Fibonacci works due to self fufilling prophecy or becuz 618 is embeded in humans?

Just stumbled upon this thread.

I don't trade fibs, I'm a quant, but I read about everything trading for fun. I've read Miner and Boroden, have a couple of other books on Fibs waiting to be read. I also have books on chart patterns waiting to be read. Time permitting, I'll read anything about trading, I think an open mind is the most precious thing you can have.

I don't just read, in the case of fibs I also draw them on charts and see what I can see. I use Sierra Chart and all the tools for price and time are there, so on a slow day, I experiment.

That out of the way, a few observations.

SunTrader is right, the fibs were being drawn upside down, ridiculous. A retracement is a retracement, there are no two ways to interpret that.

There was also a claim by the same (upside down) person about a fib support becoming resistance. Boroden explicitly states in her book that fib support does not become resistance, that is not how fibs work. Now if you want to say Boroden is wrong, she is not the sole authority on fibs, fine, I'm not going to argue with you, I'm just pointing out what she said.

Finally, food for thought, I follow an assortment of traders and analysts on Twitter. One trades harmonic patterns and out of curiosity I delved a bit further. Took a short trade on a 4 hour chart that had a bearish pattern, it reversed exactly where it was supposed to, but didn't travel the couple of hundred pips it should have, so I got out with about 40 pips profit. I haven't had time to look at it since, but if you are interested, it is very much fib related.

Also, a general observation based on some of the questions asked. If you seriously want to study a subject, buy the best books on it and study them. By study them I mean like you did when you were a student. Read once to get the gist, then read a second time making notes.

Asking random questions on a forum is not the best way to learn anything. I 'live' on the ACD thread, if someone hasn't read the book and the thread, nobody will waste any time on them.

Trading is work, if you don't want to do that, buy lottery tickets.
 
The healthy way to look at fibs is that it is a structured way to measure pullbacks and extensions in the market. That's it, nothing more nothing less.

If you get a 23.6% retracement and a continuation, it is a safe bet that is a strongly trending market. There is absolutely no reason to believe the market will bounce off the 61.8% retracement. What it tells you is the market has pulled back quite significantly and a bounce is possible. If you put in a limit orders at the 61.8% retracement and shut down your computer, that is the triumph of hope over reason. If you set an alert at the 61.8% retracement and watch the market for a reversal and entry, you can profit.

Look, the market doesn't say "we've completed a head and shoulders pattern so we must go down". If you follow Peter Brandt, you will know he openly states chart patterns do not predict the market, chart patterns do not provide an edge. His edge is trade management and discipline, chart patterns merely provide him a structured way to trade. If you understand chart patterns, you will know that you are trading breakouts, it is never fading the market. You know what they say, most breakouts fail. That is true, Peter openly acknowledges his win rate is in the low to mid 40% range, so he is mentally prepared for most of his trades to be losers. Yet he can trade profitably. His style of trading requires enormous patience, multiple weeks for a pattern to complete before he will take the trade, and if you read his book you will know he has cast-iron rules on how to manage the trade. No ifs, buts or maybes.

Well, you treat fibs the same way and there is no reason why you can't be profitable.

Now a fair question is why am I a quant and not a chart pattern trader or a fib trader.

I started trading actively about 7 years ago. Within 3 weeks I realised I was not cut out to be a day trader, I was better at swing trading. I made money, I was relaxed about it, no heart pounding and hand gripping mouse.

It took me a few years to find ACD, I did and I haven't looked back. ACD is a hell of a lot of work, it never ends, but I do it because I like the certainty of numbers. The other day Peter Brandt posted a chart on Twitter showing a reverse head and shoulders. Another guy chipped in and said it could also be a wedge (I think) then another guy came in and said it could also be a cup and handle. Jeez, that's like the Elliott Wave guys arguing over the wave count. With my trading system, a 5 is a 5, it cannot possibly be an 8 or a 1. I like that clarity, it leaves me comfortable with my decision making.

