The breaking of a wave cannot explain the whole sea.
- #62
- Jan 2, 2009 4:45pm Jan 2, 2009 4:45pm
- Joined Aug 2007 | Status: Trader | 3,135 Posts
Measure twice, cut once
- #63
- Jan 2, 2009 4:45pm Jan 2, 2009 4:45pm
- Joined Dec 2007 | Status: Informed | 1,641 Posts
Given the amount of lines on that chart, some of the price extrema are bound to match up, a better question might be, how many don't?
- #65
- Jan 2, 2009 4:58pm Jan 2, 2009 4:58pm
- Joined Feb 2006 | Status: Blah blah blah | 1,410 Posts
The Irony of it all!
The breaking of a wave cannot explain the whole sea.
- #69
- Jan 2, 2009 5:28pm Jan 2, 2009 5:28pm
- Joined Aug 2007 | Status: Trader | 3,135 Posts
Explain the simple mathematics. I am truly curious. No statistics allowed though in your reasoning.
If you add one line to your chart, you have an x % chance that price will respect it. If you add one more line the x % chance for price respecting it will start to stack up for every line you add. So with enough lines on your chart, its not a question if, only when.
Measure twice, cut once
- #70
- Jan 2, 2009 5:50pm Jan 2, 2009 5:50pm
- Joined Aug 2007 | Status: Trader | 3,135 Posts
Measure twice, cut once
(...)I don't think it is the underlying principle that makes fibs work. Here is a question that I like to ponder. Would charts look the same or different if nobody traded or knew about fibs?
We believe in the complete opposites, which makes this very good for developing new ideas.
What you say is exactly what I looked for in my quest. If you see early charts (not Forex but stocks), before 80's and technical analysis, you'll see that Fibonacci numbers are not as powerful as they are now.
We can see every single day Fibs bouncing to the pip! This didn't happen before.
Of course there were retracements, and of course Fib fanatics could argue something like "they were there, but the volume was not big enough" or that kind of argument. It's like the two astronauts that went looking for God. One said that he saw everything and didn't find God anywhere. The other said that he found Him everywhere.
If old charts didn't show Fibs because of the volume, or because people didn't use them as trading tools, it's something I can't prove. But you've made me going back to my first investigations, I'll tell you if I find anything interesting
- #72
- Jan 2, 2009 7:16pm Jan 2, 2009 7:16pm
- Joined May 2008 | Status: has long shorts | 2,584 Posts
i also deny fibs and other stuff which just plots lines on charts and dictates price what to do. the best part of this fib stuff are time extensions- big LOL, predicting the formation of a price turnaround date in the future. crystal ball stuff.
you can go much better in determining s/r by learning to read charts and not indicators...
to the subject of using them as targets: why limiting possible gain by closing a trade at a calculated area? close 1st 1/3 at e.g. 1.5x stop size and rest by reasonable stop trailing.
it was said before but the point with fibs is just the mass using it. the time will come when games get played at fib levels like at the daily pivots, since the professionals know where to fool the mass.
i don't use fibs but if i was forced
i'd only use levels of confluences by plotting it from different swing hi/lo's, because with that i can assume that i track areas which most of the other fib addicts also have.
you can go much better in determining s/r by learning to read charts and not indicators...
to the subject of using them as targets: why limiting possible gain by closing a trade at a calculated area? close 1st 1/3 at e.g. 1.5x stop size and rest by reasonable stop trailing.
it was said before but the point with fibs is just the mass using it. the time will come when games get played at fib levels like at the daily pivots, since the professionals know where to fool the mass.
i don't use fibs but if i was forced
i'd only use levels of confluences by plotting it from different swing hi/lo's, because with that i can assume that i track areas which most of the other fib addicts also have.
- #73
- Jan 2, 2009 7:22pm Jan 2, 2009 7:22pm
- Joined Dec 2007 | Status: Informed | 1,641 Posts
Nice discussing with you!
We believe in the complete opposites, which makes this very good for developing new ideas.
What you say is exactly what I looked for in my quest. If you see early charts (not Forex but stocks), before 80's and technical analysis, you'll see that Fibonacci numbers are not as powerful as they are now.
We can see every single day Fibs bouncing to the pip! This didn't happen before.
Of course there were retracements, and of course Fib fanatics could argue something like "they were there, but the volume was not big...
The problem comes when actually drawing our fibs. There are right and wrong ways to draw them. You can't just slap a fib on a chart and expect it to work. It needs to be in specific places depending on what type of fib you are drawing (yes there are a few).
To give you some direction in your search, I want you to begin implying Fibonacci relationships on your charts. Don't get stuck on the 0 and 100%
You only need your 0%, to imply a fib relationship within price.
You should see what I am saying fairly quickly.
- #74
- Jan 3, 2009 9:57am Jan 3, 2009 9:57am
- | Membership Revoked | Joined May 2008 | 3,395 Posts
The Market pays you to be disciplined
- #75
- Jan 3, 2009 9:59am Jan 3, 2009 9:59am
- | Membership Revoked | Joined May 2008 | 3,395 Posts
The Market pays you to be disciplined
- #76
- Jan 3, 2009 10:03am Jan 3, 2009 10:03am
- | Membership Revoked | Joined May 2008 | 3,395 Posts
the fact that a large number of traders do actually believe in fibs make them a self-fulfilling prophecy. That in large part is how a lot of popular indicators work, just by massaging crowd behaviour
The Market pays you to be disciplined
- #80
- Jan 3, 2009 2:59pm Jan 3, 2009 2:59pm
- Joined Dec 2007 | Status: Informed | 1,641 Posts
And the last one showing the logical conclusion.
Thank you for stepping up and actually thinking. Most traders suffer from SARS- severe automatic response syndrome. They are unwilling, most even unable to think about a problem that they were told already has an answer. Anyways.....
I do like your charts. I liked seeing the fib expansion used as well (which is a whole other ballgame). When I posted my chart with the 0 on a high and the other 0 on a high I was showing how a fib starts. This is how the fib looks in it's infancy. The first weird thing about my fib was that I was drawing it from a high to a high. This is completely unorthodox to most. But to trade fibs, it makes much more sense for us to imply a fib relationship. You'll be surprised what you find.
When you draw a fib like I did it basically shows you the first move. The next appropriate move would be to pull the fib down so that the 38.2% replaces the point of the original 0/100 line. This is true because it is following the growth ratios of the fib sequence itself. Its like going from say...144 (a fib sequence number) to 377... How do you get from 144 to 377? You would divide 144 by .382. This is exactly what we are doing on our charts. We've already seen the first move by fibbing a high to a high (catching a pullback), this is like going from 144, to 233. 233 immediately follows 144 in the fib sequence. So when we trade fibs like I am showing you, you always catch the move from the second growth period forward. So we always start on the .382 cycle. Of course after a certain point, we would then stretch to our inner .618, .764, .236, .14586 ect...
While we are discussing it, I want to talk about the 1.382 fib extension. Many traders refer to it as the 'T1.' The T1 is really just the outer fib range version of the .14586. We trade to the T1 so often because it is in a sense like a guaranteed target area (if your fib is in the right place
) The T2 or 1.618 extension is actually an outer version of the 0/100 line again, or the next 'trigger line.' Because price is finite, one of the fib cycles will eventually stop price and reverse it. I am probably confusing the heck out of you..The truth is, it would take me a couple months to properly teach fibs. So I'll stop here and show you a basic fib progression using an implied Fibonacci relationship of two points on my chart. We'll examine the dollar yen one hour in the examples.
