Fibonacci insights

Thanks for the great work, going over everything and testing it out and it seems to do well. Now I just need to ensure I'm drawing in the correct direction.

The anatomy of pullback in trend - i do not know what is you doing but i like it a lot (not micro lot, a lot) - hope to have more of your insights, still i do not expect you to continue. This is great framework, at least for me. Thank you very very much Trader

Great! Please remember those are tools only, what I mean by that, in itself Fibonacci will provide a mathematical framework an environment that you can operate in it puts everything in a clearer perspective.

In order to make money you will need to create an edge in the markets.

This edge can have many facets to it, you may be very good in how you cope with losses in other words have a high pain tolerance etc. or you might have an extremely broad and deep understanding of the market structure and all its parts including volume and order flow. etc. etc.

Speaking for myself I exclusively trade WTI Futures on NYMEX, a centralized marketplace, regulated with very good if not excellent liquidity, and, above all with access to real traded volume.

Wishing you all a fantastic journey in discovering the markets, but above all yourselves too, the very best of luck, strength and good health everyone!

Hi Trader613,

Sorry not meant to hijack your post here. But I am having problem with the indicator you built "MT4 S1/S5/S30/M10/H2/H3/H12 Bid/Ask Charts" and I cannot reply to that specific post for some reason. Anyways I get an error message after this step: "Press 'OK' on DLL window - wait for EA to update and build your Custom TF Charts (watch text on top left-hand chart corner)" The error message is it cannot create mt4chartsettings.ini

I think this is because I am using windows 10 and they moved the mt4 folder from c:/program files/... to c:/user/appdata/roaming/metaquotes/... Could you kindly make an update on this? Thanks a lot!

Hi forexleopard,

I am really sorry to tell you, but since Metaquotes have updated MT4 it is no longer possible to build these special charts using this indicator/DLL; Sangmane had looked into this - and if he can't fix it, no one can! Sorry.

Alright! That's no problem. Thanks for all your help and tools!

...just stumbled upon this thread, I know it's old, but none the less I think still with some fresh and interesting concepts, so it seems. Certainly the EURUSD chart on post #1 caught my attention.

Thanks for sharing this with us!

After a lot of time and effort i am of the opinion that i want to see the entry and the exit of all positions. Regardless of what the ideas are about how to trade and so on. Thats the first step. And it means nothing without the second step that is some live way of telling when the trades are opened and closed.

The reason for this is to sort of cut to the chase. Meaning the theory of how a technique is applied is important in the quality and quantity of the results.
So i mean if trading was more like a theological discussion, there would be no need for step two.

To be clear, let me see if i can approach this from a different angle.

Lets imagine two people, lets call them Rick and Morty. They are both trading the same instrument, lets say E/U.

Rick uses tickscale charts and has quite a lot of EAs that calculates various support and resistance and mine price data and spread data from various brokers. Ricks EAs create his charts with various specific graphical notes and information and so on.

Morty on the other hand is more old school and he uses only H1 charts and only data from one broker. Morty maybe places a line here or a line there and he might draw something on a chart and he might not. It depends on the situation.

Both Rick and Morty are relatively successful traders and they both usually place their trades at almost the same time and closes them at almost the same time.

Now its not hard to imagine that there are two other traders lets call them Peggy and Maria. Peggy uses M15 charts and a technique called "The hedgehog".
Peggy arent really using the "normal" hedgehog, she has modified it somewhat according to her thoughts.

Maria uses a technique called "The wigwam shabam" and she has a M1 chart and a H4 chart where she makes notes of her calculations. Marias technique borrows from orderflow ideas as well as some other stuff.

Now, imagine that Peggy and Maria and Rick and Morty are roughly placing their positions AT THE SAME TIME and CLOSING roughly AT THE SAME TIME. What difference does it really make then what they call their technique and which words they are using to describing it?

I've been practising trading with the Fibonacchi stratedy for a long time, although I've only tested it on options, but I think that it'll fit right in on forex, but it may need to undergoe some changes. I'm glad I'm on this thread, I'd like this theme to be developed.

