|
PureBytes Links
Trading Reference Links
|
----- Original Message -----
From: "Art Zapper" <zendial@xxxxxxxxx>
Newsgroups: misc.invest.futures
Sent: Monday, September 24, 2001 12:46 PM
Subject: More On Fibonacci
: Cycle and astro types often talk about the Fibonacci ratio. It is
: based on the so-called Fibonacci number series, which is formed by
: starting with 0 and 1 and then adding each number to the previous one
: to get the next number in the series. Here it is:
:
: 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc
:
: One interesting thing about this series is that (after about the 10th
: number), if you divide any number by the following number, the ratio
: remains roughly constant at about 0.618. For example 34/55=0.6181818
: and 89/144=0.618055.
:
: You might recognize that ratio in its percentage form as 62%, a number
: very commonly used as a retracement value, the maximum correction from
: an existing high below which there is often a reversal. At best,
: putting too much faith in that exact number seems a little arbitrary,
: but many people do it anyway.
:
: Is there something "magic" about the Fibonacci series of numbers? The
: answer is an obvious NO and it is very easy to prove to yourself. One
: gets the same result using ANY two starting numbers and forming the
: series according to the rule of adding the two previous numbers to get
: the next one in the series. Just make up a spreadsheet and you can
: have fun playing the game.
:
: As an example take 47 and 221 and start forming the series in the same
: way. Here it is, along with the ratio of each number divided by its
: predecessor.
:
: 47
: 221 0.21266968326
: 268 0.82462686567
: 489 0.54805725971
: 757 0.64597093791
: 1246 0.60754414125
: 2003 0.62206689965
: 3249 0.61649738381
: 5252 0.61862147753
: 8501 0.61780966945
: 13753 0.61811968298
: 22254 0.6180012582
: 36007 0.61804649096
: 58261 0.61802921337
: 94268 0.61803581279
: 152529 0.61803329203
: 246797 0.61803425487
: 399326 0.6180338871
: 646123 0.61803402758
: 1045449 0.61803397392
:
: It even works if the starting numbers are not even close to each
: other, for example 5 and 10,350. Here is that series and the ratios
: taken out to 20 places:
:
: 5
: 10350 0.00048309179
: 10355 0.99951714148
: 20705 0.50012074378
: 31060 0.66661300708
: 51765 0.60001931807
: 82825 0.62499245397
: 134590 0.61538747307
: 217415 0.61904652393
: 352005 0.6176474766
: 569420 0.61818165853
: 921425 0.61797758906
: 1490845 0.61805553227
: 2412270 0.61802575997
: 3903115 0.61803713188
: 6315385 0.61803278818
: 10218500 0.61803444733
: 16533885 0.61803381359
: 26752385 0.61803405566
: 43286270 0.61803396319
:
: So it is obvious that this magic retracement number has nothing to do
: with the original Fibonacci series and it is just human nature that if
: the prices of a stock or commodity have retraced by something like
: 60%, market forces will often see to it that it just continues in that
: direction.
:
: The point of all this? Beware gurus-in-training who assume the
: Fibonacci ratios are anything more than approximations to human nature
|