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Please solve this

  • #1
  • First Post: Nov 27, 2007 12:15pm Nov 27, 2007 12:15pm
Hello,

Another member has drawn my attention to a video clip from Forex Bootcamp: http://uk.youtube.com/watch?v=77Xytfw4N2o

I think this "professional" is using his fibs wrong but can someone please tell me if I am right or is it another way I am not aware of?

Look at 2:50 into the video. He draws the fibs from the LOW to the HIGH but then says the 61 is at the high. How is that possible? If you fib from low to high to measure a retracement of the swing upwards then surely the 38 is at the top?

Then he uses the fibs really weirdly - I've never seen anyone using a fib level to sell short when a market is trending up!

Please - can someone explain?!
  • #2
  • Nov 27, 2007 12:35pm Nov 27, 2007 12:35pm
Here are the standard numbers used in Fibs in trading.

0
23.4
38.2
50
61.8
76.8
100

Look at the relationships very closely.

The way a fib is drawn is irrelevant in one sense. Whether it's top to bottom, or bottom to top, the numbers all show the same thing, simply a percentage of the distance price has retraced.
  • #3
  • Nov 27, 2007 1:16pm Nov 27, 2007 1:16pm
I have 3 comments on this subject:

1. Fibs are equidistant. 100 - 23.6 = 76.4 and 100 - 38.2 = 61.8 and of course 100 - 50 = 50. Although there is a correct direction to draw them, they are after all supposed to measure a retracement, it wouldn't be disasterous to draw them backwards.

2. I question the sanity of drawing fibs from daily highs and lows versus actual market swing points. Where does the day begin and end in a 24 hour market?

3. The most egregious error I see is the fact that he attempted to draw fibs on such a small range. The fib lines are only 7 pips apart. How can price not hit a fib line? The line itself is a pip wide. When I believed in fibs (and santa claus) I would not draw them on moves of less than 100 pips. The fibs are simply too close together to have any meaning.
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  • #4
  • Nov 27, 2007 2:20pm Nov 27, 2007 2:20pm
Quoting the_wizard
I think this "professional" is using his fibs wrong but can someone please tell me if I am right or is it another way I am not aware of?
Buffering takes forever...gives me a migraine just watching a few seconds of it...small, cluttered, prejudiced wisdom ("price has no business being > 2 deviations outside of a BB"), low timeframe...it's all very icky

I've no idea what the guy is doing Wiz, sorry.

But I know one thing - if your fibs are SEVEN PIPS APART, then YOU ARE DOING IT WRONG. End of story.
Trust price. Know yourself.
  • #5
  • Nov 27, 2007 2:20pm Nov 27, 2007 2:20pm
Thanks for your comments.

This still doesn't change the fact that there is no way the 61 can be at top if he has fibbed from the swing low to the swing high.

Regardless of whether it means the same thing, its impossible.
  • #6
  • Nov 27, 2007 2:41pm Nov 27, 2007 2:41pm
just want to add a thing, if you draw fibs in the wrong way, 61% retracement wont be in the same place, only the 50% will be

example: low 1000 high:500

fib 61% from low to high: 805
fib 61% from high to low: 695

and here is the chart example
http://picnac.com/thumbs/4773example.gif
click for a larger picture
"Abandon all hope, you who enter here" La Divina Commedia, Dante Alighieri
  • #7
  • Edited 4:15pm Nov 27, 2007 2:54pm | Edited 4:15pm
Quoting semar
just want to add a thing, if you draw fibs in the wrong way, 61% retracement wont be in the same place, only the 50% will be

example: low 1000 high:500

fib 61% from low to high: 805
fib 61% from high to low: 695

and here is the chart example
http://picnac.com/thumbs/4773example.gif
click for a larger picture
Hi semar, I think what Dopey is saying is that the 38% and the 61% are in the same relative place in relation to the top or the bottom. If you look at the chart you have made, the 61 and the 38 fall on top of each other.
  • #8
  • Last Post: Nov 27, 2007 3:05pm Nov 27, 2007 3:05pm
Quoting the_wizard
Hello,

Another member has drawn my attention to a video clip from Forex Bootcamp: http://uk.youtube.com/watch?v=77Xytfw4N2o

I think this "professional" is using his fibs wrong but can someone please tell me if I am right or is it another way I am not aware of?

Look at 2:50 into the video. He draws the fibs from the LOW to the HIGH but then says the 61 is at the high. How is that possible? If you fib from low to high to measure a retracement of the swing upwards then surely the 38 is at the top?

Then he uses the fibs really weirdly - I've never seen anyone using a fib level to sell short when a market is trending up!

Please - can someone explain?!

If you are measuring the downward retracement from a high, the 38 should be near the top and the 61 should be near the bottom.
Obviously, it must retrace 38% before it can retrace 61%.

I'm sure a lot of people use fibs successfully. I have never liked them because they are too discretionary. I can give you any retracement you want, simply by choosing different swing hihhs or swing lows to draw them from.
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