Fibonacci Trading

by Barry Burns

Fibonacci Trading



Fibonacci trading is extremely popular among those who use technical analysis for online stock trading, stock market analysis, swing trading, day trading and all types of trading systems. Fibonacci retracement measurements are the most popular use of the numbers.

It is often used with other technical analysis indicators such as a moving average, stochastics, RSI, candlestick patterns, etc.

When using Fibonacci Forex, stocks, futures and commodities can all be traded using the Fibonacci retracement of a trend.

So what is “Fibonacci” and where does it come from?

The Fibonacci sequence is named after a man named Leonardo of Pisa, who was known as “Fibonacci” (which means “son of Bonaccio”).  He wrote a book in 1202 which introduced the sequence of numbers to Western European mathematics (though the sequence had been known and used in India well before Fibonacci).

The Fibonacci sequence is simply beginning with the numbers 0 and 1, and then each number after that is the sum of the previous two.

So …

0 + 1 = 1

Then you take the sum of the last 2 numbers of the above equation and add them:

1 + 1 = 2

Then you take the sum of the last 2 numbers of the above equation and add them:

1 + 2 = 3

Then you take the sum of the last 2 numbers of the above equation and add them:

2 + 3 = 5

Then you take the sum of the last 2 numbers of the above equation and add them:

3 + 5 = 8

Then you take the sum of the last 2 numbers of the above equation and add them:

5 + 8 = 13

Then you take the sum of the last 2 numbers of the above equation and add them:

8 + 13 = 21

… and on it goes to infiinity!

So the Fibonacci numbers are:

1,  2,  3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, etc.

So what is the significance of these numbers for stock market analysis, swing trading, technical analysis and trading systems? And is Fibonacci trading legitimate?

Fibonacci numbers have many ramifications and applications in the field of mathematics. Those who feel that the stock market, Forex and futures markets operate in mathematical precision are attracted to Fibonacci trading and look for Fibonacci retracement levels for this reason.

“Fib numbers” (as they are often referred to) also appear in many aspects of nature such as the arrangement of leaves on a stem and the branching of trees. Some day traders, swing traders and investors therefore say that the nature of the financial markets also manifest themselves in the structure of Fibonacci numbers.

Now the big question: Do Fibonacci numbers have a dramatic influence on the financial markets? Should you use Fibonacci trading in your trading system to help with your stock market analysis?

It’s impossible to prove. However there is no question that Fibonacci trading has become wide-spread in the use of technical analysis, taking a prominent seat next to other commonly used techniques such as moving averages and stochastics.

Therefore Fib numbers are indeed significant in trading if for no other reason than they become a self-fulfilling prophecy through their use by a massive number of Fibonacci Forex, stock and futures traders. And those numbers can be used to calculate Fibonacci retracement levels, which I’ll address in more detail in future articles.

Please let me know what you think of the video, ask questions, and leave any and all comments below. I cherish your feedback and look forward to reading it. Simply click on the word “Comments” under the social media icons below.

{ 68 comments… read them below or add one }

1 Laurie September 3, 2010 at 8:44 am

Hi Barry Very interesting and helpful. Your presentation is nicely paced and you have a great teaching style. Your information has clarified the concept very easily. Good luck with your business. Best, Laurie.

2 jon September 3, 2010 at 8:44 am

article and video pretty good introduction.
try the video with a line chart

3 Robby September 3, 2010 at 11:48 pm

Thanks Barry, Nice video.I agree there is no magic fib levels.Mini -divergence patterns that you teach are still my favorites to trade whether it be at a fib level or not.

4 Viki September 4, 2010 at 1:33 am

Thank you for a tool I didn’t know about. I always draw in my fib numbers and never knew about the snap tool. I stopped the recording, found it on my platform and used it. Thanks for the introduction to a tool I will use in my trading!

5 Karen K. September 4, 2010 at 1:34 am

Hi Barry,

This was the best explanation I’ve heard of Fibonacci levels in trading. Thanks as always for your wonderful clarity in your teaching style.

