Term

Fibonacci sequence

A Wealth of Knowledge

Fibonacci refers to a sequence of numbers developed by a prominent Italian mathematician Fibonacci and widely used in many areas of life. The sequence is as follows:

0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, ...

Whereby the following digit is always a sum of two previous digits. For instance, the first digit is "0" followed by 1, then another 1. The sum is as follows:

0 + 1 = 1
1 + 1 = 2
1 + 2 = 3
2 + 3 = 5
...

and so forth. However, this is not the most notable thing about this sequence of numbers. The most notable thing worth mentioning is that if one took any number and divided it by the previous number. One is to find either 1.618 or something close to that number. It is also said that the higher one goes in terms of this sequence the accurate it becomes. 1.618 is referred to as the golden ratio, why is that? Because it applies to almost everything in life, click here to see the pictures of the things it applies to. Now how does this apply to trading? To find out more about this tool and how it is used in trading click here.

« Dictionary