True lies about Fibonacci

Quote from MktProphet:

This is not fibonacci.. this is Elliot Wave...

and its up 5.. down 3

:) [/B]
More...

Mkt Prophet: You need to check your sources.

As to 3 and 5. The Fibonacci series is 1-1-2-3-5-8-13-21-34-55 etc... and thus 3 and 5 are considered "Fibonacci".

Elliot was knowledgeable about Fibonacci and acknowledged it was the basis for his Wave Principle. A number of his contemporaries were also doing what was then esoteric "pattern" recognition work on stocks.

In EW, there are both up 5/down 5 and up 3/down 3. The 5 is impulsive and is up in a bull and down in a bear. The 3 is corrective and is down in a bull and up in a bear.

As to the argument about Fibonacci and relevance to the market -- it's one that will go on forever. Similar to the one about fundamentals and the market. They each have their corner in the ring and plenty of fighters ready to take on challengers.

Meanwhile, if they work for you, why not? And if they don't, best to find something that does.
 
Quote from harrytrader:

Gee I have no knowledge at all since I do try to understand where do all these esoteric stuffs come from. We are in 21th Century and people trade with the moon and "natural law" without even questioning about the rationality of these stuffs just astonish me :D.

As for trading well I don't use knowledge I use a model, based on a RATIONAL BASIS, that is to say ECONOMICAL PRINCIPLE ...
More...

I don't get why "rational" is so important. There is so much that is seemingly irrational in the world, and yet taken for truth and right, that to believe something must be rational to be true is itself irrational. :p

As to trading with the moon, or fibs, or other TA. There may be a rational trader on the 50th floor of some high rise swinging a big line who in fact may be using those as a tool. He does this often enough, it will soon reflect and get copy-cats, etc. What started as irrational can soon be modeled and enters the realm of rational statistical modeling. The fibs don't work, those that use the fibs become a statistically relevant group. At least that may be one "reason".

Who really knows what drives the market? Just as physics isn't "why" the universe works (it is, after all, only the best scientific model that works repeatedly), so too don't rational models for trading actually represent the market. They only work for that part of the market they sample.

You are right in this: always question why you use any tool, fundamental or technical. If it works repeatedly and reasonably consistently to give you an edge, why look for a "rational" basis? What may be rational to you may look ludicrous to me (hee hee, I'm not at all interested in trading off fundamentals, but I do "believe" in them in principle.)

At any rate, blindly following something or someone, one is bound to come to a bad end.
 
I like your arguments because at least you try to give some :D.
I like very much also when I don't agree with because false arguments from persons in the past have given for years ago inspiration ... for my rational model: I mean by opposing their points of view it gave me the root idea :D.

So I will answer in details and perhaps by doing so it will give me new idea again for my own research :D.

Quote from amg:



I don't get why "rational" is so important. There is so much that is seemingly irrational in the world, and yet taken for truth and right, that to believe something must be rational to be true is itself irrational. :p

As to trading with the moon, or fibs, or other TA. There may be a rational trader on the 50th floor of some high rise swinging a big line who in fact may be using those as a tool. He does this often enough, it will soon reflect and get copy-cats, etc. What started as irrational can soon be modeled and enters the realm of rational statistical modeling. The fibs don't work, those that use the fibs become a statistically relevant group. At least that may be one "reason".

Who really knows what drives the market? Just as physics isn't "why" the universe works (it is, after all, only the best scientific model that works repeatedly), so too don't rational models for trading actually represent the market. They only work for that part of the market they sample.

You are right in this: always question why you use any tool, fundamental or technical. If it works repeatedly and reasonably consistently to give you an edge, why look for a "rational" basis? What may be rational to you may look ludicrous to me (hee hee, I'm not at all interested in trading off fundamentals, but I do "believe" in them in principle.)

At any rate, blindly following something or someone, one is bound to come to a bad end.
More...
 
Quote from harrytrader:

I like your arguments because at least you try to give some :D.
I like very much also when I don't agree with because false arguments from persons in the past have given for years ago inspiration ... for my rational model: I mean by opposing their points of view it gave me the root idea :D.

So I will answer in details and perhaps by doing so it will give me new idea again for my own research :D.
More...

Hi Harry-- I made that post during a 3.5 hr ES consolidation-- a better use of the mind that kept it from allowing fingers to pull the churn trigger. :D

BTW, regarding false arguments leading to root ideas. This works in TA as well. A failed pattern, or the inverse of what started as a good idea, will often lead to a better trading idea than the original! Gotta keep flexible or risk fracture.

good trading! amg
 
Quote from amg:

You are right in this: always question why you use any tool, fundamental or technical. If it works repeatedly and reasonably consistently to give you an edge, why look for a "rational" basis? What may be rational to you may look ludicrous to me (hee hee, I'm not at all interested in trading off fundamentals, but I do "believe" in them in principle.)
More...
Always asking "why" is essential to insure that your method is working for the right (or "rational") reasons.

For example, a successful trader may be following fibs or astrology to enter the market, using trailing stops to let his profits ride and cutting his losses short. Well, as it turns out, in any trending environment you can make random entries and let your profits ride, cut losses short, and you will come out ahead. This trader could have been trading some commodities and currencies for over a decade thinking his success was due to his use of fibs and astrology, but in reality it was due to the underlying nature of trends and how the exit strategy took advantage of this dynamic.

By understanding the "why" you are not only in a better position to maximize your profits, but you can also be prepared for shifting market dynamics.
 
If you look at this poll the manner it is conducted is statistically biaised because he should have randomised the answers and not even tell the people which rectangle has a golden ratio but even so biaised the results showed a great variance and one poll even shows that golden ratios are not the preferred choice. Furthermore in art it is sure that proportion plays a key role but in stock market this is absurd. The only left explanation would be that speculators have been educated to trade fibo ratios notably future traders on the open cried. A mathematician author of a book "martingale and stock market" and consultant for banks thought for French futures market that when the open cried would have closed the fibo ratios in the market would disappear with them, well it has closed but the ratios didn't disappear. And today more than a few dozen years ago more and more traders use rather stochastic methods, but still fibo ratios are persistent in the market. So the explanation is elsewhere than the psychology of crowd: it is probably not endogenous to the crowd but is exogenous. In fact every agents model of resarch laboratories in the world could demonstrate crash effect but never fibo ratios and the reason is obvious for me sinceI have my model: they can't find anything that is not in the agents :D.


Quote from harrytrader:

This is a poll who try to detect if people prefer golden ratio rectangle or not:

http://www.jimloy.com/poll/poll.htm

http://www.jimloy.com/poll/results1.htm
http://www.jimloy.com/poll/results2.htm

I will comment later on.
More...
 
be carefull when trying to be totally scientific, it really isn't possible.

remember that academics claim that ALL technical analysis is BS and the markets are totally efficient. If you believe that i will sell you a nice bridge cheap.
 
You must log in or register to reply here.
Back
Top