# Indicators: Float

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The indicator which displays the beginning and the end of the trend

Fig.1 The Float indicator

Author: Nikolay Kositsin

Moderator
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How to Use Fibonacci (based on dailyfx.com article)

Talking Points
- Fibonacci retracement zones can be used to determine when a correction in trend is over.
- Traders use Fibonacci retracement zones to pinpoint low risk well defined trade opportunities
- Fibonacci lines can be used to place stops and limits.

Catching a Ride on the Trend

Many traders struggle to “make the trend their trend” because they lack a consistent entry strategy for rejoining an established trend. It is commonly held that a trend does not move in a straight line. Rather, a trend expands and contracts much like the inhaling or exhaling of breath. This rhythmical pattern can be predicted mathematically by many Forex Traders based on set of Fibonacci ratios. This can help traders find low risk entries for trading with the trend.

Leonardo Pisano Bigollo, also known Fibonacci was a 12th century Italian mathematician who is credited for introducing the Golden mean to Western civilization. He used a problem that asked how many pairs of rabbits are created by one pair in one year to introduce the Fibonacci series.

The series goes like this 1,2,3,5,8,13,21,34,55,89,144,233,377. The first and second numbers are added to get the third number then the third and fourth numbers are added to get the fifth number and so on. So you are probably asking how do rabbits and number series give me a place to enter USD/JPY?

Well, these numbers are related to give us the Fibonacci ratios that traders use. Take the first number 1 and divide it by 2 to get 0.50. Take 21 and divide it by 34 to get 0.618, another retracement level and divide the alternating numbers like 13 and 34 to get 0.382 which is another Fibonacci level.

Applying these Ratios to a Trend

Like reproducing rabbits, a trend is a state of growth. So applying these ratios to an established expanding trend often reveal great areas to trade with the trend. These ratios act like signs on a street revealing where the next bus stop is likely to turn up. Notice in the diagram below how after a move higher, price is likely to pull back and rebound from one of these areas.