Mission Discovery: Think Outside The FX Box

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Scotty sounds interesting but i couldnt make out how are you fibbing 15ema? thanks
regards

Yeah,
I use a fib channel with more fib levels than most . But as far as fibbing the line, simply fib a high to low or vise versa. I like the fib channel because it is exactly that; a channel. It extends into the future indefinitely and it is always interesting to follow the price and watch how it will still use all the levels even days down the road.

For those of you cool cats out there who like the RSI, you can fib it as well, for it is simply a fast MA. Fib your indicators people! Fibs rule!

Side note: Do not trade off the RSI alone...I tried it and it works to a degree but sucks overall. It helps though to get a picture of where it is going as an indicator. Everyone is taught to freak out at the 30 and 70 levels, but sometimes she runs to 90, 20 or whatever. With a fib on this indicator you will have a better idea of how much further north or south a move could go.

It's good that your thinking outside the box, but your ending up with so many lines on your charts that something is bound to happen close to one of the lines. This means that you can never be sure that a particular reaction to a line is meaningful or just something that randomly happened. My gut reaction to the RSI thing is that putting a Fib on an indicator which is pretty much useless in todays markets is not going to result in anything worthwhile. If you really what to think out of the box, ditch the charts, it's all just numbers.

I would strongly beg to differ my friend. I used to think the same thing until Skunny came along and showed us that the market loves to give hints on where it is going. The answer is in front of your face and I'll give you a hint with this: BREACH and CLEAN...This is very simple, I think you'll figure it out in under five minutes.

I wanted to write today about what I've discovered about cycles. Cycles as I know them start with a defined high to a defined low or vise versa. This can be in the form of one candle or many candles because any time you put lines on a chart you are simply trapping price in time. The 0 and 100 lines on your fib define the cycle; this is always the first step in chasing cycles. A cycle is ended when an extension level is perfectly met. One thing that throws people off with cycles is impatience. For example: You put a fib on a daily candle and the price goes perfectly to the 61.8 extension the next day. You say to yourself "wow thats cool!" Then you get excited and put a fib on the next daily candle and the price breaks the daily high but fails to meet an extension. It not only fails to meet a Fibonacci extension it reverses and falls below the daily low and smashes your stop in the face in a Chuck Norris fashion. This leaves you frustrated and thinking one of two things. 1. The price is random and while sometimes I get lucky, I cannot ultimately know where it is going. 2. Fibs are just lines on the chart that the price is bound to react to sometime or another. They don't mean a thing! Arbitrary arbitrary arbitrary lines!
THE ANSWER:
It is 100% possible to know exactly where the price is going; it is not chaotic or random but surgically precise and calculated. Skunny says it is human error that prevents a person from trading 100%, I agree with him.
A SCARY TRUTH:
This is only scary because it is not convenient for us. Sometimes a cycle will take a day to complete, and sometimes it will take a few years to complete! Why a few years you say? Because sometimes you get in a trade at the perfect wrong time. Like last thanksgiving day (Nov 22) GBPJPY said she was headed north. And she then headed south, a move she is still rebounding from!(trading on holidays makes you an idiot anyways) The bull cycle she let us know about is not even here yet! But it is on it's way guaranteed.
THE UNKNOWN FACTOR X IS: Drum roll.....................
Time! I don't doubt whether it is possible to predict but, predicting WHEN a cycle will complete is beyond me!
HOW DO WE MANAGE THIS PROBLEM?:
Ok now this is completely subjective, but my method is trading very small time frames. 1 or 5 minute charts. Even on this small scale a cycle can take several hundred candles to meet! Translate this to a daily chart and you are looking at years!
The price always has followed the Fibonacci ratios and always will. To trade Fibonacci cycles you listen to what the market is saying and do it. It is simple, but can be inconvenient.
The clues I leave here will remain the same and they are more than enough for you guys to figure out Fibonacci cycles if you really want.
CLUE: breach and clean
Trading these cycles is not a cake walk, but you can adapt to them and be wonderfully successful.

