Very popular in the world of trading, the Fibonnaci sequence has been used ever since technological breakthroughs led towards the wide-spread use of trading technologies for the common man. You're reading this article because of your interest into trading.
Whether you're interested in starting, or you've already started trading, I hope to bring to you quality information regarding this method and its application in modern day trading. But first, I want to share with you the story of the person who is responsible for popularizing this sequence to the western world. I say popularized, because it is a little known fact that he was not the first one to discover it, but read on and I will share this information with you.
Nicknamed Fibonacci, an Italian mathematician whose real name is Leonardo Bonacci lived in Pisa, and he was born into a humble family of traders in 1170. His father was named Guglielmo and he worked at a trading station in Bugia (currently Béjaïa), which is a Mediterranean port in northern Algeria. Leonardo studied mathematics in Bugia, but he was also an avid traveler.
Through his travels he discovered the Hindu-Arabic numerical system and quickly figured out its advantages over the current systems in place. He is one of the most influential people that led to the adoption of the Hindu-Arabic numerical system by the western world. The way he became so influential was through his book called "Liber Abaci" or rather, The Book of Calculation, which he published in the year 1202.
In his book "Liber Abaci", he introduces the "modus Indorum", meaning "the method of the Indians", which we recognize today as the Hindu-Arabic numeric system. This book explained the use of the numbers 0 to 9 and introduced the concept of placement value. It presented detailed examples of how to practically use this, to the western world innovative method. The examples included the application of Arabic numerals to bookkeeping, weight and measure conversion, interest calculations among other things. Educated Europe absolutely loved the book and it was so well-received that we can feel the effects of it's influence even today. In the following years from 1202 to 1228 this system completely overtook the previously used Roman numerical system and improved the overall business calculation capabilities, which eventually leads to an exponential growth of accounting and banking in the heart of Europe.
Within the book, there was an interesting proposal, an observation of a problem. It involved the growth of rabbits in ideal conditions. Within the solution to this mathematical problem, was contained a sequence of numbers, which we now know as Fibonacci numbers. Interestingly enough, this is not the first time this sequence was recorded, since historians have discovered documents by Indian mathematicians at least 600 years before Leonardo himself discovered it.
Even though Fibonacci discovered this sequence, he didn't extrapolate the relationship between the numbers and their ratio. His method was to simply collect the starting number one, add it up with every number before it, and so on.
For visual purposes the sequence is as follows:
