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  • #4,201
  • Feb 20, 2009 9:20am Feb 20, 2009 9:20am
Quoting fry2010
thanks Scotty, i have just tried it using the fractals and have to say it works just as well if not better. Just interested if you use this method urself with the fractals or do you use somthing different? I have had little success with this, hardest part is handling an incorrect trade. If you close out at say the 38.2 retracement then price can return and hit taregt but if you dont price can go all the way to the 0. Its difficult to trade. Any pointers?

One thing though skunny didnt mention fractals, so he must use somthing else, if he was not...
I do not use these fibs to trade, but sometimes I will use them as a reference to confirm a trend continuation and spot potential target areas. The greatest difficulty with fibs is actually trading them. The key I have found is to trade smaller fibs with bigger pips and tighter stops. The really big fibs are hard to trade and can sometimes take a month or longer to complete making them undesirable for me. I really like the 50-150 pip ranges.
  • #4,202
  • Feb 20, 2009 9:30am Feb 20, 2009 9:30am
Here is a really good looking eur/usd trade. Confirmed with a rapid RSI break. This stuff is not rocket science. These are never guaranteed, only very likely. Management of the losers is also a critical peice of the trading side. Enter @ retrace, place stop at opposite 0/100.
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  • #4,203
  • Feb 20, 2009 9:41am Feb 20, 2009 9:41am
Along with the RSI, I also took note of the lower pin bar, and the bullish engulfing candle. Again, this stuff falls on it's face sometimes and gives us a loss, but the more evidence you have to justify your trades the better.
  • #4,204
  • Feb 20, 2009 10:34am Feb 20, 2009 10:34am
Quoting ianf0ster
Hi,
I remember that Skunny said that a Fib must be validated (by reaction to one of the 3 major inner lines) before being traded.
What I never worked out, is whether it had to react to them after the 0 to 100 extremes had been made, or if it was OK if it reacted to the inner lines whilst the 0 to 100 was in process of being formed.
Also I don't recall him saying that the needed to be validated 'to the pip', so I figured that any decent support/resistance near the inner lines was sufficient - but I may be wrong!

Ian
Ian, this is my problem with all this thing. You will find "you are in the correct path" for every try. So trial and error can't work here.

but to answer your question i remember clearly that one of the main points is that you need to see an breakout.

we can't have both, we need to choose, or breakout or retrecemment. I mean, if his 'super high probability pattern' is when the breakout happens, so you need to enter at the breakout and maybe with the stop at the 61,8. Or will you loose the "edge" of the super high probability pattern? Entering at the 61,8 would a choice if you don't believe that there is such powerfull pattern or that you are not able to determine it.

I remember the op saying that he simple average down if after the breakout price back to the 38 and 62 RETs.


best regards.
  • #4,205
  • Feb 20, 2009 10:44am Feb 20, 2009 10:44am
i remember him saying this too. somthing like if price reverses and looks to be a sustained move he will close out and re-enter at the inner fib levels. So I would imagine that he would close out before it reaches the inner fibs, then re-enter at the inner fibs. But which one? or maybe both?

What i interperet his meanings is:

1: Determine true support/resistance
2: Enter on penetration of 100/0
3: Enter on inner fibs if price not reach 138.2
4: If large swing play smaller swings inside the larger fib
5: Trade in direction of break of larger swing
6: 1h most reliable, use the next 2 higher tf to the tf you use


Thats pretty much all I get from it.

he also mentions if you trade every swing you will need to plot every swing on each timeframe, which leads me to believe he is selective in which he trades.
  • #4,206
  • Feb 20, 2009 11:02am Feb 20, 2009 11:02am
I agree with both of you guys except for the idea of getting in at the break of the 0/100. To me that is suicide. Price more often than not, will break the 0/100 and pull back to at least 38.2%. A 0/100 is really just a T1 of a smaller fib, so the stop should then be at the opposite side of the trade, the other 0/100. I simply pass on the trades that don't retrace. Also, speaking of the 0/100 being a T2, you can use your T2 on your fibs as a 0/100. Meaning, we are already expecting price to hit our T1, but if T1 is surpassed enough that price can break the T2, we can take that as a sign of continuation.

Also, because fibs fail sometimes, a trigger is only a sign on continuation. It is not a scientific/mathematical magic bullet. So in a sense, it is only an indicator of what price will most likely do. Oh the irony. I think this is why skunny mentioned a couple of times that even his magical secret was somewhat insignificant. The truth is, price will do what it's gonna do.
  • #4,207
  • Feb 20, 2009 11:15am Feb 20, 2009 11:15am
Sometimes I find my chart humorous.
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  • #4,208
  • Feb 20, 2009 12:18pm Feb 20, 2009 12:18pm
nice trade scotty.
Yeah trading on the break is a bad idea I was just reflecting on what I picked up from skunny posts.
That trade you have suggests also to me perhaps placing 2 lots, when 1 hits target let the other trail.
  • #4,209
  • Feb 20, 2009 12:19pm Feb 20, 2009 12:19pm
nice trade scotty.
Yeah trading on the break is a bad idea I was just reflecting on what I picked up from skunny posts.
That trade you have suggests also to me perhaps placing 2 lots, when 1 hits target let the other trail.
  • #4,210
  • Feb 20, 2009 3:54pm Feb 20, 2009 3:54pm
this stuff is like voodoo....price seems to magically go up and down to these predetermined lines. How come this happens? Do u think that someone is behind all of this and forces price to these levels?? Why does $$ break a 0/100 (pivot) and then retrace to some magical fib # before it continues?? sometimes it just reverses completely after the initial attempt at a breakout. How do we know when to expect a failed breakout??

