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Why do people use Fibonacci in trading?

  • #41
  • Apr 3, 2013 3:39pm Apr 3, 2013 3:39pm
Quoting GEfx
Finally, I do not consider myself a trading expert, nor am I a big shot, nor am I offering anyone help. I belong to a trading group that consists of experts, and I know for a fact that I am not one of them! Good trading to everyone.
All you need to do
to become a trading
expert

Is to forget about Fibbo

?

When the Joker is in the deck.. fear not and play it well
  • #42
  • Apr 3, 2013 3:45pm Apr 3, 2013 3:45pm
Quoting GEfx
My examples are trades, not cherry picking. Of course, I could show about 100 fib set ups from today that did not work, and should be avoided for trading, because they are not trades. The key is knowing which ones can/should be traded. I have provided the examples to show how I use fibs, and in addition, have posted lots more trades in my trading journal here on FF. And yes, there is very specific logic behind the use of fibs (and the other tools I use), based on my work as a consultant to currency and bond trading operations, in my pre-trading...
Enter Signature
  • #43
  • Apr 3, 2013 3:47pm Apr 3, 2013 3:47pm
btw...... PIVOTS
that's where it's at folks
and you don't have to try
to figure out those damn

FIBS

Repeat after me... pivots is where it's at
Attached Image (click to enlarge)
Click to Enlarge Name: Synchronicity A.gif Size: 26 KB
When the Joker is in the deck.. fear not and play it well
  • #44
  • Apr 3, 2013 3:59pm Apr 3, 2013 3:59pm
@GEfx

btw... I wouldn't be surprised if you
paid big bucks to be "mentored" by
fibber marketers. It IS a great marketing tool.

(when all you really needed was a freebie
pivot indi)

damn
When the Joker is in the deck.. fear not and play it well
  • #45
  • Apr 3, 2013 4:08pm Apr 3, 2013 4:08pm
Quoting Slim Buffett
btw...... PIVOTS that's where it's at folks and you don't have to try to figure out those damn FIBS Repeat after me... pivots is where it's at {image}
Still can't make out your entries. Can you just show where you enter and exit. I guess I could assume your entries but it would be better for everyone here if you just state where you made your money today.
  • #46
  • Apr 3, 2013 4:11pm Apr 3, 2013 4:11pm
Hi Slim Buffet,

With no offense but your ignorance about fibo tool, only make me laugh.
I know i should not say that, so just please forgive me.
Enter Signature
  • #47
  • Apr 3, 2013 4:11pm Apr 3, 2013 4:11pm
Quoting Slim Buffett
@GEfx btw... I wouldn't be surprised if you paid big bucks to be "mentored" by fibber marketers. It IS a great marketing tool. (when all you really needed was a freebie pivot indi) damn
So that's your true MO here? Enter a discussion about something you know nothing about and then go all "smarmy"? Sorry chump, not taking the bait. Time to exit this thread. Don't have time to waste on this BS.
  • #48
  • Apr 3, 2013 4:22pm Apr 3, 2013 4:22pm
Quoting GEfx
So that's your true MO here? Enter a discussion about something you know nothing about and then go all "smarmy"? Sorry chump, not taking the bait. Time to exit this thread. Don't have time to waste on this BS.
No.... I guess I don't know much about anything

Must have struck a vibrant nerve though

Would that have something to do with "paying big
bucks"

"synchronicity is the conceptual relationship of minds,"

Where did I go wrong ?
When the Joker is in the deck.. fear not and play it well
  • #49
  • Apr 3, 2013 4:52pm Apr 3, 2013 4:52pm
Quoting Forexia
trade with it and not against it.
BTW..... as I recall, several years ago you were an
advocate of tighter restrictions regarding leverage.

What is your opinion on that now ?
If I may be so bold as to ask......
When the Joker is in the deck.. fear not and play it well
  • #50
  • Apr 3, 2013 7:51pm Apr 3, 2013 7:51pm
Quoting Slim Buffett
“Fibonacci retracements are at best a bad tool, at worst a hoax”
Quoting TranceTrader
they're the trading equivalent to astrology. .....they don't have any real mathematical significance or scientific backing...
I can't have said better ...

Well done.
MT4/MT5 EAs/Indicators/Alerts coder
  • #51
  • Edited 8:25pm Apr 3, 2013 8:14pm | Edited 8:25pm
Quoting Slim Buffett
which are r3ally not true ?? Sometimes the authors who write "gee-whiz" science books for the layman engage in "Fibonacci fakery". We cite a few examples. {image} {image} Rather poor agreement. Nautilus shells. Consider the commonly seen assertion that shells of the Chambered Nautilus conform to the golden spiral. The photo on the right shows one that has been sawed carefully to show the inner chambers. For comparison, the actual golden spiral is shown on the left.
Well since you are picking on how nature elements use Fibonacci. Flower patels, the proportion of the upper torso to lower torso on a human body and even the proportion of upper portion of the human face to its lower portion all conform to Fibonacci ratios, i.e. the Golden Ratio. Now we can't help it if one particular face or body does not conform to it and that's beyond the point.

http://upload.wikimedia.org/wikipedi...iChamomile.PNG
Yellow Chamomile head showing the arrangement in 21 (blue) and 13 (aqua) spirals. Such arrangements involving consecutive Fibonacci numbers appear in a wide variety of plants.

