Practicality of Fibonacci Retracements

[rcanfiel]

Quote from squall:

I can definitely see your point on this. I mentioned earlier that I don't think it's anything magic. I think there are a couple reasons they have a tendency to work.

The real problem squall, is that they don't have a tendency to work at all. I went over a very good study of Fib levels done bgy others years ago, and the fact is they don't work. in any way. at all. They are no better than any other level.

People keep believing in them and other things, but they have no basis or reason for this. They just figure they must work because others say they do. They figure they become a self-fulfilling prophecy, but they don't, in actuality.

 

[dandxg]

Quote from RL8093:

Are they any more subjective than T/L's? I do not believe they are subjective at all - but the conviction with which the market participants use them varies depending on the situation. (Using them to call a top in a momo stock is very different than gaging how far a news stock will retrace after the initial move...). Also, the primary Fibo #'s usually have more strength than the ones at the fringes.

As w/ most TA tools, they are not absolute but are a valid form of sup/res, which when used w/ appropriate price action, can provide an edge for entry/exit.

However, if you do not believe they are valid or they do not fit your trading style - do not use them. Simple.

R

Like I said I use them everyday and like them. Honestly, objectively, there is subjectivity in where to draw them. Sure, a swing hi or lo, but which one, there are many on 10 min chart? That's what taken me 6 months of study and practice to get decent at.

Agreed it's no different than any other TA, take basic S/R. I know 4 valid ways to draw S/R, excluding fib, which all work at one time or another.

 

[squall]

Quote from rcanfiel:

The real problem squall, is that they don't have a tendency to work at all. I went over a very good study of Fib levels done bgy others years ago, and the fact is they don't work. in any way. at all. They are no better than any other level.

People keep believing in them and other things, but they have no basis or reason for this. They just figure they must work because others say they do. They figure they become a self-fulfilling prophecy, but they don't, in actuality.

Fair enough, I see your point. I just use them as a form of s/r and if it starts burying me, then I will re-evaluate.

 

[rcanfiel]

Quote from squall:

Fair enough, I see your point. I just use them as a form of s/r and if it starts burying me, then I will re-evaluate.

Smart guy. You will get farther using things that work than things people believe in

 

[jem]

many people say support resistance numbers don't work. Yet the fed says they do "work" in the currency markets.

Before you can say they do not work you would have to do at least as through investigation as the fed did.

 

[squall]

Quote from jem:

many people say support resistance numbers don't work. Yet the fed says they do "work" in the currency markets.

Before you can say they do not work you would have to do at least as through investigation as the fed did.

Yeah you're right, if they don't work, then it must be a HUGE coincidene, because it's almost uncanny how often price will keep bouncing off the same levels if you look at a chart.

 

[squall]

Quote from rcanfiel:

Smart guy. You will get farther using things that work than things people believe in

Yeah I figure as long as I see price reacting to the levels for whatever reason...I am gonna react as well.....

 

[gnome]

For those who claim, "Fibs don't work"... I suggest you are trying to apply them too broadly.

There are some chart "situations"* where Fibs work very well. If you restrict your usage to those, you'll be very pleased.

* I COULD tell what some of those are, but I'm not. If you put on your thinking cap, you can find some..

 

[squall]

Quote from gnome:

For those who claim, "Fibs don't work"... I suggest you are trying to apply them too broadly.

There are some chart "situations"* where Fibs work very well. If you restrict your usage to those, you'll be very pleased.

* I COULD tell what some of those are, but I'm not. If you put on your thinking cap, you can find some..

Come on Gnome let's hear it.

 

[gnome]

Quote from squall:

Come on Gnome let's hear it.

Reminds me of the Howard Borden classic comment... when asked, "How DID you ever get to be a navigator, Howard?", and he replied, "Oh no you don't, you'll have to go flight school just like I did"....

I remind you of a famous Mr. Spock quote... "When all other possibilities have been eliminated, whatever remains (however implausible it seems) MUST be the truth"... trading is like that.