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The Mathematical Beauty of Trading: Fibonacci Series
Fibonacci is an Italian mathematician who proposed Fibonacci sequence. They are very popular with technical analysis traders in financial markets because they can be applied to any time frame. Fibonacci series, also called golden section series, is a magical series: 1, 1, 2, 3, 5, 8, 13, 2 1, 34, 55, 89, 144. ...

The most important function in this series:

1. This series starts with the third item, and each item is equal to the sum of the first two items. The mathematical expression is F(n)=F(n- 1)+F(n-2).

2. When n approaches infinity, the ratio of the former term to the latter term approaches the golden section of 0.6 18. Therefore, 6 1.8% became the key proportion of Fibonacci, which is the so-called "golden ratio".

3. Through the exploration of this series, we can deduce two important series-0.191,0.382, 0.5, 0.6 18, 0.809; 1、 1.382、 1.5、 1.6 18、2、2.382、2.6 18。 The most important numbers in these two series are 0.382, 0.5, 0.6 18, 1 .618, which are widely used in gold foreign exchange analysis with excellent results.

Fibonacci numbers often appear in our lives-for example, the arrangement of pinecones, pineapples and leaves, the number of petals of some flowers (typically sunflower petals), honeycombs, dragonfly wings, transcendental number E (more can be introduced), golden rectangle, golden section, equilateral spiral, and the law of twelve equal parts. These are all very interesting phenomena. Similarly, there are transactions in the stock market, gold market and futures market.

In the last article, we introduced the wave theory. How is Fibonacci sequence reflected in wave theory?

Proportion 1: If one push wave becomes an extended wave, the amplitude and time of the other two push waves will tend to be the same. This shows that in most cases, among the first, third and fifth push waves, one push wave will generally become an extended wave, while the other two push waves are basically similar in amplitude and time. Usually, the third wave has a higher delay probability, while the length and running time of the first wave and The 5th Wave are basically the same. In some cases, The 5th Wave extension is also possible, especially in the futures market, the probability of the first wave extension is very small, mainly in the inclined triangle. The length of the extended wave basically keeps the golden ratio with the other two push waves, such as 1.6 18, 2.6 18, etc. Of course, this ratio is not fixed.

Ratio 2: the ratio of the distance from the bottom of the fifth wave to the top of the third wave. Usually, the ratio of gold to gold is 0.6 18. This ratio is mainly used to predict the final target position of The 5th Wave.

Ratio 3: the ratio relationship between C wave and A wave. The ratio of the two is basically maintained at 1 or 1.6 18. After one wave operation is completed, the target position of C wave can be predicted by the amplitude of eight waves.

Ratio 4: In symmetrical triangle, the ratio between two adjacent waves is basically maintained at the golden ratio of 0.6 18, and the length of the latter wave can be measured by knowing the length of the former wave (common ratios are 1.6 18, 1.382).

0.382: the fourth wave is usually reversed; The turn-back ratio of the second wave part; It can also appear in the retreat of B waves (ABC waves run with the word "zi").

0.6 18: adjustment range of most second waves; B wave adjustment ratio (ABC wave band "Z" operation); The expected goal of the fifth wave

0.5:B wave adjustment range (ABC with "Z" operation).

0.236: The rare callback ratio of the second wave or the fourth wave is a super adjustment at this time.

1.382, 1.236: In the irregular adjustment pattern, the relationship between B wave and A wave can be used to predict the target position of B wave.

0.6 18: the relationship between the third wave and the first wave; The ratio relation between c wave and a wave.

From the adjustment point of view, the adjustment around 0.382 belongs to strong adjustment, the adjustment around 0.5 belongs to medium adjustment and the adjustment around 0.6 18 belongs to weak adjustment. Once the adjustment falls below 0.6 18, the adjustment is likely to be close to 100%.