Quote
It makes no sense at all when there has been statistical evidence that it's meaningless Since I was a small child I remember the fanatics saying that the World was about to end. They still say it today. Of course it's a self-fulling prophecy. The World may end tomorrow or in a few billion years. And as you said... the "trick" is knowing where or which timeframe to use the fib(er) Seems that you can put it almost anywhere and it will mean something (which is really nothing)

Not sure how hearing about "world coming to an end" as a child would be self-fulfilling if the world really is not going to end. I mean if the world IS going to end, it's going to end no matter what, whether fanatics shout the world is going to end or not. But anyway let's go back to fibonacci. The fact that fibonacci is used widely in financial market makes it a useful tool because the more people use it the more market will move according to it, hence the self-fulfilling prophecy. Please make sure you know what a term means before you use it.

But the problem with using fibo is that you can draw so many fibo lines and get retracement ratios out of them, that the chart soon get inundated in them and you don't know which lines are valid.
Make your losses in demo. Earn your profits live.
  • #52
  • Apr 3, 2013 8:17pm Apr 3, 2013 8:17pm
Quoting Slim Buffett
BTW..... as I recall, several years ago you were an advocate of tighter restrictions regarding leverage. What is your opinion on that now ? If I may be so bold as to ask......
Ok this is going off-topic since this thread is about Fibonacci and trading. But just to answer your question I have NEVER advocated tighter restrictions regarding leverage. I actually advocate against it as I believe the government has no business in dictating how individual investors trade especially when they have no clue about the financial instrument being traded with leverage like Forex.
Make your losses in demo. Earn your profits live.
  • #53
  • Apr 3, 2013 8:18pm Apr 3, 2013 8:18pm
Quoting Forexia
The fact that fibonacci is used widely in financial market makes it a useful tool because the more people use it the more market will move according to it
This is exactly the point.
MT4/MT5 EAs/Indicators/Alerts coder
  • #54
  • Apr 3, 2013 8:34pm Apr 3, 2013 8:34pm
Quoting Forexia
The fact that fibonacci is used widely in financial market makes it a useful tool because the more people use it the more market will move according to it.
Quoting FerruFx
This is exactly the point.
Yes BUT the very first time when people used fibo in financial trading was because it was observed that fibo explained many of the market movement patterns.

Btw, just one more fibonacci number application found in nature:

The bee ancestry code

Fibonacci numbers also appear in the description of the reproduction of a population of idealized honeybees, according to the following rules:

  1. If an egg is laid by an unmated female, it hatches a male or drone bee.
  2. If, however, an egg was fertilized by a male, it hatches a female.

Thus, a male bee will always have one parent, and a female bee will have two.
If one traces the ancestry of any male bee (1 bee), he has 1 parent (1 bee), 2 grandparents, 3 great-grandparents, 5 great-great-grandparents, and so on. This sequence of numbers of parents is the Fibonacci sequence. The number of ancestors at each level, Fn, is the number of female ancestors, which is Fn−1, plus the number of male ancestors, which is Fn−2.[57] This is under the unrealistic assumption that the ancestors at each level are otherwise unrelated

Fascinating stuff!! How an animal produces offspring follows exactly a mathematical phenomenon!

Make your losses in demo. Earn your profits live.
  • #55
  • Apr 3, 2013 8:39pm Apr 3, 2013 8:39pm
Quoting Forexia
Yes BUT the very first time when people used fibo in financial trading was because it was observed that fibo explained many of the market movement patterns.
If there's a mathematic explanation, it would be great to have the source ...
MT4/MT5 EAs/Indicators/Alerts coder
  • #56
  • Apr 3, 2013 8:54pm Apr 3, 2013 8:54pm
i trade using Tau. Since Tau relates to a circle, and the world is a circle (that's right it's not a square, or a triangle, or a hexagon), and buying is usually green and selling is usually red, and stoplights are green and red and circular, then Tau must be important. Tau can be found in many places, therefore it must be relevant to trading.

food and water is poison. source : everybody dies.

me smart. derp. derpity derp.
Congratulations ScalaFX for coming out of the closet!
  • #57
  • Apr 3, 2013 9:16pm Apr 3, 2013 9:16pm
My 2 pips worth:

I believe that it is the understanding of any strategy that makes it successful. As an example I offer the following very simple example:

Imagine a guy walking into a bar and applying for a cooking job. He has no experience. The owner hires him on the spot, hands him a spatula and shows him the grill. The owner then leaves to take the rest of the day off.
How successful is this new hire going to be?

