Understanding Fibonacci Trading (Part I)

By Ahmad Hassam

What is Fibonacci forex? Did you see the movie, The DaVinci Code? You will find a scene in the movie where the characters talk about the Fibonacci number as part of a clue or code of some sort.

The Fibonacci series starts with 0 and 1 and goes out to infinity with the next number in the series being derived by adding the prior two. What are Fibonacci numbers? The Fibonacci number series were made famous by an Italian Leonardo de Pisa. For example, 0+1=1, 1+1=2, 1+2=3, 2+3=5, 3+5=8, 5+8=13, 8+13=21, 13+21=34, 21+34=55, 34+55=89, 55+89=144, 89+144=233, 144+233=377.

What is so fascinating about this series is that there is a constant found within the series as it progresses to infinity. The Fibonacci series is like this; 0,1,1,2,3,5,8,13,21,34,55,89,144,233,377,610, 987..to infinity. This constant is known as the Golden Ratio, Golden Mean or Divine Proportion.

What is so special about the Golden Ratio? You will find the Golden Ratio by dividing the higher number with the lower number by taking any two consecutive numbers in the series after the first few. For example, 89/55=1.618, 144/89=1.618, 233/144=1.618, 377/233=1.618, 610/377=1.618, 987/610=1.618 and so on. Go as higher in the series as you want and you will still find the Golden Ratio by dividing the next higher number with the lower number in the series. The inverse of 1.618 is 0.618. The inverse of the Golden Ratio is also a very important number in Fibonacci trading.

The Golden Ratio can be found in many places in nature like flowers, shells, fossils etc. What is most important to forex traders is that applying these ratios can help identify key support and resistance zone in the market and therefore determine key trading opportunities or setups.

Why use Fibonacci ratios in your trading? The application of Fibonacci ratios can give you the edge as a forex trader if you use the Fibonacci trading technique properly. We have already discussed the Golden Ration 1.618 and its inverse 0.618. The main ratios used in everyday analysis are 0.382, 0.50, 0.618, 0.786, 1.000, 1.272 and 1.618.

Since you are trying to look into a type of technical analysis, it is assumed that you have a computer, a market data source such as quote.com and a technical analysis program to manipulate that data. You should be proficient with the technical analysis program.

The Fibonacci price analysis calculations can be done by hand as well but they are time consuming and tedious. There are three types of Fibonacci price relationship namely, retracements, extensions and price projections (sometimes also called price objectives). We will look into each type of these relationships individually.

Support is when the buying pressure overcomes the selling pressure and the decline in the price is reversed at the support level. The definition of a support is the price area below the current market where you will look for a possible termination of the decline and where you would consider to becoming a buyer of whatever currency pair you are trading. Each of these Fibonacci price relationships will be setting up potential support or potential resistance in the chart that you are analyzing.

Similarly resistance is price where the sellers overcome the buyers and the price starts to decline after reaching a high. It is the price area above the current market where you would look for the possible termination of a rally and consider being a seller. - 23212

About the Author:

Mr. Ahmad Hassam is a Harvard University Graduate. He is interested in day trading stocks and currencies. Try These 1500 Pips A Day Forex Signals From Heaven. Know Forex Rebellion!

Deciding To Buy Penny Stock As Additional Income For You

By Malcolm Torren

It's not unusual to find people who would work two jobs for more income. You may have been working for more than eight hours a day, five days a week. For a time, your pay was good enough. Later on you feel that you need more. So you work harder. Then you realize that no matter how much effort you do, your pay stays proportional. Then you decide to buy penny stock shares because you heard somewhere that it can make your rich.

This is not always the case. Owning shares in a company also means putting your money at risk. If you gain some, that's good. That means you earned some money without practically lifting a finger. But what if you lose your investment? To buy penny stock shares also requires a little bit of work. The difference is that the work is more on research and learning, and not on pleasing your boss.

1. The penny stock broker. Your next step is to know where to start. Penny stocks are shares bought at an amount less than one dollar. Some stocks are higher and would go to a three dollar mark but not beyond five. That is the basic rule. You need a penny stock broker to assist you with your investment. But make no mistake. There are many swindler brokerage firms out there.

2. Know more about the stock market business. Basically it's a buy and sell concept. Your stock broker will give you advice on what stock to buy and when to get them. They will also help you in understanding the trade. But it doesn't mean you stop learning. Brokers will still rely on your trading decision. They will still consult you if you wish to buy penny stock of a small company. So it pays to do you part in research too.

