Leonardo Fibonacci of Pisa was an Italian mathematician responsible for the series 1, 1, 2, 3, 5, 8, 13, 21, … These numbers, called the Fibonacci series, are often found in nature. Each number is the sum of the previous two numbers.
In many applications, including stock trading, people do not use Fibonacci numbers directly. Traders typically use the golden ratio. One way to compute the golden ratio is to divide a large Fibonacci number by an adjacent number from the series. This ratio, like the Fibonacci series, is commonly found in nature. If we were to use the precise mathematical terminology, we would say that people trade using “The Golden Ratio”, but instead we will use the term “Fibonacci” as this term is common with traders.
The most common way traders use Fibonacci is to look for Fibonacci retracements. Trade-Ideas offers several alerts which report Fibonacci retracements and similar patterns.
We offer the following alert types which are related to this topic. Click on the icon for a detailed description of the alert, or click on the example link for additional samples of each type of alert.