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Why 61.8%?

  • #101
  • Apr 30, 2010 4:37pm Apr 30, 2010 4:37pm
Quoting opie999
Dang! Ain't seen so much excitement since the hogs ate cousin Billybob.
  • #102
  • Apr 30, 2010 5:26pm Apr 30, 2010 5:26pm
Quoting pipmutt
Ok, that sounds like a breakout strategy with the other bits added in for confirmation and confidence, is that about right?
Yes, in a nutshell, but it's the confluence of the other factors that increase the probability of the bounce, improving the win rate, while still allowing at tight SL that leads to potentially high RR. Well, that's the theory.

_____________________

I thought I'd post one more chart screenshot before I quit for the weekend. Candles A, B, C and F all break through significant levels, before price retreats to bounce of prior candle highs/lows, virtually to the pip (see the white lines). Candle A is particularly interesting, as the immediately following 3 candles each bounce off a prior high. I'm no expert on orderflow, but I'd guess that this is caused by high volumes of orders at each of these clearly visible levels. Then, after the downward pullback gets absorbed by the orders at that level, price bounces. But in each case, the sell orders soak up enough buying to allow price to retreat to the next lower level, on the subsequent downward move.

Of course I've cherry-picked perfect specimen instances, and I'm not saying that I would have traded all of these. But if we can get enough candle highs/lows, and preferably with other supporting phenomena into a tightly packed area, then we can set a tight SL with heightened probability of a bounce. Bottom line is we don't need a 100% win rate, just some kind of edge.

IMO, this particular example is superior to the cable setup I posted previously, because NZD is currently the strongest currency, causing NZDUSD to trend upward on the higher TFs (daily).

The quadruple top (marked 'Quad') is another nice (short) setup, but against the strong upward trend.

(BTW, the Better Volume indy does its job well with its green bars again forecasting impending exhaustion at candles D and E).

_____________________

Anyway........ this is a fibo thread, so to get it back on topic I'll repost my earlier GU chart, with a fibo drawn across a suitable swing. Price has bounced at the 138.2, accurate to the pip (white arrow). Is it self-fulfilling prophecy? Some kind of statistical averaging? Traders succumbing subconsciously to irresistible forces of nature? Or nothing more than mere coincidence? I'll let you good folk continue your debate, while I spend the weekend polishing my lucky nautilus shell. Have a good weekend!
Attached Image(s) (click to enlarge)
Click to Enlarge Name: fibo example2.jpg Size: 154 KB
Click to Enlarge Name: fibo example3.jpg Size: 83 KB
  • #103
  • Apr 30, 2010 6:02pm Apr 30, 2010 6:02pm
Quoting waves
I have trashed nothing......anyones style that works for them is great with me............Ted, your a bitter angry person, it shows in your posts, I feel sorry for you..........
Well let him be as angry as he wants but he still is telling the truth.

I'm glad that there are quite alot of people who don't buy everything they read on the internet and think for themself. When I found out that there are no magical numbers in the chart I was afraid that I might be the only one who knows the truth. Good to see that there are still some openminded people left on the planet.
  • #104
  • Apr 30, 2010 7:30pm Apr 30, 2010 7:30pm
Quoting TJPLD
When I found out that there are no magical numbers in the chart I was afraid that I might be the only one who knows the truth.
Right. No magical numbers.
Good lord, I can't believe that we even need to have these discussions all of the time.
Really ridiculous.

Anyway. Have a good weekend people!
  • #105
  • Apr 30, 2010 7:33pm Apr 30, 2010 7:33pm
Quoting aediaz1
Why do all amateurs believe that most bankers are profitable speculators? I wonder how this myth become so popular.
They're perceived as professionals within their industry, and certainly advertise themselves as such. They have the corporate image and vast resources, and supposed to have some of the smartest guys in the room. I think there's also a widespread and mistaken assumption that spec trading activity for banks is far higher than it really is.

