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Why do people use Fibonacci in trading?

  • #121
  • Apr 6, 2013 12:05am Apr 6, 2013 12:05am
Fibonacci Retracements such as breast rotating

http://www-history.mcs.st-and.ac.uk/...Fibonacci.html
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if there is something you should keep secret,simply just save it,, so, just
  • #122
  • Apr 6, 2013 1:06am Apr 6, 2013 1:06am
Quoting sandycarrot
Fibonacci Retracements such as breast rotating http://www-history.mcs.st-and.ac.uk/...Fibonacci.html {image} {image} {image} {image} {image} {image} {image} {image} {image}

good story,,could defuse heated situations between friends,,

salaam
  • #123
  • Apr 6, 2013 1:20am Apr 6, 2013 1:20am
Quoting kbp
I have been questioning myself again and again for a long period of time about Fib retracement. There is no logical explanation of why it works/does not work. The most answer from people is: "because everyone uses them". How about you? Do you believe in Fib? If yes, what is the most reason you think it works, besides the common reason above? If no, what is your reason? I personally never used Fib as an indicator, because I think these so called golden ratios are just illusions and do not make any sense in term of trading and market sentiment....

I don't know how it work but i still believe and use Fibo. Fibo & Gann are mysterious
  • #124
  • Edited 4:02am Apr 6, 2013 3:33am | Edited 4:02am
Quoting ForExtraPips
It's really simple folks. Connect a bottom with a top, look at the Golden Ratio for the next drop. If proper money management is not in place, look at margin call in your face. You know, it's like old nursery rhyme, "Humpty Dumpty sat on a wall. Humpty Dumpty had a great fall. All of the Kings horse, all of the Kings men, couldn't put Humpty back together again." Do you know why? Because Humpty didn't have a R:R ratio that was golden. {image}
But with the right fib extensions they managed to put him back together and he now runs a training course on baby pips.
  • #125
  • Apr 6, 2013 6:02am Apr 6, 2013 6:02am
Quoting sandycarrot
Fibonacci Retracements such as breast rotating http://www-history.mcs.st-and.ac.uk/...Fibonacci.html {image} {image} {image} {image} {image} {image} {image} {image} {image}
Show the sell order through fibonachi....
  • #126
  • Apr 6, 2013 6:52am Apr 6, 2013 6:52am
Quoting Red Herring
Show the sell order through fibonachi....
Show the sell order through
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  • #127
  • Apr 6, 2013 8:07am Apr 6, 2013 8:07am
Fibs is best to used as a tool or ruler.. but not a trading method.
  • #128
  • Apr 6, 2013 6:16pm Apr 6, 2013 6:16pm
Fibs are a tool. People use them to identify areas were a retracement may reverse, or project where a leg may end. Pick any chart, any timeframe and you can find retracements ending at the 61.8, 50% and 38.2% time and time again. You will also find projections reversing at the 1.27% and 1.618%. Because a lot of trading IS based on math - they tend to become self fulfilling. Use them as a tool to identify zones, look for price action to confirm. If these levels happen to line up with supply and demand zones it gives added weight to the price action on that zone.
  • #129
  • Apr 6, 2013 8:15pm Apr 6, 2013 8:15pm
  •  FerruFx
  • Joined May 2007 | Status: MT4/MT5 EAs/Indicators/Alerts coder | 6,542 Posts | Online Now
Quoting Aaronfb
Pick any chart, any timeframe and you can find retracements ending at the 61.8, 50% and 38.2% time and time again.
Yes as well as 54.5%, 79.3%, 28.39% and 212.57% ... or any number.
MT4/MT5 EAs/Indicators/Alerts coder
  • #130
  • Apr 6, 2013 8:34pm Apr 6, 2013 8:34pm
Without wishing to denigrate the donkeys.

I´m beginning to wonder if you're dumb or is that just having nothing to do?!
Enter Signature
  • #131
  • Apr 6, 2013 8:42pm Apr 6, 2013 8:42pm
  •  FerruFx
  • Joined May 2007 | Status: MT4/MT5 EAs/Indicators/Alerts coder | 6,542 Posts | Online Now
Quoting gomes
I´m beginning to wonder if you're dumb or is that just having nothing to do?!
Certainly i'm dumb
MT4/MT5 EAs/Indicators/Alerts coder
  • #132
  • Apr 7, 2013 8:08am Apr 7, 2013 8:08am
Quoting FerruFx
Yes as well as 54.5%, ... or any number.
Can you give me some examples of 54.5% retracements in the past week?
  • #133
  • Apr 7, 2013 8:35am Apr 7, 2013 8:35am
  •  FerruFx
  • Joined May 2007 | Status: MT4/MT5 EAs/Indicators/Alerts coder | 6,542 Posts | Online Now
Quoting Aaronfb
Can you give me some examples of 54.5% retracements in the past week?
Here you go ...

As told earlier, you can find retracements on any numbers ...

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MT4/MT5 EAs/Indicators/Alerts coder
  • #134
  • Apr 7, 2013 9:40am Apr 7, 2013 9:40am
Quoting FerruFx
Here you go ... As told earlier, you can find retracements on any numbers ... {image}
: well done!


If your trading system does not find a use for plotting fib retracements, then don't use them! Personally, I like to plot them when I am watching a retracement to see if there is price action to indicate the overall trend is going to continue. Good areas to watch are the 38, 50 an 62 percent levels. Does it always work that way? Of course not - nothing in trading always works.
  • #135
  • Apr 7, 2013 9:48am Apr 7, 2013 9:48am
Take the attached weekly chart of the EURUSD with the high on week 5/1/2011 and the low on 07/22/2012 as an example.

We have a retracement that ends around 61.8%, price action confirms with a close. Price continues down to find resistance at a 1.27% extension. Price retraces again 38.2% and then continues the trend down finding support at 1.618% extension.
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  • #136
  • Apr 7, 2013 9:50am Apr 7, 2013 9:50am
  •  FerruFx
  • Joined May 2007 | Status: MT4/MT5 EAs/Indicators/Alerts coder | 6,542 Posts | Online Now
Quoting Aaronfb
: well done!
BTW, I was lucky on this one !!! Just opened EU M1 chart to try to find one and got it right at the end of the chart (friday close). Not even scrawled back the chart !

Wish you well in your trading.
MT4/MT5 EAs/Indicators/Alerts coder
  • #137
  • Apr 9, 2013 2:40am Apr 9, 2013 2:40am
Well the reason is because Forex trading can greatly benefit form this mathematical proportions due to the fact that the oscillations observed in forex charts, where prices are visibly changing in an oscillatory pattern, follow Fibonacci ratios very closely as indicators of resistance and support levels; maybe not to the last cent, but so close as to be really amazing.
  • #138
  • Apr 9, 2013 3:31am Apr 9, 2013 3:31am
It works because it is an illusion.

Nothing magical about the numbers.

It works because so many people use it. The market is driven by people, not planets or magic numbers.

The markets are not random. Markets move because of the banks. Banks trade currencies because of they need to move money for whatever reason (underlying fundamentals).

All retail traders are doing (hopefully) is riding the moves caused by the big banks.

Everything else is smoke and mirrors.
  • #139
  • Apr 9, 2013 5:02am Apr 9, 2013 5:02am
the big one take on a large portion
all we can do only take the rest

salaam
  • #140
  • Apr 9, 2013 5:27am Apr 9, 2013 5:27am
whether the FIBS work are based on an illogical base or not,
they still provide areas where the market will probably reverse
or something.
So use them 223% expansion is particularly a great one.
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