Dow Theory = Crap Theory ??

D

dozu888

For long time I have had doubt about 38%, 50% and 60% retracement theory.
Anybody out there trading with Fib retracement, do you set buy limit at retracement whenever there is a initial run, or do you wait for it to form a base around 38-62% retracement area?

I just put together some C++ coding to run through 2 years of NQ data. If a limit order is put in, when ever there is a run-up (reverse if there is a break-down), without waiting for a low risk set up, the result shows there is no edge whatsoever.

But if you wait for a low-risk set up, ( a narrow range, or a triangle for example), I think anywhere you take the trade is good, without considering the amount of retracement.

Please provide any input you may have.

I will be glad to send you the C++ code and the NQ data to run the test, and hopefully you can find a bug in my logic and successfully defend Charles Dow.

I think Thomas Edison said after hundreds of failures in looking for a material for light bulb filament.... now at least I know they don't work :D
 
i would like to share with you my extensive analysis of fib retracements.. basically, i rigorously backtested the actual DOW over a period of 12 years and the results speak for themselves.. =)

-qwik
 

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hey man =)

i was joking.. the 12 year monthly chart of the DOW bouncing at its 38% retracement was supposed to be humorous.. guess ill have to do some more backtesting on my humor.. anyway =)..

-qwik
 
qwik it was pretty funny. I was expecting tradestation results and complicated rules. By the way I would like to see how a test could be designed because DiNapoli said he couldn't desgin a Fib system. I bring his name up because I thought his book was pretty good.
 
Quote from dozu888:
For long time I have had doubt about 38%, 50% and 60% retracement theory.
Anybody out there trading with Fib retracement, do you set buy limit at retracement whenever there is a initial run, or do you wait for it to form a base around 38-62% retracement area?

I just put together some C++ coding to run through 2 years of NQ data. If a limit order is put in, when ever there is a run-up (reverse if there is a break-down), without waiting for a low risk set up, the result shows there is no edge whatsoever.

But if you wait for a low-risk set up, ( a narrow range, or a triangle for example), I think anywhere you take the trade is good, without considering the amount of retracement.

Please provide any input you may have.

I will be glad to send you the C++ code and the NQ data to run the test, and hopefully you can find a bug in my logic and successfully defend Charles Dow.

I think Thomas Edison said after hundreds of failures in looking for a material for light bulb filament.... now at least I know they don't work :D
More...
It might first help to get to the nub of what is Dow Theory: "An uptrend is defined by prices that form a series of rising peaks and rising troughs (higher highs and higher lows). In contrast, a downtrend is defined by prices that form a series of declining peaks and declining troughs (lower highs and lower lows)." (StockCharts.com)
:)
 
Quote from Cheese:

It might first help to get to the nub of what is Dow Theory: "An uptrend is defined by prices that form a series of rising peaks and rising troughs (higher highs and higher lows). In contrast, a downtrend is defined by prices that form a series of declining peaks and declining troughs (lower highs and lower lows)." (StockCharts.com)
:)
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I agree... DOW theory has little to do with fibbonacci retracements... saying that fibonacci is crap.. well that´s another story...
 
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