Fibonacci progression
Definition
A Fibonacci progression is a money-management method in which trade sizes follow the sequence 1, 1, 2, 3, 5, 8: a loss moves you to the next number, a win steps back two numbers. It grows more gently than martingale but stays exponential — the ratio of neighbouring numbers tends to 1.618.
How the progression works
Trade sizes are taken from the Fibonacci sequence in units of the base trade: 1, 1, 2, 3, 5, 8, 13, 21, 34, 55. Each next number equals the sum of the two before it.
Two rules govern the movement along it: a loss takes you to the next number, a win returns you two numbers back. Falling below the start means the accumulated loss of the series is recovered and everything begins from the base size again.
The double step back is not an arbitrary detail. It is what makes the method self-sufficient: the size of one win is roughly equal to the two losses before it, so a series is dismantled by several successful trades instead of one large one, as in martingale.
How much bank it takes
| Number | Size on a $1 base | Accumulated over the series |
|---|---|---|
| 5 | $5 | $12 |
| 8 | $21 | $54 |
| 10 | $55 | $143 |
| 12 | $144 | $376 |
The ratio of neighbouring numbers in the sequence tends to 1.618, so the growth stays exponential. A full pass through ten numbers requires a bank of 143 base trades — with a base of 1% of the deposit that is already more than the deposit itself.
How it differs from a ladder progression
Both methods work a drawdown off gradually rather than with a single trade. The difference is in the step and in the retreat: the ladder grows by a fixed multiplier (usually 1.2) and comes down one rung after a win, while Fibonacci grows along the sequence and retreats two numbers.
Because of that double retreat Fibonacci gets out of a series faster on wins, but it also builds sizes more steeply. The ladder is gentler and more predictable, Fibonacci more aggressive over the same number of steps.
Frequently asked questions
How does a Fibonacci progression differ from Fibonacci levels?
They are different tools with a common origin. The 38.2% and 61.8% retracement levels belong to technical analysis and answer the question of where to enter a trade. The progression is a money-management method: it answers the question of how much. All they share is the mathematician's name.
Why step back two numbers after a win rather than one?
Because the size of one win roughly covers the two preceding losses of the sequence. That double step back is what makes the method work: a series is dismantled faster than with a single-step retreat, yet without the avalanche growth of sizes you get in martingale.
How much gentler than martingale is the progression?
On the early steps, noticeably: 1, 1, 2, 3, 5 against 1, 2.25, 5.06, 11.4, 25.6 at an 80% payout. But the growth is still exponential, just on a smaller base: by the tenth number the size is 55 times the base, and the full path needs a bank of 143 base trades.
Does the sequence give a mathematical edge?
No. It sets a convenient order of sizes but changes neither the payout percentage nor the share of winning trades — that is, not one of the parameters the result over distance depends on. Like any progression, it redistributes the outcome over time rather than improving it.