3. Know the level of your investment risk. By nature, all business investments have risks. But they behave differently from each other. The penny stocks have a unique risk level. It's not as liquid as those with large and medium cap shares. And often there is the lack of information of the shares and small companies' credibility. The real risk is when swindlers manipulate this part of the system. Beware of this type of investment propositions.

4. Do not invest beyond your means. Remember that your decision to buy penny stock investments is because your salary is not enough. The implication is that if you invest more than what you normally earn, the more you won't have enough. If you invested so much and lost, you will lose it forever. Regulate your investment. Learn to bank roll your funds. This is just common sense in business. Buy less and sell more.

There's more to learn aside from the tips mentioned above. To buy penny stock that gives you big smiles at the end of the year, you have to know more.

Stock market and stock trading is a very dynamic field wherein you can gain or lose everything in a matter of seconds. If you know your part of the deal well, you will have a better chance of earning more than you anticipated. Don't stop learning and most importantly don't overspend. - 23212

About the Author:

Get informed. Understand the secrets of penny stock pick before you buy penny stock.

How to use "Owner Financing" for Real Estate investing

By Doc Schmyz

Owner financing often produces a winning situation for both the homeowner who is selling the property and for the buyer who is purchasing the property. Owner financing may be defined as the situation when a seller is willing to help finance a real estate transaction by creating a loan for the entire purchase if they own the home outright or by creating a loan for part of the purchase price when there is already an existing loan on the property.

There are numerous benefits when an owner financed transaction is used. For one, the transaction can proceed more quickly and easily than when conventional financing is used because there are fewer steps involved. For another, the seller is more apt to receive a higher sales price, and the seller will receive payments and interest over a long period of time. There are tax savings realized by selling under this installment plan. Additionally, the buyer will realize savings by avoiding loan fees and lender charges, and the negotiated interest rate will generally be lower than the available interest rates from a commercial lender. Also when you factor in that 20% of home buyers cannot qualify for a traditional funding; this type of financing offers home ownership to a group of buyers that may not have the chance otherwise.

There are a few disadvantages to owner financing to consider. For one, if the buyer defaults on the loan the seller will have to initiate foreclosure proceedings. This can be costly. Of course, after the foreclosure the property can be sold again, an advantage for some owners and a disadvantage for other owners. Also, the interest income generated by the loan will be subject to taxes, which could be a disadvantage to a seller who is in a higher tax bracket. Additionally, the seller does not receive cash for their equity immediately, but rather will receive their equity in installment payments over time. This can be a problem if the seller needed funds to purchase another home.

TIPS: For the seller and the buyer to consider when negotiating an owner financed transaction. The seller should research the buyer's creditworthiness and ask numerous questions to become confident that the buyer can fulfill their obligation. The buyer should provide a written explanation of any problems that appear on their credit report, as well as give a list or personal references. The buyer should research the local housing market and get a home inspection done to identify any major problems. Also, a proof of payment provision should be included in the sales contract so the seller can verify that the new owner is making all insurance and property tax payments.

An owner financed home sale can be a winning situation for both seller and buyer. It is important, however, that the seller and the buyer do their due diligence in order to reduce possible risks. - 23212

About the Author:

Doc Schmyz has worked with investors all over the US. He owns a free website that shares Real estate investing information for all over the US. Find real estate information by state

Earn $1,000s /a Day with Forex Trading!

By Howard G. Platt 111

Forex Trading is fast becoming the new choice for a home based business opportunity. If you have never heard of Forex Trading before it is the act of trading currency in a global market. The Forex market is similar to the New York Stock Exchange or NASDAQ.

Forex Trading is typically carried out through a broker. Unlike NYSE the Forex market runs non-stop 24 hours per day 5 days a week. Foreign currencies are sold across local and global markets and it flows as one continuous action where currencies are bought and sold constantly. What's so unique about the foreign exchange market is that the market reacts almost instantly based upon real time events. This is what makes the market so volatile and an investors value fluctuate so quickly.

The basis of Forex Trading involves the trade of two types of currency. A profit or a loss with a trade is established by the Forex rate which is usually just referred to as the "rate." A traders objective is to purchase one currency based on the value of a second currency and then selling off the purchased currency when it's value exceeds that of the other currency. The rate is established between the two currencies being traded. For example a trader may buy 100 euros and the rate may be 1.075 at the time of purchase but for some reason the value of the euro drops resulting in a rate of .75 so the trader sells and he makes a profit of $32.50 US. Forex Trading can be extremely fast paced due to the fluctuations of the many economies that are involved.