Hello everybody, it has been a while since I posted on this thread but I thought I wanted to share with you an easy and effective way of how to best determine your trade direction utilising the Fibonacci method outlined above and to couple this with a purist price action approach to trigger your trades.

Use the 38.2 or the 30.9 Fib level as a way point - above those anchor points take long trades and below, short trades.

The clear advantage of this over using moving averages or any other derivation thereof (ie RSI, CCI etc.) for determining the trend is, that it will give you the opportunity to buy in oversold and sell in overbought market (so basically get in early); the beauty of Fibonacci is that it is a fully self adjusting, dynamic and a fluid approach, something that MA's can not give you as effectively as using natures best friend.

And if for anything, if all those Fibo levels are OTT for you, fine, no problem, then perhaps just use the three of them, the:

 

1. -0.382 (renew fib level)
2. 0.309 or 0.382 (anchor points long/short, above the 0.309/0.382 long and below short)
3. 1.382 (renew fib level)

With regards to what I mentioned about trading off of price action, some easy approach ideas for you if I may:

Wait for a retrace, so lets say in an uptrend wait for a bearish candle formation then, thereafter for a confirmation of a bullish candle and trade off of that (you could add rules; for instance, that the market would have to go higher than this bullish candle within the next candle period and if not then no trade. etc.).

And for higher time frames (ie H1 or higher), you could trade direct off of a bearish candle long, in an uptrend, and off of a bullish candle short, in a down trend.

Just some ideas here.

Good trading everyone.

Just a live example from today of what I am talking about; the moving average on the first trade setup is very far in reach, so no trade, long that is. And on the second trade setup (second up arrow) looking at the MA a short trade would've actually seemed more plausible given the strong down momentum. Nonetheless, for us it is long..

The theory behind this kind of approach is we would say that, as long as the market hasn't got the strength to trade below the 38.2 or 30.9 level that anything above that one should look to buy into dips/trade off of retracements after a bullish candle formation.

Further, on a side note I'd like to mention about the zigzag indicator; I personally use quite a 'tight' setting, it's the 6 & 1.7. This has served me well in the past. As I had pointed out in a previous post too, I had gone through many many zigzag indicators with the aim for any indicator to replicate what I would've drawn manually and by using my own eyes.

But the thing is, we are looking for consistency. There is actually no right or wrong in doing this. As long as one keeps the applied tools to any chart at a continues constant. Thus, using a zig indicator to isolate the so important to us swing high and lows seems the right approach to solve this issue.


PS: You are looking at a WTI July contract chart. The MA I had applied for illustration purposes is a T3 with a setting of 'a -0.7' and 'periods 9'. At the bottom of the chart you can see a traded volume indicator, not a tick volume one; the histogram bars are coloured according to aggressor action with calculated bid vs. ask traded volume. It is a very valuable tool to filter out trades; something that trading via any OTC venue is lacking unfortunately. I am for sure not saying it can't be done. But as I had said already before, I like traded prices where a stop is a stop, an actual traded price. And it's a regulated environment with centralized liquidity. Anyway.

Best wishes to everyone.

-- Cutting To The Chase --

Chapter 1: Prologue


We're all special.

Why?

There are almost 500,000 trading members registered here; all of which pursue one, and one noble goal only: becoming better and enjoying financial freedom. We could've chosen perhaps something a lot less demanding to make money in; well, for instance, how about a small ebay business or just a normal (boring) 9 to 5 job.

No, we believe in ourselves, we believe and are sure that we are better than 'them'; so then, more power to us actually if we can pull this off, this feat, that is (no Karl Marx socialists in here hopefully, are there? pheeww)

So then the outline is clear. We're all here and in it because we want. Okay okay, some of us are also here to socialise and to have a good time too, of course..!

--

Chapter 2: The Business


Group 'A' believes that current demand for said 'thing' is smaller than what group 'B' thinks about that, and group 'A' further believes that in anytime in the future the demand of said 'thing' will increase over time by group 'B' joining them but only after group 'A' has filled its stores with that 'thing' to the absolute brim.

