When looking for an ideal number to use for your indicator or Moving Average settings, Fibonacci Numbers can be used.
Here are all the Fibonacci numbers you can use when adjusting your trading indicators
1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610
It is not recommended to use anything higher than 233 as this would cause a lot of lag.
Next time you're working with a technical indicator and you find it hard to experiment with a number, don't just try a random number, instead, use these numbers whenever you're trying to adjust your indicators.
How are these numbers formed as part of the Fibonacci Sequence?
Fibonacci numbers are found by adding up the two numbers before it, together.
Did you know?
Several famous technical indicators and trading systems have been built using "Fibonacci sequence" numbers for their settings:
- Trader, Raghee Horner, famously uses the Fibonacci number of 34 to construct her GRaB Candles and 34 EMA Wave.
- Dean Malone, author of the Traders Dynamic Index indicator, uses the Fibonacci number of 34 for the yellow Median Base Line (MBL) settings in the TDI.
Can you show me an example of Fibonacci numbers used in indicators?
Sure. Here is a example template which comes with two Exponential Moving Averages, both using Fibonacci numbers as their inputs 13 & 55.