The Platinum Sequence of Numbers in Financial Trading

This analysis reveals a valuable numerical sequence for trading the global financial markets. The sequence is based on a combination of Fibonacci numbers, Prime numbers, and Fibonacci ratios.

Starting with the Fibonacci sequence.

 

The Basic Fibonacci Sequence

The Fibonacci sequence is a numerical series where each number is the addition of the last two numbers.

The sequence begins as:

• 0, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987, 1597, 2584, 4181, 6765, 10946, 17711, 28657, 46368, 75025, 121393, 196418, 317811, 514229, 832040, 1346269…

Characteristics:

• Every number equals the previous two (e.g. 3=2+1 and 5=3+2)
• Every number is 1.618 times the preceding number (e.g. 233/144=1.618)
• Every number is 0.618 of the number to the right of it (e.g. 144/233=0.618)

Why Fibonacci Numbers are Important?

Financial markets tend to create historical highs and lows near Fibonacci numbers. In addition, 0.618/1.618 are the most important ratios of financial trading.

Backtesting on Dow Jones Industrial (1928-2016)

In my book (2018) «Trading World Markets Using Phi and the Fibonacci Numbers» I examined Dow Jones Industrial’s record highs for the period October 1928 until April 2016.

As you can see in the following table, there were many times when DJIA has formed a record high near to a Fibonacci number.

Table-1: DJIA Record Highs (1929-2016)

Source: G. Protonotarios (2018)

From all seven key historical record highs, in five times the percentage difference between the record high and the closest Fibonacci number was less than 7.5%. On the first two occasions (1929 and 1966), there was almost a direct hit on a Fibonacci number (377 and 987). All the times, the record high was above the corresponding Fibonacci number.

» The book on Amazon

 

The Prime Numbers

A prime number is a natural number that is NOT a product of two smaller natural numbers. In other words, prime numbers are numbers that have only 2 factors: 1 and themselves.

List of the first prime numbers:

• 1, 2, 3, 5, 7, 11, 13, 17, 19, 23, 29, 31, 37, 41, 43, 47, 53, 59, 61, 67, 71, 73, 79, 83, 89, 97….

Characteristics:

• Prime numbers are natural numbers (natural numbers are simply all the positive integers)
• Prime numbers have only 2 factors: 1 and themselves

Why Prime Numbers are Important?

Prime numbers are very important because they are the building blocks of whole numbers. This analysis will reveal how to use them in financial trading.

 

 

Step-1: Selecting the Fibonacci Primes

Starting by selecting only the numbers that are Fibonacci Numbers, and at the same time, Prime Numbers. From the number 1 to 1 trillion, there are only twelve Fibonacci Prime numbers.

Table-2: The first FiboPrimes

 

Step-2: Seeking for the Missing Harmony (2.62/6.85)

The above sequence of FiboPrimes (table-2) is interesting, nonetheless, the sequence as a whole suffers from lacking harmony. There is no harmony when we divide each FiboPrime to the previous. The ratios don’t fit the numbers. Something is missing.

However, until the number 1,597, we can identify harmony that includes the approximation of 2.62 and 6.85 ratios. But why are 2.62 and 6.85 important to our sequence? The answer is that behind 2.62 and 6.85 we can identify the golden ratio of 1.618.

• 2.618 = 1.618 X 1.618
• 6.854 = 2.618 X 2.618
• 6.854 = 1.618 x 1.618 x 1.618 x 1.618

The golden ratio or else ‘φ’ is the divine proportion found in mathematics, music, architecture, nature, and even our entire astronomical universe.

 

Step-3: Completing the Platinum Sequence of numbers

The key to revealing the platinum sequence of numbers is the golden ratio (1.618) and its products 2.62 and 6.85. In order to create harmony, we add a few more Fibonacci numbers. Seeking for order and aiming to achieve the perfect harmony.

Table-3: The Platinum Sequence (consisting of only Fibonacci numbers)

Notes:

• All the numbers in the sequence are Fibonacci numbers (not all Fibonacci numbers are included).
• The sequence includes all Prime numbers that are also Fibonacci numbers.
• The numbers in bold (e.g. 1,597 and 28,657) are 12 Fibonacci Primes.
• A few more Fibonacci numbers are added in order to create perfect harmony (1.618/2.618/6.854).
• The ratio constantly changes between 2.618 and 6.854 imitating the natural vibration of a system (the natural vibration of a system is a pure property, according to Pythagoreans).

The Platinum Sequence of numbers in Financial Trading

The above sequence can be used when trading any financial market, as follows:

• Seeking significant price highs and lows near these numbers
• Seeking potential trend reversals near these numbers
• If the price manages to cross a number in the sequence, and make several closes above/below it, then the theoretical target is the next number
• Applying the sequence of numbers not only on prices but also on market values (price x total number of shares)

 

Final Thoughts

As I have been using Fibonacci numbers and ratios for a long time, I found them highly applicable in financial trading. However, no sequence of numbers or any other TA can save the day of a bad trader. Understanding fundamentals and applying proper risk management is far more important than learning about any technical analysis model.

A dramatic change in the fundamental landscape invalidates the importance of any static technical analysis model. Research matters only if you are able to understand the dynamics of demand and supply, and only if you can adapt to what the market is willing to offer you each time.

Finally, remember that no technical analysis method can predict future prices, the only things it might be able to predict is volatility and risk/reward. These two elements (volatility and risk/reward) are all you need to know if you know how to use them.

 

■ Trading with Fibonacci Primes -The Platinum Sequence of Numbers

Protonotarios for TradingCenter.org (c)

13th of January, 2022