The only way to trade with fibonacci

[konviction]

Quote from increasenow:

hey OP...here is the main issue with fibs that has not been brought up...the key is knowing the best place to start drawing from what high to what low...or in reverse from what low to what high?...seriously...how many periods or days back do you go?

99% of the fibs i draw are on daily and weekly that are drawn from a major swing high or low.

Like most technical analysis, fibs works best on longer time frames. I look at 4 time frames (weekly, daily, 1hr, and 15min)

I'll draw a fib on one timeframe, and if I want to take the trade, I'll zoom into a smaller time frame to view the major swing highs and lows on the smaller as well, and to get a better view of support/ resistance, and draw my fib.

So for example I find a trade on the daily, i'll go to the 1hr to get a more volatile view of price, and a good place to enter. On the longer time frame I'm looking for price to be at some level of support, but on the smaller one, I might wait for price to break a swing high before I take it because I want to see the market build strength, and strength always builds from the bottom up.

 

[dirkd]

no indicator is a "holy grail" just like a caprenter who can not build a house with just a hammer, trading is the same way. Sim trade for a few months if not 6 months. start with only 1 lots have a 2% stop every day 10% stop for the month, take your time. If you want to play football you don't go to the NFL and play. you start at pop warner then JV then Varsity then College then the pros. Think of trading like this. Fibs are a great tool but it is only a tool. Your original post is a recipe for blowing up your account. Trading takes time and lots of it. good luck

 

[increasenow]

Quote from konviction:

99% of the fibs i draw are on daily and weekly that are drawn from a major swing high or low.

Like most technical analysis, fibs works best on longer time frames. I look at 4 time frames (weekly, daily, 1hr, and 15min)

I'll draw a fib on one timeframe, and if I want to take the trade, I'll zoom into a smaller time frame to view the major swing highs and lows on the smaller as well, and to get a better view of support/ resistance, and draw my fib.

So for example I find a trade on the daily, i'll go to the 1hr to get a more volatile view of price, and a good place to enter. On the longer time frame I'm looking for price to be at some level of support, but on the smaller one, I might wait for price to break a swing high before I take it because I want to see the market build strength, and strength always builds from the bottom up.

so, for puredaytrading...do you simply use the previous day's high-low to draw the fibs or use say 5 days...please explain...thanks

 

[konviction]

Quote from dirkd:

no indicator is a "holy grail" just like a caprenter who can not build a house with just a hammer, trading is the same way. Sim trade for a few months if not 6 months. start with only 1 lots have a 2% stop every day 10% stop for the month, take your time. If you want to play football you don't go to the NFL and play. you start at pop warner then JV then Varsity then College then the pros. Think of trading like this. Fibs are a great tool but it is only a tool. Your original post is a recipe for blowing up your account. Trading takes time and lots of it. good luck

thank you, I agree.

 

[konviction]

Quote from increasenow:

so, for puredaytrading...do you simply use the previous day's high-low to draw the fibs or use say 5 days...please explain...thanks

I could use the previous days high/low, but fore pure day trading I don't think it'dbe very reliable for the following reasons...

* On a day to day basis, dealing with gaps would be a problem if it breaks above or below the fib levels of the previous day.

* Lack of time--> As a day trade, unless the price is moving with extremly high momentum, your fib extension levels would never be hit, and you could wait half the day or longer for the retracement to happen, if at all...if you do get the retracement and take the trade, no only does price have to break its high or low, but it has to fly to its extension levels before the day is over...this isnt very likely.

--

now if i drew the fib from the 5 day high or low, this is better when dealing with the volatility of price, but again as a day trader, it doesnt really help..yes price can respect the fib levels you draw, but price has to hit its fibonacii extension levels within an 7hr trading day...so again, probably not too likely.

You could use tick charts I guess, but it doesn't really solve the problem, infact it makes it harder because price is now more volatile.

So its really a matter of how much time you have VS the amount of movement required for the fib to play out, which is why I prefer to use longer time frames.

 

[konviction]

here is an intraday chart for wynn on a 5min. The gap at the open blew past the fib levels of the previous day.

 

[increasenow]

Quote from konviction:

I could use the previous days high/low, but fore pure day trading I don't think it'dbe very reliable for the following reasons...

* On a day to day basis, dealing with gaps would be a problem if it breaks above or below the fib levels of the previous day.

* Lack of time--> As a day trade, unless the price is moving with extremly high momentum, your fib extension levels would never be hit, and you could wait half the day or longer for the retracement to happen, if at all...if you do get the retracement and take the trade, no only does price have to break its high or low, but it has to fly to its extension levels before the day is over...this isnt very likely.

--

now if i drew the fib from the 5 day high or low, this is better when dealing with the volatility of price, but again as a day trader, it doesnt really help..yes price can respect the fib levels you draw, but price has to hit its fibonacii extension levels within an 7hr trading day...so again, probably not too likely.

You could use tick charts I guess, but it doesn't really solve the problem, infact it makes it harder because price is now more volatile.

So its really a matter of how much time you have VS the amount of movement required for the fib to play out, which is why I prefer to use longer time frames.

thanks...kinda what I think...I guess I am different in that really only looking for one profitable trade per day...is that a daytrade?

 

[elit5314]

Quote from konviction:

here is an intraday chart for wynn on a 5min. The gap at the open blew past the fib levels of the previous day.

typical fib move from 786 to 1.618 on wynn; 1 min chart

http://www.sierrachart.com/userimages/upload_2/1268035201_6_UploadImage.png

 

[elit5314]

Quote from elit5314:

typical fib move from 786 to 1.618 on wynn; 1 min chart

http://www.sierrachart.com/userimages/upload_2/1268035201_6_UploadImage.png

another way of applying the fibs on the same wynn chart

http://www.sierrachart.com/userimages/upload_2/1268036147_84_UploadImage.png

 

[elit5314]

Quote from elit5314:

another way of applying the fibs on the same wynn chart

http://www.sierrachart.com/userimages/upload_2/1268036147_84_UploadImage.png

yet another way of applying the fibs on the same wynn chart

http://www.sierrachart.com/userimages/upload_2/1268036312_8_UploadImage.png