Theres so much to think about and it all gets so confusing. I wish there was a better way to be able to understand all this.

If we only had an idea about what the big players are doing. I wish i could see their order books so I'd have some insight into the direction we'd most likely be headed...wait...wait!!!!!

I have an idea. Why don't we just look to the left side of the chart and take that info and use it to help us with the "probability" of $$ headed in one direction or another. I mean, after all, a chart is really just an emotional road map of fear and greed. the banks are the greedy....we are the fearful. The banks will do anything in their power to take as much $$ from us while inflicting as much pain as humanly possible on us. thats why as soon as you bail out of a losing trade....cause u can't take the pain any longer...it turns around and heads in the direction u hoped it would when u originally entered the trade.

Is price action the result of fib levels or are fib levels the result of price action??? Look at all the charts that are posted on this thread. Are u only focused on the fib lines???? are the fib lines the magic behind PA???. Push the chair away from the monitors and look at the big picture.

Good Trading

PS. Fry2010, your comment about skunny... "Or is he sitting on a carribean island with all the cash he made?" is some of the funniest SH** I've heard all year...thanks for the laugh man
  • #4,211
  • Feb 20, 2009 4:28pm Feb 20, 2009 4:28pm
Quoting trader365
this stuff is like voodoo....price seems to magically go up and down to these predetermined lines. How come this happens? Do u think that someone is behind all of this and forces price to these levels?? Why does $$ break a 0/100 (pivot) and then retrace to some magical fib # before it continues?? sometimes it just reverses completely after the initial attempt at a breakout. How do we know when to expect a failed breakout??

Theres so much to think about and it all gets so confusing. I wish there was a better way to be able to understand all this....
Alright alright...Is it the chicken or the egg?...Here is the tentative stance I have taken on attempting to understand fibs. One question I want to throw out there first though is this, does a person have to have a firm grasp of the law of physics in order to ride a bicycle? Or to drive a car? Does a person have to be well acquainted with chemistry before he enjoys the benefits of drinking water? You can probably see where I am going with this thinking.
One thing I know empirically is this, fibs work. They do not work every time. They do not have to work 100% of the time for me to become rich. I do not have to have infinite knowledge of market dynamics to win. Looking for a way to trade that is 100% foolproof, only proves the seeker a fool. It is OKAY to loose trades! It's not the end of the world. Learn to manage your damn money if you ever expect to become a trader. There is no magic bullet. ( I am not aiming this at you trader365, just ranting) All we are really doing when we trade fibs, is following a pattern thats always been there. Will it be there tomorrow? Who knows, but it was there today and I made money yet again. I am willing to go out on a limb to say that this same pattern will never disappear, until price somehow become fractured and truly random.

Fibs will continue to work, because price always move above or below X by 38% of it's working range.

Scotty B
  • #4,212
  • Feb 20, 2009 4:56pm Feb 20, 2009 4:56pm
Quoting Scotty B
Alright alright...Is it the chicken or the egg?...Here is the tentative stance I have taken on attempting to understand fibs. One question I want to throw out there first though is this, does a person have to have a firm grasp of the law of physics in order to ride a bicycle? Or to drive a car? Does a person have to be well acquainted with chemistry before he enjoys the benefits of drinking water? You can probably see where I am going with this thinking.
One thing I know empirically is this, fibs work. They do not work every time. They do not have...
U sound so angry scotty. why u ranting at me man. I get the Tony Robbins references....thats all well and good. Never said anything about not losing on a trade either so I don't know where that came from. Just saying that there's more to trading...MUCH MORE.... than fibs. Too many people are so focused on the fib levels that they forget about the rest of the stuff....u know...the stuff that moves the mkts

Looking on the left side of the chart can get u into many trades before the fibs can and often result in profit taking while others are just entering a position.

To fib or not to fib. It's great if it works for u....I use them all the time but I know that they don't MOVE the mkts but merely a by product of mkt moves. I'm glad they work for u and hopefully many others too. But when u can see the bigger picture, fibs can/will be a much more effective tool.

So, u say your rant wasn't aimed at me but it came right after my post and it sure seemed as if it was. Sorry u feel that way dude.

Good Trading
  • #4,213
  • Edited 6:26pm Feb 20, 2009 5:27pm | Edited 6:26pm
trader365 glad to have made u laugh, im sure skunny is doing the same right now.
You make valid points. U sound like you have read some info on how sam seiden trades, is this fair to say?
One problem I had with his method is that its difficult to find an area of in-balance that will play out correctly. Looking back at the chart in hind-sight you always see these areas he talks about, but trying to utilise it real time is tricky. If u have any pointers about this I wud be gratfull to hear it. (that is if you are actually talking about supply and demand).

