One of the most effective forex trading tools is the Fibonacci studies.

In the late 1100s the great mathematician Leonardo Fibonacci da Pisa was born. He discovered the pattern of a number series that equated to the same or related value when multiplied or divided following different sequences. The discovery came to be known as the Fibonacci series, which is now a forex trading analysis and trending tool.

After his travels and stay in Egypt, where he could have continued testing his number series discovery, he finished his Book of Calculation or Liber Abacci. In the book he introduced the said number series as follows: 1,1,2,3,5,8,13,21,34,55,89---and onwards, among other things. The principle used in the series is what forex trading is interested in.

Choose any two adjacent numbers to add and the sum will be the next number after the two numbers. Like, at the beginning of the series, we find 1 and 1 adjacent. If we add them the sum is 2, which is the number immediately after 1 and 1.

Again, if we perform a ratio on two numbers in sequence about midsection in the series---dividing the smaller number with the bigger one---we'd arrive at the same (or almost the same) answer. Say, we choose the number 34 in the series. The next higher number to it is 55. If we divide 34 by 55 we get 0.618. Now, as we go on dividing two adjacent numbers further in the series, answers come closer and closer to the phi value.

Forex traders don't really need to master any of the above. But they do need to ascertain if the software they are using for charts and assessing charts is Fibonacci relevant. If it is, then studying and analyzing charts become more exciting.

We won't go into the nitty-gritty of it all. In summary, we will notice how many times a security will lean or be pushed back at certain Fibonacci levels in actual forex trading charts. Lots of forex trading players use this tool so that this result ensues in such a manner, and mostly each forex trading prediction using the tool becomes so at said levels. Moreover, such result probably is also observable partly due to the tendency of it all to fall into the natural order of the market.

Trends of buying and selling seen in forex trading charts are better analyzed with the Fibonacci series. To chart a buying or selling trend in forex trading this tool is important.