True Truths about Fibonacci

Prechter wrote this book:
Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression.
Anybody read this book. This guy is really bearish.

Also:
Socionomics: The Science of History and Social Prediction

I read his book on Elliot Wave Theory but never finished it as it was too boring and confusing. I recommend Tony Plummers book instead:
Forecasting Financial Markets: The Psychological Dynamics of Successful Investing. Tony's writes about Elliot Wave Thieory with intelligence and clarity. And this is the only book he wrote so you know he is too busy trading to write more.
 
Prechter the modern Nostradamus :D . The problem with Prechter is that he predicates the same thing since now at least 15 years that each year will be the Big One (1929). For example in August 1998 Barrons reported that he was predicting that the Dow would continue down to 4000 for December ... it was far from happening. I found the archive of my post in August 1998 (at that time my pseudos was laplace and cacfute on french newsgroup) where I said about Prechter

"Every year since 10 years he says that the 1929 will happen that year. ... I think that there will be a huge downturn before the end of the year but not that it will be the end of everything."

I think 1929 equivalent will be around 2010 see my post "2008 the last bubble mania : what will you do ? "
http://www.elitetrader.com/vb/showthread.php?s=&threadid=19167

And if you want to translate the whole post of 1998 with Babelfish :)

http://groups.google.com/groups?q=p...-8&selm=82a76r$16ds$1@news5.isdnet.net&rnum=4

it will give in perfect english :D

"Then me which tends to fish by excess that one then it beats me. You do not know who is Robert Prechter ? It is large the gourou waves of Elliot consulting of all the financial institutions of the planet which each year for 10 years I have believed provides us that the cataclysm of 29 again will arrive! It has just repeated in the famous US magazine Barron' S by predicting Dow with 4000 to us at the end of December! I do not know so finally that would arrange it that that arrives that all its richness rests on this chimerical cataclysm! I think that this year will be the signal and that it will have crowned one there falls of the Stock Exchange by the end of the year because that is seen as a nose in the medium of the figure which the US trade worsens at speed large V but from there to believe in the collapse of All... not because if that were to arrive that will spend 20 more years considering a bank like the sick Crédit Lyonnais since the Seventies succeeded in camouflaging its state of decay during all this time! "

Quote from -EntropyTrader:

Prechter wrote this book:
Conquer the Crash: You Can Survive and Prosper in a Deflationary Depression.
Anybody read this book. This guy is really bearish.

Also:
Socionomics: The Science of History and Social Prediction

I read his book on Elliot Wave Theory but never finished it as it was too boring and confusing. I recommend Tony Plummers book instead:
Forecasting Financial Markets: The Psychological Dynamics of Successful Investing. Tony's writes about Elliot Wave Thieory with intelligence and clarity. And this is the only book he wrote so you know he is too busy trading to write more.
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Today's session will be an excellent illustration as well as the other 4 days of the week but I will take this last day since it will be fresh in memory. I will profit to prepare a complete tutorial I will post that Sunday or Monday - if I'm not lazy it will be done before.

Quote from harrytrader:

In fact I use a more fundamental quantitative model than just fibo ratios. Nevertheless golden ratios are attractors (in the chaos theory vocabulary) in my model and can help the interpretation of the model. My model shows that not only there are fibo ratios in the market but that each ratio represents a recurrent structure that have the same interpretation from day to day and I will illustrate that later.
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Quote from Walther:

Is there any simple trading method based on these ratios ?
Walter
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Joe Dinapoli wrote an excellent and concise book on trading fibonacci levels titled, "Trading With Dinapoli Levels, the Practical Application of fibonacci analysis to Investment Markets".
I believe trading Fib levels if traded correctly can give you an edge in your trading. It is not correct all of the time but is based on probabilities and I guess that's what successful trading is all about.
 