I just want to add to the debate about fibs. I remember a time when I first came across fibs. I thought it was crazy that these lines could show where price was heading to (this was how I believed they worked, lol). I saw quite often that price stopped dead on them some times and other times just didnt obey them at all. I still find that to this day, but my understanding of them has grown tremendously, they are just a tool. Like all tools you have to get good at using them and become a tradesman. I can pull fibs much more effectivly now and have a whole different meaning to me, partly because of the success I have had with them. I lost my way somhow I think reading too much lost my focus, and everything has just become a blurr. But i will stick with the fibs because they are my favorite tool to use.
  • #4,214
  • Feb 20, 2009 6:39pm Feb 20, 2009 6:39pm
fry2010,

Cool...fibs are great and the more of them that overlap the better. Just need to be careful cause if u drwa them fro enough pivots, u r bound to get a perfect hit. IMO, trading is about zones. not sure who Sam is although i think the name rings a bell. Sup/resis what I'm talking about. expansion and contraction. volatility and momentum. Price Action is what causes these things because the real orders are behind the real moves. I certainly don't catch them all the time but when I do, it's pretty obvious, pretty quickly. Thats the difference between fibs and the the things i just mentioned. Fibs can help pick zones and targets but the added sup/res, momo/ volatility that comes from the big orders that we can't see is what is driving the mkt.
All I'm suggesting is to look at the bigger picture. There is a lot more than jsut fibs.

Good Trading
  • #4,215
  • Feb 20, 2009 8:28pm Feb 20, 2009 8:28pm
i agree with you trader totally. Just to let you know you might want to look up sam seiden because everything your talking about is exactly what he talks about, and it is great insight into how the markets opporate. You obvoisly understand these things but you may find gd info from that guy.

I am attaching 2 charts just to show how these levels you talk about and fibs can work in harmony.
The first chart shows areas of supply and demand, the yellow ones are ones that have been activated already and so are not tradeable after the second highlighted circle on each line. The first highlighted circle on the yellow lines show when they was created, the second shows when would be the time to trade it.
The 3rd yellow line has been drawn from previous demand level that is not shown on the chart.
The red level is a line that has yet to be reached, so presents a good opportunity to sell.
The second chart shows a fib pull on that swing now I didnt realise this before I even drew it, but it lines up exactly where I drew the supply demand in balance line.
Ill just note here 1.4786 is good level to sell, so we will see what happens.
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  • #4,216
  • Feb 20, 2009 10:40pm Feb 20, 2009 10:40pm
Quoting trader365
U sound so angry scotty. why u ranting at me man. I get the Tony Robbins references....thats all well and good. Never said anything about not losing on a trade either so I don't know where that came from. Just saying that there's more to trading...MUCH MORE.... than fibs. Too many people are so focused on the fib levels that they forget about the rest of the stuff....u know...the stuff that moves the mkts

Looking on the left side of the chart can get u into many trades before the fibs can and often result in profit taking while others are just...
Sorry Pal, I really wasn't trying to attack you. I wasn't mad. I kind of went off on a rabbit trail there. Must be the ADD. It's all good, I meant no harm.

Scotty
  • #4,217
  • Feb 20, 2009 10:54pm Feb 20, 2009 10:54pm
Im sorry i dont get it shall you sraw 2 types of fibs and what about gann that skunny talks about ?

best regards
  • #4,218
  • Feb 20, 2009 11:52pm Feb 20, 2009 11:52pm
Good deal Scotty....no problem. Hope u catch that rabbit

Good Trading
  • #4,219
  • Feb 21, 2009 12:24am Feb 21, 2009 12:24am
Fry2010,

That is good stuff....trend mirrors I believe those levels are called but the more times they are tested....the stronger they become....accordind to my understanding. Yes the fib levels can and will eventually line up with these and many other levels if u draw enough of them. There are many other fib levels that are important as well.

I am more interested in why/how the mkt might get to that fib level though.(but thats just me) Multiple TF's help to look inside/outside at PA at various levels. I personally never hold a position overnight....especially given the current financial climate....or lack there of. I like to trade between the zones...with the impulse or momentum.

I would rather trade more contracts for less points The mkt is going to where ever the banks want it to. Its' not random but very calculated. If I could trade the larger size and have the massive gains...the best of both worlds...that would be great but it's too far outside my comfort zone

I'm sure your resistance zone will be tried and tested....as so many other zones will be along the way.

Good Trading
  • #4,220
  • Feb 21, 2009 6:44am Feb 21, 2009 6:44am
well wont aint broke dont fix it, you have a strategy you use that works for you, so all is good.
When you say the more a level is tested the stronger it becomes, I sorry but i dissagree.
When these areas are created there is an in-balance of supply and demand at these levels, so there is either more buyers or sellers here. When price comes back to test it, it will remove some of those buyers or sellers whichever was the stronger. The first test is the best time to trade it, then after that it has more chance of being broke. I see it all the time, these areas where price just cant seem to get through but tries hard to, then goes away a little before smashing through it.
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