POLL: Are Fibonacci numbers a worthless or expensive crutch when it comes to trading?

[Thunderdog]

Quote from RL8093:

...(T-dog: as an aside, poll wording could use some work)

Aw, c'mon:

Quote from Thunderdog:

...The choices are that either you agree with the characterization that Fibs are worthless or even potentially expensive ("Yes"), or you disagree with that characterization ("No"), meaning you find Fibs useful. How many more choices do you need?

 

[The Swordsman]

What I meant was, the naysayers of fibs are just like the naysayers of TA, they have not been able to make (TA, Fibs) work for them so of course (TA, Fibs) can not possibly work for anyone else right?

Not saying you Thunder, but people in general (cough cough Rcanfiel aka Traderzones) who adamently stamp their feet how they've tested this or that and since they couldn't find consistency, then no one else can.

Quote from Thunderdog:

Non sequitur, boyo. In its most basic form, TA is strictly using market action as trade criteria. Nothing wrong with that. It is properly reactive rather than predictive. I think that those people who misapply TA in an effort to predict find themselves stumbling over their own shoelaces far more often than not. By its very nature, Fibs are ostensibly predictive. And I already gave my own opinion on market prediction in my first post.

Stated differently, you post reaches farther than it grasps. Of course, that's just my opinion.

P.S. As for your reference to head & shoulder patterns, they are essentially nothing more than either a higher low or a lower high. Basic TA. Nothing wrong with that. Of course, that's just the structure. It still requires strategy.

 

[dtrader98]

http://www.cass.city.ac.uk/media/stories/resources/Magic_Numbers_in_the_Dow.pdf

"Our conclusion must be that there is no significant difference between the frequencies with which price and time ratios occur in in the DJIA, and frequencies with which we would expect to occur at random in such a time series.... The evidence from this paper suggests that the idea that round fractions and Fibonacci ratios occur in the dow can be dismissed."

laymen's commentary:
http://www.cs.ucl.ac.uk/staff/D.Quercia/others/numbers.pdf

Another study showed that of the major types of TA, fib ratios were the least statistically significant approach.

"fiboanacci ratios are at best a hoax at worst a lie." Larry Williams
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Although I haven't done the study myself, my personal experience shows that it is easy to fit any type of model retroactively, but more difficult to predict forward behavior by such curve fitting. And in terms of objectiveness, there have been few if any such rigorous studies that have shown fib ratios to be advantageous.

That being said, many (including some of the more intelligent posters in this thread) have said it works for them.
I figure if it honestly works for you, than by all means use it.

 

[Thunderdog]

Quote from The Swordsman:

What I meant was, the naysayers of fibs are just like the naysayers of TA, they has been able to make (TA, Fibs) work for them so of course (TA, Fibs) can not possibly work for anyone else right?

Not saying you Thunder, but people in general (cough cough Rcanfiel aka Traderzones) who adamently stamp their feet how they've tested this or that and since they couldn't find consistency, then no one else can.

Okay, your point is taken. But the reason I take exception to Fibonacci is that it lacks even the most basic theoretical premise (universal governing laws notwithstanding ). Heck, you might even be able to make do with astrological predictions provided that you buy higher lows, sell lower highs and cut your losses short. All you then have to do is remove the astrological component to please Occam.

 

[Thunderdog]

Quote from Pa(b)st Prime:

Wanna compare p/l's...........


(Dear punishing God, I say that with total humility and a lack of hubris!)

Indeed, Pabst, you are the very essence of humility and the antithesis of hubris.

No doubt, you have more money than I do, so I will concede to your proffered pissing match. Of course, I have not been trading nearly as long as you have. And, as my grandfather used to say, the really big potatoes grow for the stupidest of farmers. (Kidding!)

 

[TraderZones]

Quote from dtrader98:

http://www.cass.city.ac.uk/media/stories/resources/Magic_Numbers_in_the_Dow.pdf

"Our conclusion must be that there is no significant difference between the frequencies with which price and time ratios occur in in the DJIA, and frequencies with which we would expect to occur at random in such a time series.... The evidence from this paper suggests that the idea that round fractions and Fibonacci ratios occur in the dow can be dismissed."

laymen's commentary:
http://www.cs.ucl.ac.uk/staff/D.Quercia/others/numbers.pdf

Another study showed that of the major types of TA, fib ratios were the least statistically significant approach.

"fiboanacci ratios are at best a hoax at worst a lie." Larry Williams
----------------------------------------------


Although I haven't done the study myself, my personal experience shows that it is easy to fit any type of model retroactively, but more difficult to predict forward behavior by such curve fitting. And in terms of objectiveness, there have been few if any such rigorous studies that have shown fib ratios to be advantageous.

That being said, many (including some of the more intelligent posters in this thread) have said it works for them.
I figure if it honestly works for you, than by all means use it.

I agree. Fib numbers/levels are a belief. Studies dismiss their value. But that does not stop the 95% who lose their trading accounts...

 

[Landis82]

Quote from Pa(b)st Prime:

I'd expect more from you.

You're making the same half assed assumption as half the idiots who presently dominate ET.

Who says we're talking about retracements? And even on retracements what makes you think I merely use the fib sequence drawn off the h/l?

Like everything else in life the easy, simple application rarely provides fruit.

I'll tell you at least two MAJOR traders who use this work: Tudor and Dennis.

As someone that worked for PTJ back in 1986 just as his fund was taking off, I can confirm that pattern recognition, measured-moves, and fib ratios were extremely important to him . . . And as Pabst so accurately points out, it's how these fib sequences are APPLIED that's important.

Given that 98% of ET has no clue what something as basic as a "measured-move" is ( or knows how to properly draw a trendline, for that matter ) I would suggest that this thread is a complete waste of time.

 

[Thunderdog]

Quote from Landis82:

Given that 98% of ET has no clue what something as basic as a "measured-move" is ( or knows how to properly draw a trendline, for that matter )...

Those are mighty high standards by which you differentiate yourself.

Quote from Landis82:

I would suggest that this thread is a complete waste of time.

Thank you for your participation and contribution.

 

[Landis82]

Quote from Thunderdog:

Those are mighty high standards by which you differentiate yourself.

Thank you for your participation and contribution.

Here's my contribution from last Thursday's close, using a combination of a "measured-move" and a .618% retracement to confirm that the market was ready to rally and that 1264 SPX was strong support.

Please bear in mind that the market had gotten crushed last Thursday as the SPX fell 23 handles from Wednesday's close, and literally went out on the lows of the day on Thursday. But given the aid of a fib level confirmed by a corrective "measured-move" down into 1264 SPX, I had an edge heading into Friday's opening.

My work indicated that there would be no follow through on Friday ( even with FNM's earnings coming out worse than expected ). With the support of a strong dollar and weaker crude, the market was perfectly set-up for a surprising launch to the upside.

In fact, I believe that it was a 30 POINT UPSIDE EXPLOSION in the SPX:


http://www.elitetrader.com/vb/showthread.php?s=&postid=2022244&highlight=.618#post2022244

(scroll down to bottom of page)

 

[z0r]

Most people already know that fib ratios appear in nature already. This includes systems in nature and populations. I recently saw a documentary about human 'attractiveness' and one major point was that 'attractive' people tended to be have facial points closer to the fib ratios. Could it be that certain 'prices' relative to others have an attractiveness as well? hell if i know....

I'm not sure if this helps anyone become more profitable or not, however, to dimiss it entirely out of the realm of possibility for anyone to use reeks of someone who thinks they have all the answers.