Lesson 1 -- Fibonacci Number Sequence

The Fibonacci Sequence is most likely the most influential series of numbers in the world. It is also likely that you encounter the numerical pattern everyday. This mathematical series was discovered by Leonardo Fibonacci of Pisa in the early thirteenth century and was outlined in his book, Book of Calculations. 1, 1, 2, 5, 8, 13, 21, 34, 55, etc. are the "golden" numbers that are found in geometry, art, anatomy, music, biology, botany, conchology, and even trading. After the two starting values, each following number is the sum of the two proceeding numbers. Fn=Fn-1 + Fn-2

How does this relate to trading? The ratio of any number to the next larger number of the sequence is 62% (or specifically 61.8%), the "Golden" ratio. The inverse of that Fibonacci ratio is 38% (or specifically 38.2%). Mathematical psychologist, Vladimir Lefebvre suggested that traders exhibit positive and negative evaluations of the opinions they hold about the market. These negative and positive evaluations have direct correlation with the retracement percentage seen in market analysis.

You can use the Fibonacci tool on MarketClub's Java Charting Applet by clicking on the high points and most recent/major low. This will plot three ruling lines that represent a 38%, 50% and 62% markings between the chosen high and low points. These levels can help traders identify pullbacks/retracements. As you move through different time periods, the Fibonacci lines will readjust to fit various data constructs. It is possible to use this function regardless of market trend direction. The Fibonacci tools is also useful to analyze equities, futures, forex and precious metal markets.

If you are interested the Fibonacci Sequence you may also want to obtain more information on Elliot Wave and W. D. Gann.

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[noergelstein]

Actually, the technical charts may work if enough people believe in them. Then it is a self fulfilling prophecy.

[MrDrunkmonkey21]

I understand how the "Golden Rectangle" builds on it's self: 1,1,2,3,5,8, this sequence was discovered by Leonardo Apiza aka Fibonacci. The scale that the "Market Club" meant to say was 1.618 not 1.68. I don't think that this guy can really tell were the markets going to go, I mean he doesn't even show how these numbers apply to the changes in market price. There are so many more factors that need be consider.

[MakeMoneyBetting]

Which books of WD Gann are most related to Fibonacci etc? I have read "The Search for Gann's Master Time Factor" which is great for time cycles. Looking at further info now

[mallamby13]

I use tradestation and I don't see the Fibonacci sequence as an option for technical analysis. If anyone here uses tradestation, please let me know if there is another form of technical analysis available on tradestation that is similar to the Fibonacci Sequence. Or let me know if the fibonacci sequence is under a different name in tradestation.

[lukegranger89]

This is absolute garbage. If it actually works, then why are you infront of a computer making useless videos and not in an island? Oh wait..

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[sebastian869]

and that is the point, if enough people do than its relevant

[AngeluuKiyokoia757]

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[jentaurus14]

thanks a lot. You presented it very well indeed!

[freeSCALPINGindicato]

Brilliant trading info! Fibo is also great for SCALPING!

[patrick258181]

Every one is trying to find a magical equation to answer all there problems and make them rich. You want to earn money in stocks the charts only quickly tell you companies past habits. You really want to know where it's going to go. Look whats going on in the world, whats going on with people and the company your investing in. Then ask yourself is there a future need want or desire among the main stream population, is the company responsible and dependable what vulnerabilities would it have?