Keep these great videos coming.
Karen

6 hong luo September 4, 2010 at 5:09 am

I enjoy your video, your voice and music. You make leaning more interesting and fun.
Thank you.
Hong

7 Peter September 5, 2010 at 8:51 am

I am new to trading Forex and I see that your teaching style makes everything very clear. You fill all the voids left by others and make the ladder of learning to greater understanding much easier to climb. Many thanks. Peter

8 Verena September 5, 2010 at 10:02 am

Thanks Barry for this excellent introduction to Fibonacci retracements and Fib trading.
I am very much looking forward to your upcoming series on Fib trading.
good luck with your business

9 Dan September 7, 2010 at 4:48 am

Thanks Barry for all your work putting these teaching videos together. I am just beginning to learn the Fibonacci and I was wondering if you would give a little more insight into how you use them. What signals an entry or exit point for you on the retracements?

10 mneal September 10, 2010 at 3:33 am

Barry

Thank you, I know now not to bother with them and I don’t have to go around wondering what they are.

11 Ian Maclean September 11, 2010 at 6:29 pm

Hi Barry
Your courses are brilliant.
They have shed light on important things others have left out.
Does Fibonachi correspond with DAD or MOM in some sort of way?

Regards

Ian.

12 Barry Burns September 17, 2010 at 5:39 pm

Hi Ian,

Yes, it sure does. Check out my Advanced Fib Course and it goes into detail about how Fib ties in with the 5 energies – including giving live trading examples:

http://www.topdogtrading.com/Products_Fib_Course.html

13 Ronnie December 27, 2010 at 6:56 pm

Thanks Barry, your videos are very informative and put together so that they are easy to understand. I am new to forex and trying to learn all I can from the internet. I really appreciate all you are doing to help everyone looking for information. Thanks again, Ronnie.

14 Vishwas December 27, 2010 at 7:02 pm

I have taken Barrys below courses:
1) Foundation Course 1 and 2
2) Swing Course

I found Barry’s teaching skills excellent – his course material is great because he starts from the basics and progresses. He goes into very specfic details that most traders need to know and on top of that teaches money management skills – key to trading. He has responded to all my questions. Currently I am paper trading as a swing trader and hope to take his day trading course soon.

15 Nick Neamtu December 27, 2010 at 7:05 pm

Hi Barry,

For some years I’ve attended/listen to a number of seminars and webmail about investing.

Your seminars were the most valuable for me and some of the knowledge I acquired like setting up the chart indicators, trading rules, and the rubber bent trades I continue to use them profitable to date.

Fib Course was also well presented, however I don’t use this feature to my short term trading.

Barry you are doing a great job in helping me with all I need for my trades, many thanks.

Wish you the best of everything and a Happy New Year

Nick N.

16 Dee Jay December 27, 2010 at 7:06 pm

Barry,

I took your # 1&2 courses and it has made all the difference in my trading. I still have a lot to learn but am winning the game.

Thank You

17 Paul December 27, 2010 at 7:15 pm

Barry,
Like many others who have commented before me, I have taken a host of courses, some of them way beyond expensive. And as others have commented, yours are the best. By far. Beginning with the basics, you progress to practical applications of the principles you teach, and you do it in a manner that makes sense to a humble trader. You demonstrate that so much of what is promoted in the marketplace as ‘super’ is really not essential. Notwithstanding the fact that your courses are less costly than others’, yours are simply the best. Period.

18 Asif Wraich December 27, 2010 at 7:40 pm

I like the Top Dog Trading site and Mr Barry burns method of teaching and explaing about the futures tradind. I read his articals and listen his vdeos carefully.

19 Joseph Sun December 27, 2010 at 10:03 pm

Barry, yours is the only courses I have bought and listened to seriously. I actually have adopted your rubber band set up as part of my trading methodology. I will be soon getting your custom indicators as well to bring some clarity to my trading.

Thank you and keep up the good work. Some of my friends I have introduced your 5 Day Courses to are very happy customers of yours.

Cheers,
Joe Sun

20 Patrick Gauthier December 27, 2010 at 11:24 pm

I bought course 1 and 2. It gave me a methodology and some perspectives that i was missing. You are a great teacher and i plan getting more good teaching from you… Thanks for these enlightning courses, and keep up the good work..

Best regards

21 Julio Chacón December 27, 2010 at 11:32 pm

It is a precious way of learning or understanding fib issue, charts are really helpful showing the resistance point through fib levels. Thanks a lot for making it easier and unforgetable.