I don't trade Fibo directly as I said I use them rather for analysing rapidly my model which is more fundamental and more precise - the term fundamental means that the probability that it is true is high whereas a fibo number is just numerology you never know for sure - but for those who do want to initiate with Fibo can read such a book. I had a book not from Dinapoli but from another one I used but I don't remember the title because I give it to somebody. What I think is that they can marvelously fill many pages just for doing multiplications and divisions (joke :) ), nevertheless they are not dreaming which I wasn't convinced at the beginning before I could prove it to myself with my own rational model (I didn't see immediatly that golden ratios were present in my model results since I didn't use golden ratios at all in any parameter of the equations) :).
P.S.: On zapftures you can also find some online seminars about fibo techniques if you are interested.

Now fibo gives just supports and resistances, elliott and my model are more than just supports and resistances it contains the description of whole market cycles that is to say it gives the trends which means that you know if a support has a probability to be broken or not which you cannot assert from support or resistance only, it means that you can anticipate far in the future even if not with certainty you can have a few scenarios and not an infinite and build a strategy. In fact if I wanted support or resistance only I have other equations of my model that can give to the very pinpoint the supports and resistances wich are conceptually different from the points I use actually which I called rather potentials to distinguish from "true" supports and resistances - but these potentials are close enough to the true supports and resistances so that I prefer not to add another set of numbers which would be redundant.

Quote from mojo59:


Joe Dinapoli wrote an excellent and concise book on trading fibonacci levels titled, "Trading With Dinapoli Levels, the Practical Application of fibonacci analysis to Investment Markets".
I believe trading Fib levels if traded correctly can give you an edge in your trading. It is not correct all of the time but is based on probabilities and I guess that's what successful trading is all about.
More...
 
Quote from harrytrader:

I don't trade Fibo directly as I said I use them rather for analysing rapidly my model which is more fundamental and more precise - the term fundamental means that the probability that it is true is high whereas a fibo number is just numerology you never know for sure - but for those who do want to initiate with Fibo can read such a book. I had a book not from Dinapoli but from another one I used but I don't remember the title because I give it to somebody. What I think is that they can marvelously fill many pages just for doing multiplications and divisions (joke :) ), nevertheless they are not dreaming which I wasn't convinced at the beginning before I could prove it to myself with my own rational model (I didn't see immediatly that golden ratios were present in my model results since I didn't use golden ratios at all in any parameter of the equations) :).
P.S.: On zapftures you can also find some online seminars about fibo techniques if you are interested.

Now fibo gives just supports and resistances, elliott and my model are more than just supports and resistances it contains the description of whole market cycles that is to say it gives the trends which means that you know if a support has a probability to be broken or not which you cannot assert from support or resistance only, it means that you can anticipate far in the future even if not with certainty you can have a few scenarios and not an infinite and build a strategy. In fact if I wanted support or resistance only I have other equations of my model that can give to the very pinpoint the supports and resistances wich are conceptually different from the points I use actually which I called rather potentials to distinguish from "true" supports and resistances - but these potentials are close enough to the true supports and resistances so that I prefer not to add another set of numbers which would be redundant.
More...
Joe Dinapoli's book goes way beyond just pointing out points of support and resistance. It shows how trend lines and other indicators can be used to practically trade effectively using fib support and resistance points. His method can be used utilizing 1 min charts or monthly charts. Predicting the future of the market is not the goal, but making money today on a concise trading methodology is what its all about.
 
The simple fact to affirm that trend, support and resistance exist implies predicting the future since in official theory support and resistance, trendlines etc. don't exist since they violate the Saint Efficiency. So it's a question of vocabulary. Of course in the book I have it wasn't just Fibo, there was a method but fondamentally compared to traders using only indicators using Fibo is using prediction that's why those who use indicators don't believe in them because for them it seems absurd that such ratio could exist and they're right there is no reason in the actual official paradigm. It is not the efficiency paradigm in fact that is false - the efficiency could be not well defined - it is rather that the paradigm is based on the supposed power of the crowd to move the price randomly whereas it is not the crowd it is the big money (and only after the speculators that follow them ). And the big money probably don't trade by inspiration at the minute: they plan for days, months, years.