Investors are attracted to the Forex Trading market due to the many opportunities to make high profit trades continually throughout the day. Another positive is that there are a lot of opportunities to make zero commission trades with short term Forex Trading. Investors also love the volatile nature of the Forex market as this opens the door to make high profit trades very quickly. The Forex is traded through a broker and over the years the capital that was needed to enter the market has dropped so low that many small time investors now have the opportunity to trade the Forex. The fact that the Forex is open 24 hours a day allows for a greater number of investors to trade on the foreign exchange market.

Forex Trading is a unique type of investing. If you were to look at a real estate investor you have someone who is investing in something tangible, they are investing with the intention of owning an asset. Trading Forex is based more on speculation, there is no real intention of taking possession of the foreign currency. The Forex trader is purchasing for the sole purpose of selling.

Analyst are constantly trying to forecast the behavior of the foreign exchange market and there are two basic approaches to this. You will find some traders in the market taking the technical analysis approach while others will follow more of a fundamental approach to predict price movements. However, the most successful Forex traders will combine the two which helps in long term and short term market predictions. Analyzing the Forex markets and its movements is big business in the US as many people will pay to receive top rated advice.

The Forex trader may analyze the market in a number of ways hoping to be able to predict the movements in the market. Some traders will focus on the fundamentals of the market and that just means that they are basing their trades on what is currently taking place in the economies around the world. Another popular method for analyzing the market is the technical approach and this is where an investor will study the history of the market through the use of graphs that map out the past movements.

The introduction of the Forex Trading Robot has really opened the doors to many new investors that would have otherwise never considered the Forex Trading market. As a result of the advancements in technology the accuracy of this type of artificial intelligence exceeds that of the majority of traders. Most investors stayed away from the Forex due to its fast past and the requirement of a large cash investment. However, more people are drawn to Forex Trading in the recent years due to the lower cash requirements and the potentially large profits from utilizing the advanced Forex robots. - 23212

About the Author:

Learn how you can earn Massive Profits in 1 day using the new Forex Trading Robots at Forex Trading Robot Reviews. Also download a FREE eBook that shows you exactly how to earn $200/day or more at Make Money Online Eazy Guaranteed!

US Dollar Currency Profile (Part I)

By Ahmad Hassam

As a currency trader, you should know the US Dollar intimately. It is important for you as currency trader to have a good grasp of the general economic characteristics of the most commonly traded currencies. US Dollar is the most heavily traded currency in the global economy.

You should know as a trader what moves the currencies particularly the pairs that you are interested in trading. Traders need to also know the difference between the expected and the actual data. Some currencies tend to track commodity prices while others may move in complete contrast.

News or data that is in line with the expectations has less of an impact on currency movements than unexpected news or data. The correlation between the currency markets and news is very important. Therefore short term traders need to closely monitor the expectation of the currency markets.

United States is the worlds leading economy. US GDP is approximately three times the size of Japan, five times the size of Germany and seven times the size of UK. The US economy is now a service oriented economy with almost 80% of GDP coming from real estate, transportation, finance, health care and business services.

However, the manufacturing sector is still formidable and US Dollar is particularly sensitive to the development within the sector. United States has the worlds most liquid and deep equity and fixed income markets in the world.

Investors from all over the world purchase US assets due to their liquidity and safety. Foreign Direct Investments (FDI) into the US is equal to almost 40% of the total net inflows for United States. The import and export volume of US also dwarfs the countries. This maybe due to the sheer size of US as true import and export represent only 12% of the GDP.

US economy is facing the paradox of the twin deficits. One is the Budget Deficit and the other is the Current Account (CA) deficit. US is running a large CA deficit for more than a decade now.

Due to the high CA deficit; United States need to attract a few billion dollars of capital inflows daily in order to prevent the decline in the value of US Dollar. In other words, the Current Account (CA) deficit is being financed by the Capital Account (KA) surplus. The large CA deficit makes the US Dollar highly sensitive to changes in the capital flows.

United States is a member of the World Trade Organization (WTO). This means that United States is heavily committed to the free trade idea. A weaker US Dollar will help boost US exports whereas a stronger US Dollar makes the US exports expensive and US imports cheap. US trade is equal to roughly 20% of the world trade. United States is the trading partner of many countries across the globe.

Leading import sources for United States are: Canada, China, Mexico, Japan and EU. Leading export markets for United States are: Canada, Mexico, Japan, EU and UK. The growth and political stability in countries that are leading export markets for US are important. For example, should Canada growth slow; its demand for US exports will fall that will have a ripple effect on US growth. - 23212

About the Author:

Mr. Ahmad Hassam has done Masters from Harvard University. He is interested in day trading stocks and currencies. Try Strignano's Forex Signals free. Discover a revolutionary Forex Robot Trading System!