My theory against such widespread and highly profitable bank speculation is that the food chain could not support it. The fact is that opportunities are too common and edges too large for such profitable and widespread bank trading to exist. That fact actually suggests that the majority of the market is dead money, and that banks as a whole aren't able enough to feed significantly from it.
  • #106
  • May 1, 2010 1:08am May 1, 2010 1:08am
Quoting TJPLD

I'm glad that there are quite alot of people who don't buy everything they read on the internet and think for themself.......Good to see that there are still some openminded people left on the planet.
I agree, people open minded enough to realize that just because they can't see or understand something it doesn't mean others can't.

Wasn't Fibonacci himself ridiculed for his beliefs, in fact wasn't all science and mathematics considered heresy at one time, the bible being accepted as the source of all knowledge?

Fortunately we've moved on a bit since the Dark Ages
  • #107
  • May 1, 2010 1:20am May 1, 2010 1:20am
Quoting hanover
I'll let you good folk continue your debate, while I spend the weekend polishing my lucky nautilus shell. Have a good weekend!
lol, yes you too!
  • #108
  • Edited 2:13am May 1, 2010 2:09am | Edited 2:13am
I consider myself a very open minded person, and yet,
it is not very smart to make general statements like: fibs are BS.
Fibs are a great tool for those who use it successfully, and there are quite a few of those, is it as simple as drawing a fib range and expecting a reaction on a level just because it is part of the ratio? ...NO!
Is it precise? though it can be and many times it is, generally NO! (show me something that is)
Imagine if it was that simple!
Markets are not simple, I'm sure everybody knows that, they'll always be uncertainty whenever you enter a trade.
I have quite some time ago come to the conclusion that you do need the "whole" picture in order to trade successfully, at least i do.
What i like about fibs,and the ABCD way of evaluating moves is that it really complies with the age old idea of what is really a trend, i can not explain in a post like this how amazing and complex the relationship of fib numbers on both directions of a trading range, i still find myself smiling in awe sometimes after quite a few years of trading with fibs.
Is it magic ? probably not, most likely self fulfilling, or whatever you want to call it, irrelevant, they work for me, and they're most certainly not the only way to trade, and i respect every other way people use.
I personally don't use oscillators that much, but i don't ridicule people who use them.
Certainly i wouldn't say: oscillators are BS!...i found one guy about 1 year ago who uses them profitably.
Oh finally, going by the avatar and a specific N word that is getting repeatedly mentioned by one poster, i can't help but....

Inserted Video
Biggest joker
  • #109
  • May 1, 2010 2:53am May 1, 2010 2:53am
Quoting baron193
I consider myself a very open minded person, and yet,
it is not very smart to make general statements like: fibs are BS.
Fibs are a great tool for those who use it successfully, and there are quite a few of those, is it as simple as drawing a fib range and expecting a reaction on a level just because it is part of the ratio? ...NO!
Is it precise? though it can be and many times it is, generally NO! (show me something that is)
Imagine if it was that simple!
Markets are not simple, I'm sure everybody knows that, they'll always be uncertainty whenever...
Well you can say that Fibs are BS because they simply are. As Ted pointed out that doesn't mean that it's BS to trade Retracements because Retracements and Expansionis do happen that is a fact. They just do not happen more often on Fib Levels than on 68,9%. That is Fact too.
  • #110
  • May 1, 2010 4:08am May 1, 2010 4:08am
Quoting baron193
Is it precise? though it can be and many times it is, generally NO! (show me something that is)
Imagine if it was that simple!
right. so what you are saying is that sometimes it hits a fib and sometimes it doesn't, which is the same as "sometimes it hits a number". so what's the point if it's not precise? do we need an eye-test to check why we can't eyeball a retracement as being "around 1/3 or 2/3"?

wow. it works sometimes and it doesn't another. like every single indicator in the existence of ever. hell, i could drop a random horizontal line on a chart and use it as an indicator... look back and find all the times it was somehow magically touched, and then other times it wasn't. ooh ooh i must need to use discretion, right?