Group 'B' believes their current stock of said 'thing' is too dear and therefore believe that same 'thing' can be had for a better value anytime in the future. They go and meet group 'A'. Hold on.

But then, WE come along and we need to decide, so: do we stick to 'A' or are we better off to sticking with 'B'?

Oh, did I mention that, group 'A' AND 'B' happen to be among: the most fearsome, the most powerful, the most merciless, the most well capitalised and the most well informed *________________ - (enter here whatever you like go on have a go) - in this entire universe. I think, I forgot. But, I just did.

And, we are not done yet; to the point: we need to be better than 'A' and 'B' COMBINED together.

You see what I am saying here...

--

Chapter 3: The Arena


In one word:

Dangerous.

But things did seem to improve a little with Basel ll and lll since the '07 shake up (or shake out shall we say). But, I remember very clearly, back then I was a young kid; the very first online trading platform on the market, blessed, by none other than her Majesty, the Queen - CMC's Marketmaker platform. The year was 1996.

It had two price windows. Two..! Yes.., for the very same instrument. One window was a dealer's price and the other an executable bid/offer customer's price. Can you imagine this? This level of transparency. Then. That was.

Everyone in the industry had quickly realised that the dawn of ADSL connections meant that people all over the world could do, what up until then, only a few privileged select could do. We had our CQG satellite feed (my goodness that was a humongous satellite dish up on our roof) and it was, before anything could be done always first a stretch over to the quick dial to the US reaching for Brian or Sue over at Dean Witter; Oh I remember... ''Hi Sue this is Martin (my older brother) quote 10 soybean March...fivesixthreefifty..Mine..done at fivesixthreeeighty..thanks..bye bye''. That was that, and if it was nice weather it was ''have a nice day too''. Those were the days.

And soon after it, it was heyday. Platform heyday that is. The rest you know already and is now history. How quick and easy is it these days to open a broker account and to quickly fund it with paypal. Unbelievable, but very true.

Housewives, in China!

Awesome!

I can only say this: if you can, do yourself a favour and open a Futures account and trade FX at the CME. Why? For many, many good reasons actually.

But particularly one reason is most important. Of paramount importance actually. But soon. Bear with me.

For now I could tell you about Futures being regulated, centralised and offering plenty of liquidity these days. But you still choose MT4 instead. Okay. I hear you. It's better, because... Ah, I see. Okay. Well. We'll talk about that, soon.., as I said...

--

Chapter 4: The Master Plan


Oh this is a tough one.

Okay, I'll give it to you straight.

Ready?

You know when they say ''its like a dog chasing its own tale'' (I've actually never seen it happening with my own eyes but it must be a funny sight. Can you imagine a dog running in circles barking, huffing and puffing at its own tale...)

The bad news is, unfortunately it's us.

We are that dog.

Please, please stop using moving averages of price to determine the price in any point of the future. A moving average of price has no power in itself. Its just only that. An average of a value. That's it. No power. Zero. Zilch. Nothing.

It works, you say? Okay. Let me ask you this: have you ever heard of a super cycle? Do you understand that markets are fractal in nature?

Do you know what that means? What it implies?

It shows and teaches us that this is the awesomeness of nature. Like a human organism where you can just simply be blown away by its sheer complexity and wonder of nature, yet, it is also a curse in a way. Why? That's not a nice thing to say. But, you know that first Nokia phone of yours you had, that was simple enough to repair wasn't it; your iPhone now? Oh, don't even mention it.

When you study charts or price you can feel, touch and see the sheer complexity. Its awesome. But it is also a curse at the very same time. Why does it have to be that complicated? Can't it just go up when I decide to buy or go down when I decide to sell? Why is it so hard. My goodness. Stop it! Be nice market. Please!

A super cycle. Its nasty. You that back testing you've been doing. Being up late at night. Working through nights. Cancelling that dinner. Not going out. Sitting. Studying. Taking apart. Putting together. Building. Destroying. Starting over again. You know why?

The super cycle.

Do me a favour please. Read this and come back here when you're done. Please...thank you!

...You read it? You saw it?

