# How can Fibonacci help a spread better?

A mathematical sequence first identified by Leonardo Fibonacci in the 13th century can help spread betters make money. Tim Bennett explains how.

It falls into the 'unlikely but true' category. A mathematical sequence first identified by Leonardo Fibonacci in the 13th century can help spread betters make money. Here's how it works.

The Fibonacci sequence is just a string of numbers 0,1,1,2,3,5,8,13, 21, 34, 55. The key to it is that each number is simply the sum of the preceding two. So 0+1 is 1, then 1+1 is 2, then 1+2 is 3 and so on. One of the features of the sequence is that each number is roughly 1.618 times bigger than the one before it. The higher the pair of numbers, the closer to this relationship they get so 13/8 is 1.625 and 55/34 is 1.617. Conversely if you divide any number in the sequence by the one that follows it you get about 0.618. Thanks to that fact 61.8% is known as the 'golden ratio'.

Taking this principle on, divide any number by the one two places further on and you get 38.2%. For the one three along, it's 23.6% and so on. For reasons that no-one has convincingly explained, that series 61.8%, 38.2%, 23.6% is important in nature it describes the way a snail or sea shell contracts from outside to centre for example.

## Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free