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Why 61.8%?

  • #61
  • Edited 12:58pm Apr 30, 2010 8:58am | Edited 12:58pm
Quoting uncle gromit
Take the numbers from the sequence of fibonacci numbers.

34, 55, 89, 144, 233, 377, 610, 987

Divide 34 by 55, 55 by 89, 89 by 144, 144 by 233, 233 by 377 and so on.

This makes 61.8 the most significant of the retracement levels.
Divide 1 by 1. This makes 100 the first retracement level.
Divide 1 by 2. This makes 50 the second retracement level.
2/3, 3/5, 5/8 verge on 61.8, supporting what you say.
Skip one number (55 by 144, etc.) and you get your second-most significant (38.2), two and you get your third-most significant (23.6), and so on, according to what you say, of the retracement levels.
Which all ignores Lucas numbers.

To me, it's easiest to do the 100 and 50, although a 23.6 dcb and adjustable 3D fib spiral TL's are fun.
  • #62
  • Apr 30, 2010 9:07am Apr 30, 2010 9:07am
Quoting fxpipper
What is it about 61.8% that makes it stand out from the rest?
Absolutely nothing. Its a system sellers/shills myth.
  • #63
  • Apr 30, 2010 9:11am Apr 30, 2010 9:11am
Quoting baron193
Someone here said it's only proven to work if price reacts right on the level.....why is that?? is that what you have learned so far from trading?
(if it doesn't react right on my level it doesn't work)...bollocks!
The reason I'm saying that is beacause its true. I'm not saying, (for the nth time), that the ratios cannot be used profitably. Many claim that the market adheres to these formulae with mathematical certitude. They are morons.

Nautilus shells, Greek temples and pretty faces have nothing to do with trading.
  • #64
  • Apr 30, 2010 9:12am Apr 30, 2010 9:12am
Quoting PayTheLimit
All I can tell you is that from my experience on the floor, lots of guys will keep on eye on them, believe them or not, just like a ton of other things.
Yesterdays high and low are just as much random numbers but you know that the market will have its eyes on those levels when it gets close.
i'm going to put a stop to these shenanigans once and for all... i hereby invoke the "pics or it didn't happen" rule!
Congratulations ScalaFX for coming out of the closet!
  • #65
  • Apr 30, 2010 9:16am Apr 30, 2010 9:16am
Quoting PayTheLimit
Many technical indicators can become self fufilling if enough people are following them. At least in the short term. Thats my take.
That was my take too, and hundreds of other forum posters takes aswell. Unfortunately it only makes sense on a superficial level.
  • #66
  • Apr 30, 2010 9:18am Apr 30, 2010 9:18am
Quoting acumen
i'd stay away from this guys quotes.

he really doesn't know WTF he's talking about.

m
Care to back that up with some evidence?
Or are you just gonna throw out empty challenges?
I know you're a pivot nazi, so no surprise really.

How many videos are you gonna put out where price nearly gets to a pivot point?
  • #67
  • Apr 30, 2010 9:20am Apr 30, 2010 9:20am
Quoting Scotty B
It's in the details that edges are found. Whoever said the devil was in the details was an idiot. I'm a mechanical thinker so learning and now knowing market mechanics has become very valuable to me.

I've seen price tick up on no volumes before, but I don't fully understand why that happens. I was talking with trader365 a while back, and he told me he saw price to tick up to a new level when a new limit order was issued at the next higher price when the market was at an extreme high. I think this may have to do with the price settings your platform...
w.r.t. prices moving on no volume, I'll give you an example:

Say I am a market maker, well in whatever, let's use EUR/USD as a simple example. Now, currently I am quoting prices of 1.3320 Bid 1.3323 offered.

Then I see a flash headline hit the wires that a black cat has walked under a tree. This can't be good! I immediately change the prices I quote to 1.3290 bid, 1.3295 offered. Price has moved without any trades occuring.

Now, that example might seem a little simplistic, but behaviour like this does happen occaisionally.. think for instance of a gap.

w.r.t Fibs - it really is just selective memories / survivorship bias. Every instance of a retracement to something at or near to a fib level is cited as evidence that they "work", but every example of a retracement going nowhere near a fib level is just ignored. I mean, of course retracements will sometimes occur at or near these regions... but I have yet to see evidence that they occur at these regions any more than any other arbitrary region.

Some people will say that the Fib series is some sort of magical thing that occurs all over the place in nature, and so it is sensible to look for instances of Fib numbers in the markets also... in my mind this is like "the cart leading the horse". Eventually, price will either get to a fib level or it won't. And when it gets there, it will either reverse, range, or continue on its path. This is actually true for all prices! Taking a measurement, figuring out some magic proportion of it, and attributing more significance to the "magic fib" price over other prices is just plain daft.

Moreover, it is at odds with my beliefs about how markets operate in practice to impose arbitrary conditions upon them in order to interpret the activity.
  • #68
  • Apr 30, 2010 9:34am Apr 30, 2010 9:34am
Look I'm just telling you my experience. I dont use fibs on an intraday basis. I will keep an eye out on daily fibs or pivots just as I would previous days high and lows just as a matter of house keeping. Call it what you want but the fact of the matter is we all look at something. What works for you might not work for me or the other guy. I cant really justify in saying something is bull or not, but I may choose to disregard it or not. Simple I'd say.
Look Sharp/Trade Tight
  • #69
  • Edited 10:23am Apr 30, 2010 10:09am | Edited 10:23am
Quoting PayTheLimit
What works for you might not work for me or the other guy.
I don't buy that. It's a cop out.

