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Why do people use Fibonacci in trading?

  • #161
  • Apr 13, 2013 6:24am Apr 13, 2013 6:24am
surprised nobody posted 50% fibo at 100 on USDJPY from where it has fallen 160 pips.

Anyway you answered your question yourself already, cause everybody uses them and thats the reason all SR stuff in trading works. The first 10-20 reaction you see on any SR (any tech tool used like tl's, previous high/lows, fibs, round numbers etc) is only cause people were watching the level and they had orders lined up there.

Why those people were watching those levels? Because everybody watches them!

Maddening no?

But its works and thats whats matters.
.
  • #162
  • Apr 13, 2013 6:01pm Apr 13, 2013 6:01pm
Seems U/J took a little dive to the ( former) monthly R2 pivot
After some brokers closed
a smaller dive can be noticed slightly below the Daily S3

pivot
one might notice some divergence there somewhere

idk
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When the Joker is in the deck.. fear not and play it well
  • #163
  • Apr 13, 2013 6:30pm Apr 13, 2013 6:30pm
So now...................

If one were to draw fibs in whatever way
.... is there a greater predictive value ?

idk
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When the Joker is in the deck.. fear not and play it well
  • #164
  • Apr 13, 2013 10:21pm Apr 13, 2013 10:21pm
Quoting FerruFx
Generally when you defined your high and low point (0-100 fib levels), you wait for the price to retrace to a given level inside this range. Your pic show the fib wrongly. I would have plotted the 0 at the low point instead of the high.
Hi FerruFx

Now 0 at the low point:

Attached Image (click to enlarge)
Click to Enlarge Name: Capture.GIF Size: 39 KB


Please tell me what what is the exact price that I can pick from those range! I just want to clear my understanding regarding what fib indicates and how to understand what it indicates! For example at 61.8 I see the price just above 133.90 , should I place a buy order or sell order around this price level at the current market! What, if the current market is away from this range and my fibo is of Yesterday! Should I draw a fibo based on today's market in that case?

Can you help me understand the indications of fib here!
  • #165
  • Apr 13, 2013 10:26pm Apr 13, 2013 10:26pm
Quoting Red Herring
Hi FerruFx Now 0 at the low point


The 0 at low point was for the SELL setup shown in your last pic.

In the BUY setup you are showing now, the 0 should be the high swing.
MT4/MT5 EAs/Indicators/Alerts coder
  • #166
  • Apr 13, 2013 11:00pm Apr 13, 2013 11:00pm
Quoting Red Herring
Hi FerruFx Now 0 at the low point: {image} Please tell me what what is the exact price that I can pick from those range! I just want to clear my understanding regarding what fib indicates and how to understand what it indicates! For example at 61.8 I see the price just above 133.90 , should I place a buy order or sell order around this price level at the current market! What, if the current market is away from this range and my fibo is of Yesterday! Should I draw a fibo based on today's market in that case? Can you help me understand the indications...
Dear RH
It seems to me that your chart is a bit dated (a lot dated)
I prefer to "live in the moment" and therefore offer a current
graphical representation............ with PIVOTS

You may notice were said pivots are and it's safe to say (not)
that you can easily understand this graphical representation..

all the best
Attached Image (click to enlarge)
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When the Joker is in the deck.. fear not and play it well
  • #167
  • Apr 13, 2013 11:21pm Apr 13, 2013 11:21pm
In summation, you can spend a lot of time
trying to "connect the dots" from fib to fib,

Trying to cover fibs may lead to long term
insecurity ?? (and further loss)

Pivots insure that (at least)
it's not your fault ?

which keeps your confidence on higher ground

?
When the Joker is in the deck.. fear not and play it well
  • #168
  • Apr 14, 2013 12:59am Apr 14, 2013 12:59am
Quoting Slim Buffett
In summation, you can spend a lot of time trying to "connect the dots" from fib to fib, Trying to cover fibs may lead to long term insecurity ?? (and further loss) Pivots insure that (at least) it's not your fault ? which keeps your confidence on higher ground ?

I just can't help but laugh at this. What makes pivot points so great?
Play the players, not the cards.
  • #169
  • Apr 14, 2013 2:10am Apr 14, 2013 2:10am
Quoting FerruFx
The 0 at low point was for the SELL setup shown in your last pic. In the BUY setup you are showing now, the 0 should be the high swing.
Then assume that it is a sell setup (the source was wrong for sure cause I know you are a good contributor). Can you answer my queries now?
  • #170
  • Apr 14, 2013 2:18am Apr 14, 2013 2:18am
Quoting Slim Buffett
Dear RH It seems to me that your chart is a bit dated (a lot dated) I prefer to "live in the moment" and therefore offer a current graphical representation............ with PIVOTS You may notice were said pivots are and it's safe to say (not) that you can easily understand this graphical representation.. all the best

Too many lines and colors in your Pivot! Let me understand fibo first!
  • #171
  • Apr 14, 2013 3:38am Apr 14, 2013 3:38am
Quoting Red Herring
Then assume that it is a sell setup (the source was wrong for sure cause I know you are a good contributor). Can you answer my queries now?
So once defined your swing high and low, let the price retrace to a given level (ie. 23.6), then place enter the market in the opposite direction of the retracement.

