Discovering the Origins of Fibonacci Sequence: Where to Find It?

The Fibonacci sequence is a well-known mathematical sequence that has found its way into various fields, includingfinanceand investing. But where did this sequence come from? In this article, we will explore the origins of the Fibonacci sequence and discuss its implications in the world of finance.

What is the Fibonacci sequence?

The Fibonacci sequence is a series of numbers where each number is the sum of the two preceding numbers. The sequence starts with 0 and 1, and the next number in the sequence is obtained by adding the two previous numbers. Therefore, the sequence goes 0, 1, 1, 2, 3, 5, 8, 13, 21, and so on.

Where did the Fibonacci sequence come from?

The Fibonacci sequence is named after Leonardo of Pisa, who was also known as Fibonacci. He was an Italian mathematician who lived in the 13th century and was one of the first people to introduce the Hindu-Arabic numeral system to Europe. Fibonacci is credited with introducing the sequence to the Western world through his book Liber Abaci, which he wrote in 1202.

What are the implications of the Fibonacci sequence in finance?

The Fibonacci sequence has found its way into finance and investing through the use of Fibonacci retracements and extensions. Fibonacci retracements are used to identify levels of support and resistance in a financial asset's price movements. These levels are based on the Fibonacci ratios, which are derived from the sequence. Fibonacci extensions, on the other hand, are used to identify potential price targets for a financial asset. These targets are also based on the Fibonacci ratios.

Investing strategies using the Fibonacci sequence

One popular investing strategy that uses the Fibonacci sequence is the Fibonacci retracement strategy. This strategy involves identifying the high and low points of a financial asset's price movements and using the Fibonacci ratios to identify levels of support and resistance. Traders may then use these levels to enter and exit positions.

Another investing strategy that uses the Fibonacci sequence is the Fibonacci extension strategy. This strategy involves identifying the high and low points of a financial asset's price movements and using the Fibonacci ratios to identify potential price targets. Traders may then use these targets to set profit targets or to identify potential areas of resistance.

Conclusion

The Fibonacci sequence has a rich history and has found its way into various fields, including finance and investing. By understanding the origins of the sequence and its implications in finance, investors can use it to develop their owninvesting strategiesand potentially improve their investment returns.