Original subtitles

In this lesson, we're going to talk about Fibonacci as a trading indicator, and I tell you, a indicators

go this is really hotly debated in the trading world.

Some people love it, absolutely love it, really believe in it, embrace it, use it all the time.

Others like I don't like this at all and they don't use it at all.

And they just think it's kind of a little bit more mystical.

And in some people think it's got mystical qualities in a good way because it's based on, you know,

Fibonacci math.

So all we're mathematicians out there watching and saying, yay, more math, Fibonacci.

And people also tend to be can be a little bit more of an advanced indicator.

By the way, the understanding the how it works is not too bad, but then applying it can be a little

bit more tricky.

And as we go through the lesson, you'll see how we do that and you can decide for yourself whether

that's easy or hard for you.

But the big idea with Fibonacci is you're trying to identify pullbacks or retracement.

You're trying to see these different support levels and resistance levels.

You're trying to, you know, see what might be going on in terms of, you know, mathematically what

might be going on in terms of, you know, volatility or market sentiment type indicator.

And the train platform will automatically calculate all these things for you as far as the actual,

you know, feminazi and how you how you use that the platform, a calculator, for example, to do a

math or calculations.

And then you take what it calculates and you overlay that on top of the charts.

That's working a little tricky is where you pick where you place it on the chart and will demonstrate

that here for you coming up.

So first off, it's actually pretty instructive to understand what is Fibonacci?

You know, what is what is it?

Where did it come from?

What's the big idea behind that?

So and it's hard.

Fibonacci is basically math.

It's a mathematical sequence of numbers as the sequence of numbers described by the mathematician Leonardo

Paisano Bergoglio MacArthur, I don't know.

But if that is a sequence of numbers that he discovered and came up with and it's a very well-established

idea in mathematics, basically what you do is start with a zero and and one, and then you add each

number in the sequence to the previous number to get the next number.

It's a sequence of numbers.

So if you look at the example here, this is the Fibonacci sequence.

It's zero and one is one and then one and one is two and two.

And one is three and three and two is five and so on as you keep going on out into infinity.

So that's like that's how it works.

It's a mathematical sequence of numbers.

Kind of interesting that way.

But how does that work for trading securities?

Like, OK, that's nice.

Well, if you look here from match, if you take how it's applied in trading, actually, again, you

don't have to calculate this math, but it's good to understand the underlying why, because these numbers

that you're going to see in the yellow are going to be important to us when we start actually using

and trading.

But basically with effeminately if you take any two adjacent numbers in the sequence and divide the

lower number by the higher number and you keep going and you keep going and in this calculation and

you'll approach the ratio of sixty one point eight, you know, as we approach this.

So we're an example, five divided by eight to adjust numbers five and eight point six to five.

Eight is next to thirteen point six one five.

And everything starts approaching the sixty one point eight as kind of an accepted average for Fibonacci.

And then you do the same.

But instead of two using the two adjacent numbers you use to further along the sequence and they get

along, they get close to thirty eight point two.

So it'd be like, let's say instead of five and eight, it would be like to five and 13.

And the same thing with three further along would be five and twenty one, for example, has to go further

along and these are thirty eight point two percent and twenty three point six percent.

So those numbers are actually very important because they're going to show us when we do our phenomenology

overlay.

These are these are important numbers are being used for making trading decisions on.

So in training, the key numbers are zero seventy six point four, sixty one point eight fifty.

And these are all percentages, fifty percent, thirty eight point two, twenty three point six and

one hundred percent.

And the levels these are the key numbers that they use.

And we're going to talk about why they were chosen just a moment here.

But the levels are calculated relation to the vertical distance between the high and the low.

You're looking at it as a percentage basis.

So it's a zero to one half percent is the full trading range of, let's say, a security.

And then there's percentages based on between zero and one hundred percent.

Again, these are not prices that that's sixty one point eight rupees or dollars or whatever it might

be, euros it's or thirty eight point two or anything like that.

It's a percentage, sixty one point eight percent would be an example of a number in our trading range.

Are we using Fibonacci now?

First off, you might look at that and say to yourself, well, wait a minute.

Now, these numbers, not all are truly Fibonacci.

I saw some of them were, but not all of them were truly from anatsui.

So let's talk about that for a second.

So the zero and the one percent represent the high and the low price, you know, the high and the low

price.

So need that kind of use that from a trading aspect.

So it's not truly from an arbitrary fifty percent.

You sometimes see in there, sometimes it's out of there, sometimes it's in there, depending on your

trading.

Platform, but 50 percent is based on another theory, actually.

It's a Dow theory that says a trend has a good chance of continuing once there has been at least a 50

percent retracement in that there's a 50 percent turns around, you can see that the trend will tend

to continue in that and once that retracement of 50 percent has happened.

So that's where you see the 50 percent on top of that.

More in a second here.

And there's only six point four percent, not Fibonacci, but that's basically taking one hundred percent

and subtracting a Fibonacci number, twenty three point six.

And that kind of developed over time by Fibonacci trading supporters.

They wanted that that that number.

And there is another indicator, another level of another level to look at.

So that's that's where they kind of came in.

So you have true Fibonacci and then trading over time has developed add a little bit more to it to make

it more of a complete indicator is the idea behind it.

So the idea is in the theory behind trading, Fibonacci is of a security has shot up over a period of

time and it's starting to pull back or starting to pull back.

There will be support at the Fibonacci levels, you know, below that high.

So if it's gone up and starting to come back, you have these different phenomenology levels that we

just talked about.

And then as it approaches them, if there's a chance it's going to rebound, go and go back there.

Likewise, if a stock has fallen and bounces back, starts to bounce back up, you'd see resistance

at the Fibonacci levels as far as, you know, seeing seeing resistance to going above a Fibonacci level.

So it's looking at, you know, going above or below, looking like at those, you know, support and

resistance lines.

So using the concept of spawn resistance lines, you're basically adding that into Fibonacci level.

So we'll take a look about how that's actually applied here in these in these graphs here.

See that a little bit better in action.