However if price is in the upper 30 ish percent of yesterdays range that sounds bullish to me. Dont think anyone is going to argue that.
Thats where there is value in measuring percentages of a range.
  • #70
  • Apr 30, 2010 10:16am Apr 30, 2010 10:16am
Quoting Jonty
w.r.t. prices moving on no volume, I'll give you an example:

Say I am a market maker, well in whatever, let's use EUR/USD as a simple example. Now, currently I am quoting prices of 1.3320 Bid 1.3323 offered.

Then I see a flash headline hit the wires that a black cat has walked under a tree. This can't be good! I immediately change the prices I quote to 1.3290 bid, 1.3295 offered. Price has moved without any trades occuring.

Now, that example might seem a little simplistic, but behaviour like this does happen occaisionally.. think for instance...
This is where the details count. The price does not change until an order is issued except for in places like oanda. Of couse we ought to be concerned with the bid and offer over the last traded price (or average price) anyways, but price won't change on the chart until a market order goes through..That's all I was saying.

This says a lot more about the difference between retail and the real deal.
  • #71
  • Apr 30, 2010 10:20am Apr 30, 2010 10:20am
Go for it Ted. I'm with you. I just stumbled on this thread and although I think Fibs can be used and are used as a measuring stick, in a similar way to pivots, I would rather my trading was not burdened with this extra junk. I posted some charts here: http://www.forexfactory.com/showthre...t=53366&page=4 which amply demonstrate the random aspect of Fibs applied to trading.

Have a great weekend.
Gone to a better place
  • #72
  • Apr 30, 2010 10:22am Apr 30, 2010 10:22am
Quoting Scotty B
This is where the details count. The price does not change until an order is issued except for in places like oanda. Of couse we ought to be concerned with the bid and offer over the last traded price (or average price) anyways, but price won't change on the chart until a market order goes through..That's all I was saying.

This says a lot more about the difference between retail and the real deal.
"The price does not change until an order is issued except for in places like oanda"

What is special about oanda?

"price won't change on the chart until a market order goes through"

Well that depends on what you are charting, doesn't it - if you are charting the LAST price, then all you are going to get is where the market WAS, not where the market IS.
  • #73
  • Apr 30, 2010 10:24am Apr 30, 2010 10:24am
Quoting nubcake
this makes me quite sad....
Do you usually read a sentence in it's context or do you just pick a favorite line and respond to that alone? If your head hurts it's not because this or any other place is like a blond convention, but because you may need some work in the realm of reading comprehension. I offered my understanding of the problem at hand in that post, go back and read it, it's there.

As I've told many others around here, beggars cannot be choosers. It doesn't make sense to complain about that which you've paid nothing for. If you don't like this place, don't waste your time here. I hear babypips has some really good stuff that will have you profitable in no time, you might want to give that a try.
  • #74
  • Apr 30, 2010 10:28am Apr 30, 2010 10:28am
Quoting Jonty
"The price does not change until an order is issued except for in places like oanda"

What is special about oanda?

"price won't change on the chart until a market order goes through"

Well that depends on what you are charting, doesn't it - if you are charting the LAST price, then all you are going to get is where the market WAS, not where the market IS.
As I stated in my post, Oanda displays an average price on the charts. This is why you are quoted a buy or sell price when you go to trade. The price on the chart is not the price you pay (what you said). I also stated that we must focus on the bid/ask anyways, so why continue your rhetoric?
  • #75
  • Apr 30, 2010 10:35am Apr 30, 2010 10:35am
Chill out dude, it's nearly the weekend!

  • #76
  • Apr 30, 2010 11:22am Apr 30, 2010 11:22am
I'll add 1 more thing to all this trash.......how do you guys that don't believe in fibs know you were drawing your fibs from the right place? it is definatly not always from the latest swing highs and swing lows.....a fib drawn in the wrong place is as useful as a moving average cross...........NONE
  • #77
  • Apr 30, 2010 11:29am Apr 30, 2010 11:29am
Quoting waves
I'll add 1 more thing to all this trash.......how do you guys that don't believe in fibs know you were drawing your fibs from the right place? it is definatly not always from the latest swing highs and swing lows.....a fib drawn in the wrong place is as useful as a moving average cross...........NONE
Jesus H Christ. That just throws another statistical spanner into the works.
Please think about what you're posting.
Throw enough shit and something is bound to stick. Get it?
  • #78
  • Apr 30, 2010 11:44am Apr 30, 2010 11:44am
I think fibs where to first tool I backtested with tons of data, proving it was an rather poor tool compared to others forms of analyzes.
Measure twice, cut once
  • #79
  • Apr 30, 2010 11:52am Apr 30, 2010 11:52am
LOL..trash what you don't understand......enjoy the weekend boys
  • #80
  • Edited 12:16pm Apr 30, 2010 11:59am | Edited 12:16pm
Quoting waves
LOL..trash what you don't understand
Well thats what you've been doing all along isn't it?

I'd rather go with Craig, Smikester and aediaz1, than the guy who posts nothing but "LOL" posts.
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