There is two things to distinguish: the model of the market and the management or method. I talk here only about the model of the market. For management I used something that is similar to elliottist because my model is similar. Nevertheless in the future I intend to build a scientific management system in parallel to the scientific model because each method can also be optimised for a specific model. By scientific I mean something that will used a system of equations that could optimise the whole. I don't do it for the moment because It is still premature - if you read my signature "Premature optimization is the root of all evil " :) - because I haven't achieved to gather some collection of datas.

The use of model for forecast is not a goal by itself of course it is for the probability gain in edge because don't forget that there is the risk/reward but also its associated probability in the expectancy equation and if you ever look at money management the probability has more weight in the growth of equity than a high risk/reward with a low probability. It is because for most methods it is highly difficult for them to get a high probability that they claim that they don't try to predict but if you can predict you improve the probability part of the expectancy and the growth of the equity is more improved - including for the drawdown and the smoothing - by improving probability than by improving the risk/reward (not saying that the more you try to have a high risk/reward the lower the probability since there is no miracle that you can achieve that without a model - whatever rustic it may be - since the market behavior is complex so trying to have a high risk/reward ratio is highly pretentious task if one only use his "intuition".

Quote from mojo59:


Joe Dinapoli's book goes way beyond just pointing out points of support and resistance. It shows how trend lines and other indicators can be used to practically trade effectively using fib support and resistance points. His method can be used utilizing 1 min charts or monthly charts. Predicting the future of the market is not the goal, but making money today on a concise trading methodology is what its all about.
More...
 
One of my model is screening the highest probability of explosive moves for the most liquid stocks (stocks which have liquid options )

What I discovered after many years is that when a stock opens on a gap (down or up) , it is being stopped at a fibonacci level.

That is extremely surprising

I decided to put some profit orders at these fibo targets to simplify my book management. I must say my risk reward has significantly increased by using fibo as a target to ,exit my profitable explosive moves

Well thanks tharry to bring some kinds of answers : you may be right, but it seems too esoteric for me
 
Quote from fortuna:

One of my model is screening the highest probability of explosive moves for the most liquid stocks (stocks which have liquid options )

What I discovered after many years is that when a stock opens on a gap (down or up) , it is being stopped at a fibonacci level.

That is extremely surprising

I decided to put some profit orders at these fibo targets to simplify my book management. I must say my risk reward has significantly increased by using fibo as a target to ,exit my profitable explosive moves

Well thanks tharry to bring some kinds of answers : you may be right, but it seems too esoteric for me
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I plead guilty to being disgustingly practical when it comes to trading. I feel whatever works be it esoteric or practical is the bottom line. If basing my trading on past market data which occurs over and over again(Fibonacci) is predicting the future, then I am guilty. But I see it as just a probability and if you are trading probabilities, then that is your edge. It may be simple but oh well:)
 
That's what I have just precised more in details:

"The use of model for forecast is not a goal by itself of course it is for the probability gain in edge because don't forget that there is the risk/reward but also its associated probability in the expectancy equation and if you ever look at money management the probability has more weight in the growth of equity than a high risk/reward with a low probability. It is because for most methods it is highly difficult for them to get a high probability that they claim that they don't try to predict but if you can predict you improve the probability part of the expectancy and the growth of the equity is more improved - including for the drawdown and the smoothing - by improving probability than by improving the risk/reward (not saying that the more you try to have a high risk/reward the lower the probability since there is no miracle that you can achieve that without a model - whatever rustic it may be - since the market behavior is complex so trying to have a high risk/reward ratio is highly pretentious task if one only use his "intuition".
"
Quote from mojo59:



I plead guilty to being disgustingly practical when it comes to trading. I feel whatever works be it esoteric or practical is the bottom line. If basing my trading on past market data which occurs over and over again(Fibonacci) is predicting the future, then I am guilty. But I see it as just a probability and if you are trading probabilities, then that is your edge. It may be simple but oh well:)
More...
 
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