However I always trade with the trend at the time that I see for the next 30 days. As an example for the moment I see USD/JPY more likely to trade back towards 105.00 rather than 109.00

Whenever it gets to top of resistance I short it. There was a quick reversal near the end of the day Friday when the Dow reversed to close up neatr + 100

I shorted from 108.35 and I expect with BAD fundamental data out next week for the Dow to head lower. Bad news expected from Fannie and Freddie.

I posted on another thread and briefly shared another one of my discoveries using the gann grid tool. I've heard it said many time that this is a worthless tool. I used to think the same thing until I put a good couple days into watching how it worked. I found it is useful in many ways and I will discuss two of them here now and save other uses for later.
The first use: Triangles: The market loves to follow the gann lines up and down as she ranges and loves to find key S/R in the middle of the gann diamonds as I call them. I believe the forex is a cohesive unit no matter which way you slice or dice it. Meaning that any two points on a price chart have a special relationship. I may be going out on a limb here, but there is NO WRONG WAY TO GANN GRID TRADE. Try it for yourselves!
Here's what I want you kids to do to see this.
Put a gann grid on your chart From a low to a low (my preference). Then take your horizontal line tool and cut the diamonds in half. Watch how the price reacts to the horizontal lines! (the middle of the diamonds)
An important note: I will never tell you exactly how to trade, I will give you explanations hints and more than enough evidence to figure out how to trade these techniques.
Moving on....Now that your grid is up and the diamonds are cut in half, pay special attention in seeing WHEN and WHY the price moves up to the next horizontal line. Sometimes the lines will be pierced but the price never makes it to the next line. I won't tell you the answer but your charts will very quickly! Everyone reading this can figure it out, I have no doubt in my mind.

Ok I apologize for what I have named this technique, it's pretty chessy. Heck maybe I should be driving an escalade with spinners.

This discovery came about while I was in the throes of my Gann grid studies. I simply started fibbing diamonds and was surprised by what I found. Like I said before, I like to set up my grid by going from a low to low or high to high.
All of you Skunny followers out there will like this, and probably catch on a little quicker.
Everyone will notice that I use several fib levels. They are there and in plain sight, take them or leave them, we will all trade differently in the end any ways.

These are the only clues I leave when it comes to Fibonacci: Breach and clean. Check out my chart: I used the same chart from my previous post for accountability reasons.

A final note for the night:
If any of you find yourselves getting frustrated and not getting it you're on the right track. Nothing WORTH doing or finding is easy. If you try you will get it, and you will appreciate what you've found because of your efforts.

Hi Scotty,

Like cycles of price the market also has cycles of time as you said, they are a bit different and harder to analyze than price but they do exist indeed, there is no question about it, I use them and are part of my method.

Scotty, keep up the good work.

Would you mind if I asked you how long have you played around with Gann's work?

Roy

This looks like one of those mysterious/no clear cut answer, threads. I am enjoying this.

Please share

Ok this is my thread so I can get away with this here. I've been studying fibs for a while now and one day I had some time on my hands so I decided to plot the temperature of a us city for one full year. I plotted the temps on a stock chart and fibbed the hottest day and found that even the temperature loves Fibonacci ratios! So I figure that since price is cyclical and follows fibs, the temp is cyclical too. You could say the temperature is simply in a bull cycle? Hahahaha. Choppy reasoning yes, but you never know.
Just a little food for thought.

Scotty,

People have done this with so many things, from mountains to real estate prices over decades.

hi..


Some interesting ideas....but I do get worried when there seems to be more hype than substance to the discussion...

Pick one of your ideas and run with that..show how you trade with it and how you avoid taking false trades with the number of lines on the charts..

If your thread is open to anyone....I would like to hear more from Craig on his numbers trading..

Hello,
I started this thread in the hope that a lot of collaboration and experimentation would happen, with my ideas being part of many. All the Ideas I've presented are tradable, and I said on the get go that I would never tell anyone how to trade directly. My desire is to spark creativity.

I think the method of trading my price action observations are strongly implicit; more than the other ideas I've presented.

Thank you for your feedback,

Scotty

didnt know u had a thread bud!


looking forward to it

update...

scotty have been working with your ideas... i must say.... you are a genius!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

WOW! Thanks for taking the time Scotty B. It seems amazing! Unbelievable.

Grk