Trembling and heart braking, but also an absolute fascinating story, right... huh?

Do you know that even if you had taken at your disposal all of the monthly data and back tested that it wouldn't have made a blind bit of difference. At one point or another in the future 'it' or 'them' would have still bitten your behind. Hard.

Do you realise that there's even a greater thing than the mighty tall standing monthly chart? What is that chart called, the yearly perhaps? Perhaps (how many candles 10?).

But why don't we call it the ''changes of shift of human behaviour of certain values over a long period of time''-chart (COSOHBOCVOALPOT-chart). Case in point: You can back test as long and hard as you like. Nature, us humans, we change. Our surroundings change, our needs change, our believes change, our values change and our needs change too.

Never let this out of your sight. It's very important to mention that.

--

Chapter 5: The Great Build


You know I said before there is one important issue I wanted to leave for the ''last but not least moment''. Well, this is the moment my dear friend.

You like MT4. I know. You like said brokers because they are easy to deal with. You like FX spot because you are a Chinese housewife that puts away her $2.50 saving into a forex account. No only joking. But you don't seriously believe that you can with a $100 account make a living, right, okay. Well that's fine then. Cool. You get my point...

You need volume. (yeah both, the money kind and the other volume, the exchange traded kind)

You need it. Unless you are or have developed a talent for either, naked trading, and I mean naked. Stark-naked. No charts. Just a number. Going up and down up and down all day long. Or, you are using anything that has nothing to do with a moving average of price logic. Anything. Or any derivation of such, including the cloud or any fancy indicators.

What you need is price and volume, and that's all you'll ever have and need (no, I wont even mention insider trading, quote stuffing or flashing). Both go hand in hand. Volume, and by that I mean actual exchange traded volume, and price are two half parts that belong together. You can use very simple and effective methods to filter out trades. Because when using naked price only, it can be done, of course for sure, by why not use a mechanism that is part of price discovery along with it? I mean it really should be a no brainer. Right?

Unless you are a very big institution that has entered into the HFT arena utilising microwave data feeds and co-location next to the exchange's data server, employ the cream of the crop talented people with multiple PhD's in Physics and Mathematics, you don't need anything.

But for us, mere mortals lets use what nature has to offer us (Fibs). We are nature. Us humans. And as long as the rise of the machines is not happening where in which artificial intelligence is going to decide over a certain value of that 'thing' then we are okay. If, we use common knowledge, hard work and are prepared to put in the effort we'll be fine.

We will be better than 'them'.

Amen to that.

--

PS: I've taken out part of a beautiful sunny afternoon to write this message for you. Because I want you to do well. I want you to succeed as much as I want to. I hope I've driven home the message in a palatable and meaningful way, such done with a hint of humour and an ever so tiny sprinkle of sarcasm, but through this I sincerely hope that you understand the seriousness of my intent of my message to you.

Hi trader this is a bit confusing, the screenshot you have in this post explains your latest logic of anything above 38.2 or 30.9 buy and sell when below but on your edited post 1 you still have the other fib levels which are a tad bit confusing, not impossible to learn but a little confusing, which logic in your opinion should one stick with?

Hi Caleb hope you are very well and thank you for your comments.

Fibonacci is best utilised as a reference map showing us if the market is in a bullish or rather in a bearish sentiment price cycle.

All I had done was to apply some logic to the various cycles; in saying that, the more price is retracing and establishing itself into a current price swing the more or the greater the chance of an imminent price reversal, unless, price is once again able to 'make it' back into the shallower retracement areas and bouncing off of those once again, which would implement that the current trend is 'active' again.

It is a logical approach to price action; In a strong trend you want price to only keep making shallow retracements. Because the deeper price is cutting into higher retracement levels the greater the chance of the current trend to be 'in danger' if you will. I'd like to reference you to this chart here; there are 3 price zones within an active price swing - one zone above it and one below it; ranging from a trend being 'super strong' to being 'very weak' and being in-between those extremes.

That's the framework.

