Fibonacci and The Forex Market

Fibonacci Will Earn You Money In The Forex Market

Every keeps telling me that I can earn high profits trading currencies with Fibonacci… I just need to find out who he is.

We know him as Fibonacci, but his real name was Leonardo Pisano, because Pisa was the town where he was born. His father’s name was Guillermo Bonacci. In Latin, the common European language of the time, “filius Bonacci” meant “son of Bonacci”. This was combined to make “Fibonacci”, similar in english to “Fitzgerald” (“son of Gerald”) or “Robertson” (“Robert’s son”) or “MacDonald” (“son of Donald”).

Now Fibonacci was born around 1170AD. So, if you are trying to reach him, you are out of luck, but if you do, please have him give me a call. That was a longtime ago, way before currency and before computers and before the Forex Exchange. One thousand years later, his name is used daily by many traders, written thousands of times a day on charts, on trading sites, in newsletters. This man probably never met more than a few hundred people in his entire life.

Fibonacci, was a mathematician, and wrote his first book entitled The Book of Calculations in the year 1202.

This sounds like a history lesson, not something to do with the complex matters of the Forex Exchange and Currency Trading. Fibonacci developed a set of numbers from two studies.

The best explanation I can offer comes from a history on the life of Fibonacci.

“In his first publication, Liber Abaci*, Fibonacci presented the problem:

A certain man had one pair of rabbits together in a certain enclosed place, and one wishes to know how many are created from the pair in one year when it is the nature of them in a single month to bear another pair, and in the second month those born to bear also. Because the above written pair in the first month bore, you will double it; there will be two pairs in one month. One of these, namely the first, bears in the second month, and thus there are in the second month 3 pairs; of these in one month two are pregnant, and in the third month 2 pairs of rabbits are born, and thus there are 5 pairs in the month; ..

And so on, he explains each month in turn. Finally, he concludes:

You can indeed see in the margin how we operated, namely that we added the first number to the second, namely the 1 to the 2, and the second to the third, and the third to the fourth, and the fourth to the fifth, and thus one after another until we added the tenth to the eleventh, namely the 144 to the 233, and we had the above written sum of rabbits, namely 377, and thus you can in order find it for an unending number of months.

So the zero we now place at the start of the sequence arguably doesn’t belong, especially considering it wasn’t part of Fibonacci’s puzzle problem that made the sequence famous.”

From this study he developed the Fibonacci sequence 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377…

I know it sounds like a bunch of malarkey, but this sequence and these specific numbers have been tested and tested over and over again, and continually appear throughout nature and in mathmatic equations.

Many technical analysis experts rely on the use of Fibonacci numbers. We will take a more in-depth look at these strange numbers in a more advanced paper.

Believe me, many traders have used Fibonacci numbers to trade the forex markets and have earn high profits.

Take a look at this chart and see if you can find any magical numbers.