weeeeeeeeeeeeeeeeeeeeeeeeeee!
Congratulations ScalaFX for coming out of the closet!
  • #111
  • May 1, 2010 4:18am May 1, 2010 4:18am
Quoting Scotty B
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...
for all your posturing i now realise this isn't he first time i've caught you speaking from the wrong end. it's not something i'm doing on purpose, but when i see something so blatant it's not my fault it's from the same person. you talk the talk but you don't walk the walk. you seem to have some vague notions of 'something' but you don't seem to grasp the basics of what a market is... you like to drop talk of this and that and nuggets of text from books you've read, and quite frankly people drink your koolaid and you love it.

kudos to you. i'm not profitable, and quite frankly i don't believe you are either. i do not rate you as i get a vibe that you are not all you would like to allude that you are. i do not expect, or want, you to care... because i don't care if you care or not... but stop speaking crap. simple. if you know what you are talking about then great, but until then...
Congratulations ScalaFX for coming out of the closet!
  • #112
  • May 1, 2010 4:22am May 1, 2010 4:22am
I think this thread is full of very angry and disappointed guys (and gals?). Sometimes our minds tell us we're smart when in the last analysis we're just wasting breath (do they waste breath typing on computer?). Bla bla bla everywhere. The original question about 61.8 is now being covered with a whole BS about price and personality. For chrissake can we focus on the issue?
Ted said "The simple fact is they have no underlying mathematical meaning in the market" That's great stuff he posted. Hi Ted, can you tell me one thing that has underlying mathematical meaning in the market? If nothing, then we don't need maths to trade, if something, then we all go back and learn trading maths and quit fighting.
Now to my little contribution, which might as well be useless and generate more controversy. . .

Quoting LasVahGoose
Why Fibonacci? We know that people unconsciously identify beauty by facial geometries and physical proportions that possess Fibonacci and symmetric qualities. I believe people identify the significance of opportunities and threats in a similar fashion - probably unconsciously - certain patterns and ratios are attractive or threatening and evoke an emotional response. People start looking for a gas station when their tank is 3/8 full.
If you want to know how effective something is, you need to start with questioning what its function is (Paraphrasing Aristotle)
The above quote from LasVahGoose is very significant to me in the whole lot. Forex market is mostly governed by emotions (psychological reactions). Now what does fib do? Or where is 61.8 fib found? In measuring retracement I think. Now I learnt that the big dogs - and some small ones - like to hold a position for a long time, weathering all forms of retracement. I also learned that when a market retraces 50%, people begin to worry (because 50% or more of accumulated profit is gone), and when it progresses from there to around 60% which means more than 3/5th of profit gone, then worry turns to panic and most start to exit believing that retracement is about to become reversal. During that mad exit the market might then find great support or resistance around that area and voila! fibo just worked. Just as LasVahGoose quoted above 3/8 to $0.00 is very threatening and no one wants to move from $2500 profit to $0.00 or worse.
I would have loved to say more but my family is waiting outside. Can't keep them waiting because I want to prove a fibo point
Have a great weekend
Kenn
Mystery Is The Final Product Of Ignorance. Hey! What's ma chart doin'
  • #113
  • May 1, 2010 4:31am May 1, 2010 4:31am
Quoting nubcake
right. so what you are saying is that sometimes it hits a fib and sometimes it doesn't, which is the same as "sometimes it hits a number". so what's the point if it's not precise? do we need an eye-test to check why we can't eyeball a retracement as being "around 1/3 or 2/3"?

wow. it works sometimes and it doesn't another. like every single indicator in the existence of ever. hell, i could drop a random horizontal line on a chart and use it as an indicator... look back and find all the times it was somehow magically touched, and then other...
You're taking (choosing) the simplistic, linear approach to what i said, if you really think that we can jump from deliberately inaccurate fib reactions, to "drawing any horizontal line on a chart", you are sadly mistaken.
I suppose you want to see charts next?
Stick with your precision, and don't use any discretion in case it renders the way you do TA invalid.
Biggest joker
  • #114
  • May 1, 2010 4:56am May 1, 2010 4:56am
Quoting baron193
You're taking (choosing) the simplistic, linear approach to what i said, if you really think that we can jump from deliberately inaccurate fib reactions, to "drawing any horizontal line on a chart", you are sadly mistaken.
I suppose you want to see charts next?
Stick with your precision, and don't use any discretion in case it renders the way you do TA invalid.
lol.

