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Fibonacci - Who Was He And How Could He Improve My Stock Trading
By Chris Towland
The word Fibonacci means a lot of things to a lot of different
people. For mathematicians, Fibonacci is an important number sequence.
For some painters, sculptors, and other visual artists, Fibonacci
is a principle theory of the arts. For traders, businessmen, economists
and the like, Fibonacci is a system that can efficiently predict
market trends. Yet, for most of us, Fibonacci sounds incredibly
complex and something that we'd rather not discover. But what
exactly is Fibonacci? What does it mean and for what is it used?
Fibonacci, which means son of Bonacci, is actually a nickname
used by the famous Italian mathematician and businessman Leonardo
Pisano. Bonacci, on the other hand, is the nickname of his father
and it means 'good natured' or 'simple'. While Fibonacci was born
in Italy, he spent most of his childhood years in Bugia (now Bejaia),
a Mediterranean port in Algeria where his father, Guilielmo, worked
as a consul for the merchants of Pisa. It is in Bugia where he
learned the Arabic numeral system, and later as he traversed the
rest of the Mediterranean world, he learned more of the Arabic
mathematical system and its practical uses.
In 1200, Fibonacci ended his travels and returned to Europe. There
he wrote a number of books that disclosed the mathematical skills
he had learned in his Mediterranean travels. Among his works that
were published are the Practica Geometriae, Flos, Liber quadratorum,
Di minor guisa, and his commentary on Book X of Euclid's Elements;
the last two mentioned, unfortunately, are already lost. His Liber
quadratorum, or Book of Squares, is probably his most magnificent
book, but it was not his most popular work. His most popular work
was rather the Liber Abaci, his first book that was written in
1202 where he introduced to the Europeans the Arabic numerical
and mathematical system. In this book, he also taught the Europeans
how to use such mathematical system in accounting and in trading.
Most importantly, it is in the Liber Abaci where he introduced
the Fibonacci numbers and sequence for which he is best remembered
The Fibonacci numbers, or sequence, was first used in Liber Abaci
as a solution to a problem regarding the ideal population of rabbits.
It is a recursive number sequence that starts with 0 and 1, and
the succeeding numbers being the sum of the two numbers preceding
it. This number sequence efficiently predicted the ideal growth
of the population of rabbits. Later, mathematicians and scientist
discovered that the Fibonacci number sequence has a lot of other
uses aside from just predicting the population growth of rabbits.
They have discovered that the Fibonacci sequence, in fact, occurs
in many various patterns of nature.
What started out as a way of counting rabbits has now found a
large number of other uses and applications. And as our present
day scholars continue to study about the Fibonacci sequence, more
and more uses for it continue to be discovered. Today, there are
a variety of applications where the Fibonacci sequence, and its
derivatives, are being used. It has found use in many computer
programs. A ratio derived from the Fibonacci sequence, called
the Golden Mean, has been considered by ancient Greeks to be the
ideal aesthetic ratio and is now being widely used by many visual
artists in their works. The Fibonacci trading system, which is
an efficient way of predicting future trends in the world financial
markets, has also become popular to expert traders and aspiring
traders as well.
Who in the past might have known that such a simple number sequence
like the Fibonacci numbers would have a great impact on a lot
of things today? Maybe, not even Fibonacci himself.
About the Author: To learn more about how you can use Fibonacci
to accurately predict major stock market turning points, visit
Fibonacci Trading at http://www.fibonacci-trading.com
Forex trading uses something that is called Fibonacci ratios,
and these are used a lot. These ratios are just a fraction of
the studies done on Fibonacci. Leonardo Fibonacci was an Italian
mathematician who became famous for discovering a simple number
series that created ratios which described the proportions of
things that exist in the universe. This series of numbers starts
with two ones, and then the next number is the sum of the two
numbers that precede it. These ratios are used in Forex trading,
and they make up a large percentage of subjects in Forex. Leonardo
Fibonacci was called the greatest mathematician of the Middle
Ages, as he contributed greatly to the developement of numbers,
and the algebra concept was based on his work in math.
Fibonacci retracement levels are used by Forex traders as support
and resistance levels. Hundreds of thousands of Forex traders
see the same support and resistance levels, and they place sell
and buy orders on the levels to place stops or enter trades. The
Fibonacci extension levels are used by Forex traders as profit
taking levels. Almost all software that is used for charting Forex
includes tools for both Fibonacci extension level and retracement
level. However, in order for you to apply the Fibonacci levels
to your tradings, it is imperative that you identify the Swing
High and Swing Low points.
Leonardo Fibonacci was famous for mathematics, and his mathematics
are famous in Forex trading. There are numerous Fibonacci principles
that are applied when dealing with the Forex trading market, and
using these principals can greatly improve your ability to make
an informed decision when you are trading on the forex market.
Fibonacci ratios are applied to targets, as well as numerous other
factors in Forex trading.
If Leonardo Fibonacci had not been the mathematical genius that
he was, Forex trading might not exist today and the world would
be a completely different place. Fibonacci numbers and ratios
are an important part of Forex trading and analysis. Fibonacci
retracement level and Fibonacci extension level are a tool used
by traders in the Forex market to help them control the risks
and profits of trading in the Forex market. Leonardo Fibonacci
has made a very important contribution to the world of market
trading, and his contribution is used in the Forex market on a
daily basis by hundreds of thousands of traders.