The Significance of the Fibonacci Series in the Tauro Markets Trading Platform

The Fibonacci series is asequence of numbers where each number is the sum of the two previous numbers.It was first described by Leonardo Fibonacci in the 13th century and it hassince been found to have applications in many fields, including mathematics,science, nature and even finance.

With seasoned traders onthe Tauro Markets ‘trading platform’, the Fibonacci series is used to identifypotential support and resistance levels. Support levels are prices at which a livetrade is likely to find buying support, while resistance levels are prices atwhich a live trade is likely to face selling pressure.

Traders at Tauro Markets useFibonacci retracements and Fibonacci extensions to identify these key levels.Fibonacci retracements are used to identify potential support and resistancelevels after a strong move in price. Fibonacci extensions are mainly used toidentify potential support and resistance levels after a breakout from atrading range.

How to Use the FibonacciSeries in Online Trading with the Tauro Markets trading environment:

To use the Fibonacci seriesin online trading with the Tauro Markets trading environment, we encourage ourcustomers to identify a strong move in price. This could be a sharp uptrend ora sharp downtrend. Once having identified a strong move in price, it is easy tothen apply Fibonacci retracement levels or Fibonacci extension levels to thechart.

Fibonacci retracementlevels are drawn at the following key levels:

• 23.6%
• 38.2%
• 50%
• 61.8%
• 100%

Fibonacci extension levelsare drawn at the following key levels:

• 0.618     (Fibonacci retracement 61.8% extended)
• 1.000     (100% retracement)
• 1.618     (Fibonacci extension 0.618 extended)
• 2.618     (Fibonacci extension 1.618 extended)

After drawing Fibonacciretracement levels or Fibonacci extension levels to the chart, our customerscan now look for price to react at favourable levels. If price finds support ata Fibonacci retracement level, it may then rebound and continue its upwardtrend. If price faces resistance at a Fibonacci retracement level, it may thenpull back and resume its downward trend.

Significance of theFibonacci Series in Online Trading:

The Fibonacci series issignificant in online trading because it provides our traders with a way toidentify potential support and resistance levels. These levels can be used toplace orders on the Tauro Markets trading platform, identify stop-loss levels andset price targets.

To make things simple, letus explain this mathematical phenomenon with an example:

Suppose any of our trader islooking for a potential trading opportunity and is focussed on a stock symbol ABCand the trader further notices a strong uptrend. At this moment, the traderwill decide to apply Fibonacci retracement levels to the chart to identifypotential support levels.

The trader in-turn drawsFibonacci retracement levels at the 23.6%, 38.2%, 50%, and 61.8% levels and thennotice that price is approaching the 38.2% Fibonacci retracement level. Afterthat, the trader decides to place a buy order at the 38.2% Fibonacciretracement level, believing that price will find support at this level andcontinue its upward trend.

The trader’s buy order isfilled and price does indeed find support at the 38.2% Fibonacci retracementlevel. Price then begins to move higher again. The trader decides to place astop-loss order below the 38.2% Fibonacci retracement level in case pricebreaks below this level.

Price continues to movehigher and the trader eventually decide to sell their shares of ABC for aprofit. The trader generates a profit on this trade because the trader was ableto identify a potential support level using the Fibonacci series.

The Fibonacci series is apowerful tool that can be used by online traders on the Tauro Markets tradingplatform to identify potential support and resistance levels. By usingFibonacci retracement levels and Fibonacci extension levels, traders at TauroMarkets usually place more informed trades and improve their chances ofsuccess.

Disclaimer:

This article by TauroMarkets training department is for educational purposes only and should not betaken as financial advice. Please consult with a financial advisor beforemaking any investment decisions or email us at marketing@tauromarkets.com foradditional details.