Of course the retracement level is just an example. With experience you will find your own best level. The one which works fine for you.
MT4/MT5 EAs/Indicators/Alerts coder
  • #172
  • Apr 14, 2013 3:49am Apr 14, 2013 3:49am
Quoting Red Herring
Too many lines and colors in your Pivot! Let me understand fibo first!
Pivots are one of the very first basics before understanding fibs.

Even if I don't believe in S/R, fibs and all magical/mathematical stuff, you should start learn trading from the beginning. According to your postings since the last few weeks, you seem to have skipped a lot of basics.

Don't try to find a preformated setup. Understand the market ... then and only then, define your own setup based on your own understanding of the market and which will suit your own trading style and risk.
MT4/MT5 EAs/Indicators/Alerts coder
  • #173
  • Apr 14, 2013 5:07am Apr 14, 2013 5:07am
Fibonacci numbers are numbers patterns .people knows them like they know trading patterns (double bottom ,ascending triangle ,descending triangle until the end of list also Elliot waves are patterens that have been observed and studied .
every thing have a pattern .
pattern give you a logical aspect of something you are observing .
most science came from studying observing patterns in things because they give you logical results and causes .
hope this will help you
all have a nice day
focus while relaxed to see better
  • #174
  • Apr 14, 2013 6:46am Apr 14, 2013 6:46am
After 12 pages and 173 posts only 2 people have come close and the rest failed miserably to explain the relationship between fibs and the market.

Nature=fractals=fibs

Market=fractals=fibs

See the connection?
  • #175
  • Apr 14, 2013 7:53am Apr 14, 2013 7:53am
Quoting Slim Buffett
So now................... If one were to draw fibs in whatever way .... is there a greater predictive value ? idk {image} {image}
Thats where the tech's go wrong, techs and especially SR tools have no predictive value. These are just zone of concentration of orders. There were more than 80% chances of price reacting at that 50 fibo for like 20-40 pips, but that had absolutely nothing to do with the 180 pip fall.

If there is water pool in a forest or a desert we know there will be activity around this area (watch natgeo). Animals will come to rest and drink water and then there will be predators waiting for them there etc. So you can draw a high probability scenarios of what kind of events might occur near the pool.

But the pool and events occurring near it have no predictive value to what each animal will do or go to after and the other events that happen.

Point is SR works fine but inside a limitation and people screw up when they try to get more out of it.
.
  • #176
  • Apr 14, 2013 8:30am Apr 14, 2013 8:30am
Red Herring, your fib tool uses a traditional approach to the fib levels which is reversed in my toolset (your .618 is my .386, etc). Keep that in mind when talking about fibs so as to avoid confusion. The charts you posted use historic data, and my charts do not go back that far. Here is an example of how I used fibs on the recent yen move up:
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  • #177
  • Apr 14, 2013 9:04am Apr 14, 2013 9:04am
1.27, 78.6, 88.6, and 11.3. Why did I put them on my fib retracement tool? 1.27 is the square root of the golden ratio (1.618). Notice where price on the E/U weekly chart below, topped out at. Why is 78.6% on there? 0.786 is the square root of the inverse golden ratio (0.618). Price has been closing around that number several different weeks. Why is 88.6% on there? Because the square root of 0.786 is 0.886. And once again, notice where this past week's high touched at. Along with several other weeks. Oh, wait. Everybody already knew this. And that's why fib ratios become a self-fulfilling prophecy. Because all of this has already been known. And that's why it works. Everybody uses this same concept in their trading. Never mind.

Oh, almost forgot. 1+1=3, so I put 11.3 on there. If I would have went long once price crossed 11.3, back in July of 2012, when it bottomed out, with my SL at the previous low, (for a long term position type of trade), look at how many green pips I could of had. And actually, the real reason that I put 11.3 on there is because it's half of 23.6.
Attached Image (click to enlarge)
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Time turns trend. - W.D. Gann
  • #178
  • Apr 14, 2013 9:29am Apr 14, 2013 9:29am
http://cuntinglinguist.com/wp-conten...-the-blind.jpg
It never gets easier, you just get better
  • #179
  • Apr 14, 2013 9:38am Apr 14, 2013 9:38am
Quoting Shabs19
{image}
How did you know? Good point. I lost my eye sight in my right eye this past November. I've been trading with one good eye. I see things differently now.
Time turns trend. - W.D. Gann
  • #180
  • Apr 14, 2013 1:51pm Apr 14, 2013 1:51pm
Oh, I forgot one more for you. Put in 0.41413%. That's today's date. And notice price is ahead of time. Watch out for a little retrace action.
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Time turns trend. - W.D. Gann
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