Baron will hate me for this, he makes money from page views, but I honestly think all this arguing over which type of trading works is a colossal waste of time.

I can trade profitably with MACD, I made 26% profit in my first year trading using MACD. I can do it with RSI, not with Stochastics, for some reason. If I took the trouble to learn the chart patterns, I'm pretty sure I could trade them profitably too. It is a pretty structured approach from what I see skimming the two bibles of chart pattern trading.

The best way for you to trade is the one that you can profit with. It doesn't have to be the one someone else trades profitably with, only what works for you matters.

It really is that simple.
 
justrading said:
The healthy way to look at fibs is that it is a structured way to measure pullbacks and extensions in the market. That's it, nothing more nothing less....
More...
You obviously did not look deep enough.

But the rest of your post suggest you have found something else that does works ... for you. Good.

Why not leave it at.
 
SunTrader said:
You obviously did not look deep enough.

But the rest of your post suggest you have found something else that does works ... for you. Good.

Why not leave it at.
More...
Actually I have looked into fibs deeply enough to know I can use them profitably if I use them the way I detailed in my post. But there is no way I will place limit orders at any retracement level without looking at the price action there.

In his book Trading Basics, on page 52 Thomas Bulkowski detailed a test he did on the 38.2%, 50% and 61.8% retracements. He had 23,921 samples from 576 stocks covering the period January 1995 to October 2009.

Quote - "I concluded that using Fibonacci retracements offers no advantage over using any other number as a turning point."

I am not being critical of trading with Fibs, so please don't take this as such. I am simply noting that one has to use them with realistic expectations.

Bulkowski says pretty much the same on his website, where he does advocate looking for entries at these retracement levels, with the statement that price could turn at any of these levels or at any other level.
 
justrading said:
That's what I said all along. Read my post. You are the one who wanted to argue the point.
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You posted - The healthy way to look at fibs is that it is a structured way to measure pullbacks and extensions in the market. That's it, nothing more nothing less.

And then I replied - You obviously did not look deep enough.

My comment still stands, there is a whole lot more to fibs than just pullbacks/extensions.

If you differ it is you that is arguing the point. Have I said anything about ACD other than if it works for you ... good?
 
SunTrader said:
You posted - The healthy way to look at fibs is that it is a structured way to measure pullbacks and extensions in the market. That's it, nothing more nothing less.

And then I replied - You obviously did not look deep enough.

My comment still stands, there is a whole lot more to fibs than just pullbacks/extensions.

If you differ it is you that is arguing the point. Have I said anything about ACD other than if it works for you ... good?
More...


SunTrader said:
Ok so you are saying blindly using fibs is not a good idea. Who knew!
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Your misplaced sarcasm here sunshine.

You read the first line of my post, concluded I was criticising your Fibonacci religion, and insulted me by suggesting I needed to study more deeply.

I posted proving how shallow your understanding of fibs is.

You realised you were wrong, but your ego didn't permit accepting that, so you insulted me again by saying I was stating the blindingly obvious.

Read my posts, I am all for using fibs to trade, just have a realistic view of them, not blind belief.

I am at an age where time is my most precious resource. I fully believe in freedom of speech, I have vigorously defended it on this forum. Freedom of speech does not extend to having to hear out people of limited intellect who are too lazy to do the work I do to understand all the facets of trading.

Your defensiveness shows in your wailing about not questioning ACD. This isn't about ACD, it's about fibs, but you attack the person and the method because you cannot find a rational defense for your blind belief in fibs.

I'll save us all a lot of time sunshine. I'm putting you on ignore. I'm too old to tolerate idiots.

One last point, for all the newbies reading this.

People like you do a great disservice to all desperate to learn. You misguide them, when what they really need is an honest view of what works and what doesn't.

You should be ashamed of yourself.

Bye, won't see you again.
 
LMAOffffffffffffffffffffffffffffffffffffffffffffffff WTF is that nonsense all about.

Oh they probably didn't have a good trading day today. Oh well.
 
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