Now, think about the same guy, however this time imagine him hired by an owner who takes the time to train him. Besides just a spatula, he gives him 2 fry pans, a pairing knife, a bread knife, a soup warmer, an apron, a deep fryer, a few slotted spoons, serving plates, baskets and silverware. He gives the new hire a tour of the storage areas and the kitchen. The owner takes the time to go over the menu so the new guy will know what he will be cooking. The owner shows him the table numbers in case he may have to run an order out. The owner also spends the necessary amount of time with the new hire to ensure his understanding of the kitchen, the menu, the cooking, the storage areas, the prep lists and the cleaning lists. The owner then spends multiple days making sure that the new hire is comfortable and competent before turning him loose on his own.
So will the new hire have a better chance of success with this owner? VERY VERY VERY LIKELY

Now, a quick reflection on your fibonacci training:
Which 'owner' taught you fibs? -
Are your fib trading results a reflection of the answer to the above question?

I do analyze with fibs. I do trade with fibs. I use over 30 different fib tools.

I DO NOT us one single platform 'default' fib tool. If 95% of traders fail in the 1st year then no way am I gonna be interested in the tools that 95% of the traders are using in their 1st year

Do I use only Fib tools? NOPE.
Is it the holy grail? NOPE.
Was it an easy journey? NOPE.

Is it getting better? YEAP!!!!!!!!!!!!!!!!!!!!

And besides all of that, each of us traders must believe in ourselves - that each of us IS worthy and deserving of the potential success awaiting all of us in the Forex markets. With out that belief, no strategy or tool will work!

Good Trading All !!!
  • #58
  • Apr 3, 2013 9:30pm Apr 3, 2013 9:30pm
all kinds / all sorts of indicators work effectively and very helpful
but especially for those who create these indicators
(because he creates these indicators with specific goals for himself )
but not necessarily useful or helpful to others
because what is in the head of the creators of these indicators is often different from what's in other people's heads

salaam
  • #59
  • Apr 3, 2013 9:33pm Apr 3, 2013 9:33pm
Quoting FerruFx
What are you talking about ?

When I asked that I did not know that Fib is available within MT4, sorry!
  • #60
  • Apr 3, 2013 9:38pm Apr 3, 2013 9:38pm
Quoting FerruFx
If there's a mathematic explanation, it would be great to have the source ...
The source is the relationship of the Fibonacci number sequences and the Elliot Waves observed in the market cycles.

Below is the explanations in detail. I apologize for its lengthiness. Hope it helps.


The Golden Ratio and the Golden Spiral
http://www.elliottwave.com/images/fr...e/FiboFig1.jpg
Let's start with a refresher on Fibonacci numbers. If we start at 0 and then go to the next whole integer number, which is 1, and add 0 to 1, that gives us the second 1. If we then take that number 1 and add it again to the previous number, which is of course 1, we have 1 plus 1 equals 2. If we add 2 to its previous number of 1, then 1 plus 2 gives us 3, and so on. 2 plus 3 gives us 5, and we can do this all the way to infinity. This series of numbers, and the way we arrive at these numbers, is called the Fibonacci sequence. We refer to a series of numbers derived this way as Fibonacci numbers.
We can go back to the beginning and divide one number by its adjacent number -- so 1÷1 is 1.0, 1÷2 is .5, 2÷3 is .667, and so on. If we keep doing that all the way to infinity, that ratio approaches the number .618. This is called the Golden Ratio, represented by the Greek letter phi (pronounced "fie"). It is an irrational number, which means that it cannot be represented by a fraction of whole integers. The inverse of .618 is 1.618. So, in other words, if we carry the series forward and take the inverse of each of these numbers, that ratio also approaches 1.618. The Golden Ratio, .618, is the only number that will also be equal to its inverse when added to 1. So, in other words, 1 plus .618 is 1.618, and the inverse of .618 is also 1.618.
http://www.elliottwave.com/images/fr...e/FiboFig2.jpg
This is a diagram of the Golden Spiral. The Golden Spiral is a type of logarithmic spiral that is made up of a number of Fibonacci relationships, or more specifically, a number of Golden Ratios. For example, if we take a specific arc and divide it by its diameter, that will also give us the Golden Ratio 1.618. We can take, for example, arc WY and divide it by its diameter of WY. That produces the multiple 1.618. Certain arcs are also related by the ratio of 1.618. If we take the arc XY and divide that by arc WX, we get 1.618. If we take radius 1 (r1), compare it with the next radius of an arc that’s at a 90° angle with r1, which is r2, and divide r2 by r1, we also get 1.618.
Fibonacci-Based Behavior in Financial Markets
We can visualize that the stock market or financial markets are actually spiraling outward in a sense. This is a diagram of the stock market whereby the top of each successive wave of higher degree (in terms of the Wave Principle) becomes the touch point of an exponential expansion or logarithmic spiral. We can actually visualize the market in this sense, and we will see later on, in terms of Fibonacci ratios and multiples, how this unfolds.
http://www.elliottwave.com/images/fr...e/FiboFig3.jpg
This is a diagram of the Elliott wave pattern. It is a typical diagram showing us the higher degree in Roman numerals with wave I up (motive) and wave II down (corrective). One of the connections to Fibonacci ratios and numbers is that with Elliott wave, if we look at how many waves there are within each wave, we end up with Fibonacci numbers.
http://www.elliottwave.com/images/fr...e/FiboFig4.jpg
Make your losses in demo. Earn your profits live.
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