (Bloomberg)
Jan. 6 (Bloomberg) -- Emerging-market currencies are poised for further losses as recessions force wealthier nations to rein in overseas investment, Morgan Stanley says.
Asian Currencies May Extend Drop in 2009, Brown Brothers Says (Bloomberg)
Jan. 5 (Bloomberg) -- Asian currencies may remain weak in 2009 on slowing inflation, weaker growth and deteriorating exports, according to Brown Brothers Harriman & Co.
Euro to Decline Against European Currencies, Goldman Sachs Says (Bloomberg)
Jan. 5 (Bloomberg) -- The euro may decline by 10 percent against a basket of European currencies, which includes the British pound, Norwegian krone and the Swedish krona, according to Goldman Sachs Group Inc.
Currencies: Dollar rises vs. yen., euro on hopes for U.S. economic stimulus (...
The dollar, marking its highest levels against the euro and Japanese yen since early December, gains ground against most major global currencies, boosted by hopes for a large-scale stimulus plan to jolt the U.S. economy.