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Many people have an incorrect idea of fib numbers and fib ratios. Fib numbers
are the quickest way to get to the fib ratios but fib ratios DO NOT need fib
numbers.
Trick? Fib ratios approach 1.618 as the numbers get larger, therefore, we
will start with any number over 1000 and a random number. Example: 1012
+2034
The sum of the first 2 numbers = 3046 and starts the same process that we use
for Fib numbers. Add the result to the previous number to get the next number
in the series Example 3046+2034=5080 Now divide 5080 by the previous number
3046 to get 1.6677 and repeat for the next number 5080+3046=8126, 8126
divided by 5080 = 1.5996 Notice that the first number was above 1.618 while
the second was below it. As you add more numbers in the series, the numbers
approach 1.618.
The next number is 8126+5080=13206 and 8126/5080=1.5996 and 13206/8126=1.625
and 13206+8126=21332, now 21332/13206=1.615 (Getting Closer). The point is
that ANY number series that is added together to get the next number will
approach the same fib RATIO between numbers in the series. You do not have to
start with fib numbers to get fib ratios. Fib Ratios are everywhere.
Compare these ratios with the fib numbers and with random numbers. The fib
numbers are 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55 etc. We will start with 8 &
13.
13/8=1.625, 21/13=1.615, 34/21=1.619. The last ratio in our random series was
1.615 so if we add 21332+13206=34538 and 34538/21332=1.619 !!! Eventually all
numbers lead to 1.618. Fib Ratios are independent of fib numbers. As for
previous tests on fib ratios, remember, the LARGER the numbers, the closer you
get to the fib ratios. If you test alot of commodities with small numbers, you
may not find the ratios valid. Remember, the first numbers in a sequence have
the LEAST resemblance to fib ratios. Ex 2/1=2 and 3/2=1.5 With the size of
the S&P now, will it respond better to fib ratios? I will let you work that
out for yourself.
Good Trading.
Lynn
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