22 Steve December 28, 2010 at 12:12 am

Hi, As a purchaser of Barrys Foundation Course, after watching his free 5 day course you would be doing yourself a great disservice if you dont even just the 5 day course.
Barry is a great teacher, very simple to understand, and very honest to deal with. He is always giving free info like the Fib Retrace Info above. Thanks to Barry I am now a winner instead of a break even or losing trader.
Thanks Steve from Oz. {Australia}

23 Richard December 28, 2010 at 1:12 am

Hi Barry,

I have taken your courses 1 & 2 and I use Ninja trader with your indicators with good success to trade futures. I would highly recommend your courses to anyone.

Thanks Barry

RT

24 Richard Hewitt December 28, 2010 at 1:38 am

Hi Barry…. Thanks for your courses, insight, pleasant teaching demeanor! I ‘m forever tweaking your basic info, settings etc, but find your assessments to stand the test of time.
Thanks for your hard work and insights.

25 Andrew December 28, 2010 at 2:54 am

Awesome content Barry thanks for all your hard work.

26 Raymond December 28, 2010 at 3:40 pm

Good explanation Barry !

I enjoyed your free rubber band course and the other free videos.
So I bought your courses 1 & 2.
I just finished the course 1 and I am very pleased and eager to continue
with the course 2.
I am an humble successful trader with about 10 years of practice.
I only trade when all is OK and when you can see the Moon and the Sun
Under the same blue Sky ****

So happy New Year and good trades to All !

Raymond.

27 Mark Martinez December 28, 2010 at 4:04 pm

Thanks Barry I’ve found your insights & training videos highly informative & helpful- I will and have, recommended your website to friends & family members regardless of their experience in trading stocks or commodities … I have also mentioned your name to professionals who have asked me , “you’ve never traded before how on earth did you decide to pick that stock !??”

28 Doreen H December 28, 2010 at 5:40 pm

Hi Barry,
I am new to trading and is on a demo account at the moment. The explanation in your videos are readily intelligible even to newbie and non English speaker like me. The best thing I like about your videos and teaching is that they not only benefit experienced traders but also newbie in that they cover details that new traders would want to know and a refresher to already traders. I would certainly recommend Barry Burns if anyone would like to learn more about trading. Thank you Barry and Best of Luck to your business.

29 Fayyaz Haq December 28, 2010 at 6:36 pm

Hi Barry
I have gone through some of your courses/seminars and have found them very interesting, informative and helpful. I appriciate your attitude and willingness to help other traders.
Keep doing the good work.

Thank you

30 Roy December 29, 2010 at 12:31 am

Hi Barry,Ihave been introduced to Forex for the past twelve months and up until a month ago I was of the strong opinion that to be a profitable trader is just a fleeting dream. In my search I stumbled upon you and now ,day after day I am seeing that Forex can be traded without pain and anxiety. Thanks for being there for persons like myself.

31 John December 29, 2010 at 2:35 am

Great videos great teaching, I have learned alot in a short time.
Thanks

32 GRAHAM OWEN December 29, 2010 at 8:49 am

Hi Barry I think your cources and videos are great and full of information for traders of all experience levels. Keep up the good work and I hope to obtain moore of your work.

33 greg December 29, 2010 at 10:08 am

Yes Barry does put it all together.
Trading is having a method and his is as good as you get.
Now it is up to you, placing in mind the Discipline than is required to become a trader.
Greg

34 CH Ong December 29, 2010 at 2:52 pm

Hi Barry,

I am a beginner in forex trading and find your videos and your courses very interesting and easy to understand.Keep up the good work!

Regards,

CH Ong

35 umesh charanashrita December 29, 2010 at 3:02 pm

There is a warmth and genuine integrity about what you share. It leaves me confident and informed to take the many steps up and beyond the barriers we all face, in becoming competent traders who might also act with the same disciplin and virtue , as a result of your hard work . You make it easy for us to follow what we know we are capable off.
That is a great gift , Long may you continue. Happy new year.

warmest wishes

Umesh

36 eric December 29, 2010 at 6:47 pm

Hi,Barry
I m always exited to get free videos from You
the cources ar verry meaningfull ,like this video on febinacci trading as well .
because of Your course I hope tho become a succesful trader someday in the future,
Many Thanks
Happy New Year
to You and Famely

37 atif December 29, 2010 at 7:41 pm

there is no doubt that the work done by dr. Barry has helped me a lot and all that benefit from his sites was free too. I personally dont like to praise any one for no reason; if i am saying Dr. Barry’s work has helped me than i mean it, and that is the truth.

