Just realized that many people are still confused about what Fibonacci really is in the trading industry. Although it is very popular, most only understand part of it.

Actually, Fibonacci is a sequence of numbers that has been connected since ancient times (0, 1, 1, 2, 3, 5, 8, 13, 21...) created by adding the two previous numbers together. What’s interesting is that these ratios appear throughout nature, from seashells to sunflower petals, and traders use them to find support and resistance levels of prices.

When calculating Fibonacci numbers, you get special ratios such as 0.618, 1.618, 0.382, which become golden ratios used effectively in price prediction.

**Tools used in trading:**

Fibonacci Retracement - Used to find buy points when the price pulls back. Drawing from the lowest to the highest point creates support and resistance lines at levels 23.6%, 38.2%, 50%, 61.8%.

Fibonacci Extension - Used to find profit targets when the price breaks out. Target levels are at 113.6%, 127.2%, 161.8%, 200%.

Fibonacci Fans - Combine price and time, creating sloped lines used to identify support and resistance.

**How to use Fibonacci in actual trading:**

In an uptrend, wait for the price to pull back, then use Fibonacci Retracement to find buy points at 23.6%, 38.2%, 50%. In a downtrend, do the same but for selling. Importantly, other tools like EMA or RSI should be used to confirm; Fibonacci alone should not be used for trading.

The advantage is that Fibonacci is an easy-to-use tool, with clear readings, and traders worldwide use it the same way. The disadvantage is that it is subjective and requires confirmation from other tools.

Try installing it on a chart and experimenting; you'll better understand that Fibonacci is a truly useful tool in trading.