"Leonardo Pisano Bigollo was a brilliant mathematician who lived in thirteenth-century Italy. Like many of his time, he was known by several different names, the most famous of which is Fibonacci (fib-buh-NAH-chee)."
During his lifetime, Fibonacciwas widely known for his Book of Calculation, in which he discussed a series of numbers we now call the Fibonacci series where each number in a set is the sum of the two preceding numbers, such as 3, 5, 8, 13, 21, 34, 55, 89...
Dividing a number in the series by its preceding neighbor results in a number close to 1.618, which is widely known as the Golden Ratio, a mathematical anomaly that carries considerable significance when applied to price movements in the world of stock trading.
A "Fibonacci retracement," for instance, measures the distance between two extremes of a stock price and divides that range by key ratios like .618 to predict its future in a series of "measured moves."
As David Halsey explains in Trading The Measured Move, "Markets set up in a series of measured moves and continue in a trend of either rising or falling prices until the series of MMs fails... All series of MMs fail eventually, at which point a change in trend occurs, also known as a price reversal."
Never mind monetary policy or product innovations or the effectiveness of corporate management, this level of stock trading is strictly technical and numbers-based, and it dominates world trading in the 21st century. This book provides a methodology for the individual investor to use in picking entry and profit targets, managing stops, and pursuing profits in currency and day trades especially.