FIBONACCI GOLDEN RATIO # 2
The Golden Ratio to identify and forecast the Extent of a Correction and a possible pullback.
Fibonacci numbers 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144 …. & so on
The another strategy for minimizing Risk and maximizing Gains
If you divide the previous number in the Fibonacci series by its succeeding number
For instance :
5/8=0.625 ; 8/13=0.615; 13/21=0.619& 89/144=0.618 till infinity
This Ratio gets closer to 0.618
Amazing Mathematics …
Now I will show you how to get use this Fibonacci Mathematical Calculations in your day to day Trading
This week also our traders made handsome profit of Rs. 21,000/- on investment of approx Rs. 1,09,000/-. Returning 19.20% absolute return on investment. The returns were amazing as compared to time involved in holding the stock which is surprisingly just a SINGLE DAY
Stock Name : UPL ( United Phosphorous Limited) Recommended Rate: 712-708 (SL 701) CMP:730
Risk Reward ratio of 0.98 : 3.10 @ 708 & 1.54 : 2.52 @712
In last week, UPL shot up to Rs 750 approx (see point number 2 on chart) from our recommendation rate of Rs 687, followed by a smaller correction in price up to Rs. 707 approx (see point number 1 on chart).
Now, Beauty of Fibonacci Retracements is that since you see the stock has started falling from Rs 750. You need to just wait and watch till you don’t see the stock touching 61.80% retracement level of previous up trend.
You can calculate the 61.8% retracement level by doing simple math as below;
750 (recent high) – 687(recent low)= 63, then, 63 x 61.80% = 39, then 750 – 39 = 711 ( approx) (point no 3 on chart)
This gives you your Best Entry point in the stock ie. 711, with 1-1.5% Risk on price.
You also get your target price by calculating the 61.80% retracement level between the high of 750 & low of 707. The target price i.e. 733 is arrived by similar math.
Not surprisingly the The Stock Skyrocketed>>>>> & made a high of 732 ( see the red horizontal line on chart)
And Our Traders booked handsome profits the next day as usual.
4 Questions to ask ourself,
- What do I need to do to make consistent profits in share trading ?
- Will my present trading style help me achieve my goals ?
- What trading strategy do I need ?
- How can I improve my trading skills ?
“The Smart Traders, lower the noise around the market and focus on their Own, Time Tested & Proven Strategy, Just to focus on the trading plan & make big profits.”