I've been looking at how fib levels work. Sometimes they work, sometimes not. I know the Fibonacci Sequence is related to the Golden Ratio. I'm somewhat of a mathematician, and did some searching for what this stuff really means in terms of prices going up and down. I've come to some tentative conclusions:

The Golden Ratio is sort of a borderline between linear, polynomial, and exponentiel growth. It is useful as a boundary on growth rate.

The 61.8 fib level represents the inverse of the Golden Ratio and is the only fib level that really applies to growth. It represents "room to grow", the space in which something most efficiently expands as it tries to grow exponentially in linear steps over time. It is the size of a sprout compared to the size of a seed.

In terms of a market, growth and expansion have nothing to do with price, only volatility. Fib levels only apply to periods of volatility expansion.

The period of volitility expansion is officially over as soon as the 61.8 is broken. Price then returns to linear change over time.

None of this says anything about which direction price is going, just how fast it's changing. However, if price isn't going in a certain direction, fib levels are useless anyway.

I think I've come up with a different way of thinking about a tool many of us have been using mindlessly for quite a while. I'm starting to think that all success in trading is based on how volatility is handled, and this might be a big clue.

I've got some ideas about how to apply this practically, but I'd like to see some counterexamples. Show me a chart where volatility expands and goes sky high, then down through a 61.8 level, and volatility then doesn't quiet down for a while.

The Golden Ratio is sort of a borderline between linear, polynomial, and exponentiel growth. It is useful as a boundary on growth rate.

The 61.8 fib level represents the inverse of the Golden Ratio and is the only fib level that really applies to growth. It represents "room to grow", the space in which something most efficiently expands as it tries to grow exponentially in linear steps over time. It is the size of a sprout compared to the size of a seed.

In terms of a market, growth and expansion have nothing to do with price, only volatility. Fib levels only apply to periods of volatility expansion.

The period of volitility expansion is officially over as soon as the 61.8 is broken. Price then returns to linear change over time.

None of this says anything about which direction price is going, just how fast it's changing. However, if price isn't going in a certain direction, fib levels are useless anyway.

I think I've come up with a different way of thinking about a tool many of us have been using mindlessly for quite a while. I'm starting to think that all success in trading is based on how volatility is handled, and this might be a big clue.

I've got some ideas about how to apply this practically, but I'd like to see some counterexamples. Show me a chart where volatility expands and goes sky high, then down through a 61.8 level, and volatility then doesn't quiet down for a while.