38 Bob Dhillon December 29, 2010 at 7:42 pm

I have one word for Barry Burns course “AWESOME”. Any body who trade knows the importance of the indicators taught by Barry. I like the simple and detail way that he put everything together.

39 ruthie December 29, 2010 at 7:51 pm

Excellent training videos and forums Barry. They are cuts above the rest and very informative. Keep up the good work. Happy new year in advance and wishing you a wonderful new year.

40 nobreakfast December 29, 2010 at 7:51 pm

Another useful posting. Thanks.

41 Narhari December 29, 2010 at 7:56 pm

Hi barry,
I have watched your videos and other materials and I find it full of informaton.It’s been
very helpful to me.Keep up the good work and I hope to see more of your educational ideas.
Thanks for your help.
Regards Narhari.

42 Eliot Bissey December 29, 2010 at 8:17 pm

Hi Barry, I just wanted to post a note endorsing you. I’ve taken a LOT of training from a lot of big names (Van Tharp, Steve Nison, John Person, Oliver Velez, Larry Levin, etc.) and YOU are my personal favorite mentor of them all. Why? Because your methodology is 1. clear (unambiguous), 2. objective (not wishy-washy or too subjective), 3. inclusive (doesn’t exclude important information, like our own psychology and biases as well as what we see on the chart) and 4. uses a “Take the trade to court” approach where we add up the multiple energies in the market (trend, cycles, momentum, support/resistance and fractals) for a sound decision making process that leads to high probability trading when adequately implemented. You’ve done your part exceptionally well, providing us with a solid method. The “adequate implementation” is up to us, as we evolve as traders; we get back what we put in, or as Krishnamurti used to say “The urgency with which we ask the question determines the quality of the answer we receive (when we inquire within).” ( a nod to your recent trip to India) I particularly enjoy your authenticity as you sometimes comment on your own evolution as a trader; what used to give you trouble, and what you learned that cleared things up for you. You’re a great trader and a good person (as far a I can tell, lol!) with an objective perspective and a sensitive mind – just what I want to be when I grow up!
All the best to you and yours, and Happy Holidays!
Sincerely, Eliot Bissey

43 aj December 29, 2010 at 8:20 pm

Barry ..I am a new to trading, I learned more about trading from your free presentation on the 5 energies ..than from a course that initially cost 3k plus the continuing access fees..and that is no B.S. ..[if you have to edit that out so be it]..I will,in the new year,sign up for one of your trial offers..your presentation of info.. is far superior than any other I have seen..Thankyou..

44 Winston C December 29, 2010 at 9:31 pm

I came across Topdogtrading courses by sheer accident and I am glad I did. It should have been sooner.
Barry you are a great teacher and one of the best I have come across thus far. I too have taken a host of courses but to me yours stand out and is the best value money can buy. Your teaching methodology is clear and concise and I am so impressed that I now want to buy your indicators.
Wishing you all the best and a Happy New year.

45 Csaba Varga December 29, 2010 at 10:52 pm

Dr B Burns !! You did it again. Wonderful explonation on Fibs!!! Csaba

46 Ruud December 29, 2010 at 11:52 pm

Hi Barry,

I have followed your free video courses and must say I am convinced by your knowledge and ability to explain in normal speaking language the concepts and approach of the forex market. Certainly worth a followup for the rest of your courses.
Warmest regards,

Ruud
The Netherlands

47 Khalil Malik December 30, 2010 at 2:16 am

I enjoyed the top dog videos related to fibonacci retracements.This will certainly be helpful in my trading.Keep up the good work.

48 Richard Lam December 30, 2010 at 2:41 am

It’s very useful and practical

Many Thanks!!

49 Olav December 30, 2010 at 6:02 am

Hi Barry,

I enjoyed your clear and logical teaching. Excellent videos.

Happy New Year
Olav

50 JohnA December 30, 2010 at 6:58 am

I am very new to trading and so am still learning but I must say I have found the free video courses very helpful. Thanks.

51 Albert Tan December 30, 2010 at 10:44 am

Hi Barry Burns

You introduction on Fibonacci Retracement Trading is very interesting. I would like to know how I can use it with the other indicators? What happens if all Traders use this method for their trades ? Does it mean that we will know their entry and exit points?
I would appreciate if you could enlighten me on this.