As pointed out before, we must use a trigger for our trades. Relying blindly on a 61.8 Fibo level to say we go long or short here is really not advised whatsoever, (unless a strategy out of many could be to scale into a position by taking your normal lot size and split it into 3 or 4 sub lot sizes and spread those over any corresponding Fibo levels). The use of this particular Fibo tool relies on the sum of all parts and not just an individual fraction of it.

But in my opinion, the best way really is to combine purist price action and/or trend lines/trend channels/fibo fan with the full fetched Fibo tool, in such a way, that we use price action to get us into a trade and eye the Fibo levels to get us out of it - this is a very effective approach, because you have a probable profit target price projection which in turn helps you to calculate your risk reward ratio and stop loss level; and, last but not least, to be able to hold onto just a little tad longer to your trades, this the case especially if price is able trade into the 'Projection B/C/D' areas. Those trades are particularly nice because the market is in reversal mode which are often accompanied by a more one directional order flow (or price pop in other words).

Further, and back to your question, I wanted to share a way in order for everyone to get away, as far as possible, from using moving averages for triggering a trade or using MA's for determining the trend. By applying the logic of using the 38.2 or 30.9 Fibo level as an anchor point which gives us a dynamic trailing stop if you will, with the beauty being that the Fibo tool stays in place on the current price swing as long as the 'renew Fib levels' either side haven't been reached. It's a dynamic market approach that utilises pure price action and price sentiment rather than the lagging price indicators of sorts.

May I suggest that the best way really to get a feel of the whole approach is to open a 1 minute chart, or even better than that a 30 second chart, set the zig zag indicator settings to 6 and 1.7, apply the Fibo tool and watch the market like that for a couple of weeks.

This really is the best way in using small time frames to learn any market - the markets are fractal in their wave form and price behaviours, what one can learn and see in small time frames can later be applied and utilised to when trading off of bigger time frames too if one wishes to do so, all of which depending of course on one's individual trading style, a spectrum ranging all the way from aggressive scalping to longer term investing.

I hope this helps and good trading everyone.

All clear and understood now, articulate and precise..thanks a million mate.

This post is a good read for those who have read my journey along the creation of VeeFX: Universal Time Action Strategy with a collection of useful links in my profile.

I have incorporated a similar approach to break down the complex and fractal market structure using only the closing price of some 32 to 60 timeframe combinations to determine 4 trend phases in each UP or DOWN direction i.e. Trend Reversal, Trend Reversal Continuation, Trend Continuation/PullBack, Trend Continuation Confirmation. Do this across 28 pairs, use mathematical correlations to your advantage, actively manage profits and losses during volatility times across a 24x5 trading week and you cannot go wrong. It's the inevitability of the "Market is Universal and Neutral" characteristics.

Just posting here to bring attention to this thread and OP... you have my deepest regard for his immense knowledge of the markets.

Greetings everyone!

It has been a while (well, almost a decade ago to be exact!) since the first chart has been posted to this thread, so I thought time to catch up!

(red line on the chart is where we left off)

Fibo, when understood and applied properly will help you greatly in making your trading decisions. Starting right from the small timeframes and up to monthly and even longer than that market cycles!

Good trading everyone!

Hi there! I would like to thank you for sharing this thread with us! I am amazed with such a deepest regard for his immense knowledge of the markets.

Hi, I want to acknowledge , this information written right here is the backbone of understanding a global concomitance on a trading chart. IMHO... KNOWING, simply the truth is the pinnacle of accomplishment that goes overlooked to satisfy the self destructive indicator blow-out, I my-self suffers from, but when it comes to making trades the only thing guiding my trade decisions is the fibo tool. I exhaust all areas of inquiry and this information right here is what success & accomplishment is all about, Thank you.

And thank you to whom started this thread and helped me along the way. I am only sharing this now because I should give this tool I freely found to make it a little easier, If I can, than digging into the config file. For some it might not be so easily navigated, that's all.

I am posting an indictor that when opened in the editor you can quickly save as copy paste any note pad list of numbers you want and it does the %%-%$ for you very nicely. I personally like the Expansion extension combo exact overlap, but the are so many extremes that what ever fulfills the reversal point for you is what will work. Scripts...