i could not care less about people and their charts. how boring.

so why use a tool that requires discretion when you could just eyeball the chart in the first place? can you not see roughly where 61.8 lies on a chart without a magical fib tool? really? ok then. power to you and your fib tool.
Congratulations ScalaFX for coming out of the closet!
  • #115
  • May 1, 2010 5:24am May 1, 2010 5:24am
Quoting nubcake
for all your posturing i now realise this isn't he first time i've caught you speaking from the wrong end....
Again Nubs,

You need to focus on reading in context. You would not have the misunderstandings that afflict you so severely if you'd focus on this handicap of yours.

You claim not to give a rip about what anyone has to say or think all while you are doing just that. This is called self contradiction.

Start here:
http://books.google.com/books?id=IAJ...page&q&f=false

Then try this:

http://en.wikipedia.org/wiki/Contradiction
  • #116
  • May 1, 2010 5:31am May 1, 2010 5:31am
Quoting TJPLD
I did some statistics and it turned out that ....
you are pretty lost in applying stats to the market..
  • #117
  • May 1, 2010 5:43am May 1, 2010 5:43am
If only you guys would just stop this endless wrangling and focus on issues.
But we're all like that sometimes.
Nuke, Scotty, etc. Tell us about what you want us to do with 61.8%. We'd appreciate it more than some ego stuff I read around here.
Don't mean to insult anyone, but I'd rather ignore any statement that doesn't contribute anything to a thread I decide to join.

Came back two hours later to see the same kind of stuff. I'm not impressed

Kenn
Mystery Is The Final Product Of Ignorance. Hey! What's ma chart doin'
  • #118
  • May 1, 2010 6:31am May 1, 2010 6:31am
by posting off-universe.

this thread has nowhere left to go so for all the "oh boohoo this thread isn't on topic" have missed the point that the topic has been done and ended. The answers have been given. the rest is pure fun, clearly. it was a simple question and has received it's answers. no?
Congratulations ScalaFX for coming out of the closet!
  • #119
  • May 1, 2010 6:35am May 1, 2010 6:35am
Wow, what a collection of frustrated and angry people. I started to participate in this thread a few days ago but deleted my post out of fear of being sucked into a meaningless argument. If half the people here were traders then it would be worth the effort, but it is pretty clear that most here do not have a clue about what they are talking about.

The question on the table is about the .618 fib. Is it significant? Sometimes, and actually often it is, but not always. The great thing about the forex is that it tends to be a series of repeating patterns. Profits flow to those who can detect a recognizable patter developing and then trade it. If, and as soon as, the pattern no longer fits your experiences, you exit and keep your money or exit and minimize your loss. Pattern recognition is one of the things that can give you an edge in forex trading.

It is up to the trader to select the tools, if any, that help them recognize patterns. I use trend lines, fibs, and S/R. I loved Hanover's chart because it clearly outlines one of the patterns he looks for while trading. The key is getting good at recognizing when your pattern is starting to develop, because this is where you can start with a small risk, and add as the pattern unfolds.

So why are S/R, fibs, trend lines, etc important? Because the bankers say they are. Every trader (for a CB, bank, hedge fund, etc) use these tools when they are trading. The patterns I spoke about develop when these big boys are in the market, and break down when the big boys are not very interested in the market, or change their direction. Of course they are not accurate to the pip (come on, you have thousands to traders trying to get to about the same place, so they will sometime over/under shoot), but that is the nature of trading.

Trade well.
  • #120
  • May 1, 2010 7:18am May 1, 2010 7:18am
This isn't directed at anyone in particular, OK! Just food for thought, thats all.

In the land of the blind...

The Emporers New Clothes

PEACE!

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