Finally, Have a Happy and Prosperous New Year.

Albert

52 Elam December 30, 2010 at 10:56 am

Dear Barry, I went through your free videos and articles (5 energies and fibonacci…) and found them of a great value. In simple and didactical words they explain key and fundamental rules and principles of successful trading. I personally found them easier to understand and they were a plus for my day trading system. I cannot thank you much for the time and devotion you spent to create these very useful tools. Please keep going , I guarantee that the truth is on your side. And in this seasonal time I wish you all the best and happy new year.
Elam

53 val December 30, 2010 at 11:11 am

Thanks Barry, I find your training resources informative and very well presented.
I always look forward to anything you have to say about trading.

Val

54 Enes December 30, 2010 at 12:36 pm

—Barry, You are the most honest teacher in the business. You gives so much practical advice and it can be used in the same day.
Didactic format is such clear, concise and to the point. Also Your videos are very understandable.
A trader who learns this methodology will have good powerful tools available to thrive in all m,arket.

55 PRADIPKUMAR PATEL December 30, 2010 at 2:27 pm

Hi Dr Burns:

As usual very nicely presented basic FIB. education. Good luck in your business and wish you and your family a Happy New Year

56 Ernest Anthony December 30, 2010 at 4:27 pm

Thank Barry

57 dana December 30, 2010 at 8:49 pm

as a new course member I am just beginning to study the foundation 1 and 2 courses . To date I have completed the Manual and five videos. After 10 years and thousands of dollars spent trying to learn day trading, I feel bottom line, this is the best course I have taken. I would vote Topdog trading, and Dr. Barry Burns. a strong # 1. I am very thankful I have found someone to show me the way. dana Fl.

58 sev December 30, 2010 at 10:41 pm

Barry, All your videos are very clear and concise. Your indicator videos have been an immence help to my understanding of the Market.Please keep it up.MANY MANY THANKS.

59 Subra December 31, 2010 at 5:33 am

Hi Barry,thanks for the all the articles and videos on trading methods.As usual your explanations on Fib. applications are very informative. They have added on to my scanty knowledge of the Fib. system. Keep up the good work !

60 Daryl December 31, 2010 at 8:27 am

Barry your Foundations 1 & 2 courses were a breath of fresh air. I took your advice and packed away my preconceptions to look at my trading with a fresh set of eyes, and I haven’t regretted it for a moment.

Thanks a lot for your straight up, clear style of presenting such a challenging subject.

Daryl.

61 Maran December 31, 2010 at 10:36 am

Hi Barry,

Your detailed course materials are very informative and simple to understand for a beginner like me. I wish that you will continue to give us your most valuable advise and share your expertise with us. Wishing you a prospertous New Year Greetings, 2011. My vote is for you. Thanks.

Maran

62 Hugh December 31, 2010 at 10:44 am

Hi Barry,
Top Dog Trading videos realy good info for me being a newbie what better way
to describe it than TOP DOG
Thanks Barry and a Happy and profitable New Year

Hugh

63 Hugh December 31, 2010 at 10:44 am

Hi Barry,
Top Dog Trading videos realy good info for me being a newbie what better way
to describe it than TOP DOG
Thanks Barry and a Happy and profitable New Year

Hugh

64 pete December 31, 2010 at 12:53 pm

Barry has a good method of teaching. He also offers many free videos on trading. His courses are fairly priced and very helpful. I would recommend them to anyone. He is a positive example of a trading mentor in an industry filled with scams and hype. Barry I hope you have continued success as a mentor, and thanks for sharing your insight and experience.

65 David December 31, 2010 at 4:49 pm

Useful stuff, clearly explained. Many thanks.

66 Bijan January 1, 2011 at 12:38 pm

Hi Barry, your cources are the best and, i found them very interesting the way you explane
them and are ful of information. please carry on with the good work.
thank you very much

67 akhtar aboobakar January 2, 2011 at 6:33 pm

Hi Barry
Your presentaions are quite easy to grasp .I am quite hooked to them and am
contemplating joining your courses.
My vote is definitely with you and good luck.

68 Michael January 3, 2011 at 7:56 pm

Thanks Barry for another informative video. Your foundations courses and videos are brilliant and I would recommend your courses to anyone interested in trading. I’m looking forward to getting your intermediate course very soon. Best wishes for 2011.
Cheers Barry!!

Michael

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