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Why do people use Fibonacci in trading?

  • #181
  • Apr 14, 2013 2:57pm Apr 14, 2013 2:57pm
Quoting FerruFx
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.
>pivots
>basic

I wonder if a banker would agree with you on that one.
Play the players, not the cards.
  • #182
  • Apr 14, 2013 6:28pm Apr 14, 2013 6:28pm
  •  traade
  • | Joined Apr 2013 | Status: the market knows every move u got | 14 Posts
I think fib. analysis is a great tool for journalists/historians who don't have a solid background in live trading and economics because it offers simple explanations for what happened and not what is going to happen in the market.
  • #183
  • Apr 14, 2013 7:17pm Apr 14, 2013 7:17pm
Quoting traade
I think fib. analysis is a great tool for journalists/historians who don't have a solid background in live trading and economics because it offers simple explanations for what happened and not what is going to happen in the market.
No one knows what's going to happen in the market
Doing what you like is Freedom. Liking what you do is Happiness.
  • #184
  • Apr 14, 2013 7:43pm Apr 14, 2013 7:43pm
Quoting realjumper
No one knows what's going to happen in the market
That is for sure.

But our job is to be the best at guessing where the market is goind to go.
MT4/MT5 EAs/Indicators/Alerts coder
  • #185
  • Apr 14, 2013 7:45pm Apr 14, 2013 7:45pm
Quoting FerruFx
That is for sure. But our job is to be the best at guessing where the market is goind to go.
I'm not here to predict where the market is going next, and I'm most certainly not going to guess at it!!
Doing what you like is Freedom. Liking what you do is Happiness.
  • #186
  • Apr 14, 2013 8:35pm Apr 14, 2013 8:35pm
Quoting realjumper
I'm not here to predict where the market is going next, and I'm most certainly not going to guess at it!!
This. Poker players don't bet because they try to predict the cards, or guess what will happen. They know their odds and they know their players.
Play the players, not the cards.
  • #187
  • Apr 15, 2013 12:52pm Apr 15, 2013 12:52pm
mental retardation I guess...
wo-yoy! wo-yoy! wo-yoy! wo-yoi! wo-yoy-yoy-yoy!
  • #188
  • Apr 16, 2013 4:50am Apr 16, 2013 4:50am
There are very few people that understand how to use fibs in their trading, they don't work all the time, nothing does.
But used correctly it will give some order to the market where there appears to be chaos.
It is the same in nature, you either believe it is random (evolutionists) or perfect (creationists).
It never gets easier, you just get better
  • #189
  • Apr 16, 2013 5:36am Apr 16, 2013 5:36am
Quoting GEfx
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: {image}

GEfx, nice explanation and chart.

You have an interesting way of where you start and end the fib, as in after it stalled rather than a swing high or swing low.
I have to look more into this start and end.

Definitely excellent reward/risk ratio tht you are getting.
Your stops at 0.78, your entries to targets of 0.5 to -0.27 gives about 2.75:1, and 0.5 to -1.27 gives about 6:1.

Do you enter as soon at it touch 0.5 first?
Or you wait until it goes pass 0.5 like 0.618 or 0.78, then come back to 0.5 to enter ?

What is the timeframe of the charts you are using??
  • #190
  • Edited 2:11pm Apr 16, 2013 11:35am | Edited 2:11pm
Quoting foxybunny
Do you enter as soon at it touch 0.5 first? Or you wait until it goes pass 0.5 like 0.618 or 0.78, then come back to 0.5 to enter ? What is the timeframe of the charts you are using??
Hi foxybunny. Entry is when PA is within 2 pips of the .50, or 2 pips of the .618, depending on which is being traded at the time (.50 is my favorite entry point). Stop is 7 pips beyond the .786. Look at the 4H for trend, and the 1H for fibs (although when a move is underway, I use the 10M chart for incremental fibs). I have more examples on my Journal. Good trading to you!

Edit: I put a few charts from today on my Journal for you to review.
  • #191
  • Apr 16, 2013 9:39pm Apr 16, 2013 9:39pm
You just have to know where to connect in order to get the cause and effect.
Attached Image (click to enlarge)
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Time turns trend. - W.D. Gann
  • #192
  • Apr 17, 2013 12:02am Apr 17, 2013 12:02am
Quoting FerruFx
That is for sure. But our job is to be the best at guessing where the market is goind to go.
If you are guessing, you are in the same position as a gambler.

In fact, I must say you are right, tho. A Forex Trader is a Gambler, for the simple fact that they are just "guessing" what will happen...

You try to convince yourself, that you are doing a trade, because all your indicators aligned to enter either a long or a short. But you are just guessing. It could be 50-50... Red or Black. It doesn't matter how many indicators, EA's, etc you use. That is not going to change anything.

With "You", I refer to traders. I know you are not an active LIVE FOREX Trader, but a coder.

You know very well, that it would be impossible to make a living trading FOREX long term. Smart move to stay away from it, and live off the AREAS "surrounding" the Forex Market.
The Black Swan: The Impact of the Highly Improbable
  • #193
  • Apr 17, 2013 12:41am Apr 17, 2013 12:41am
Quoting MapleLeaf
You try to convince yourself, that you are doing a trade, because all your indicators aligned to enter either a long or a short.
No indicator nor EA. My charts are 100% naked. It was not the case in the past!

Quoting MapleLeaf
I know you are not an active LIVE FOREX Trader
You are wrong.

Quoting MapleLeaf
You know very well, that it would be impossible to make a living trading FOREX long term.
You are wrong again.

You seem to know everything more than everybody ... This is generally the case for those who are envious about others. You should concentrate on your trading (if you are a trader) instead of always contradict others in many threads.
MT4/MT5 EAs/Indicators/Alerts coder
  • #194
  • Apr 17, 2013 1:00am Apr 17, 2013 1:00am
Quoting FerruFx
You should concentrate on your trading (if you are a trader) instead of always contradict others in many threads.
I have noticed this person posting with extreme vitriol and negativity in other threads. Maybe it is just a passing psychological state - look at the poster's sentiment on their profile: Bullish Gold since March 2013. Strong conviction. I would be very fricken annoyed with the world too.

MapleLeaf, this is a trading forum. There are winners and losers here. Winners also lose but have strategies to minimize losses and extend gains. If taking a calculated risk on a probable outcome is equivalent to gambling, then every business venture, every book written, every aspirational thought - hell, even getting out of bed - is "gambling". Not that gambling is even - in itself - an evil. I know some profesional card and casino gamblers who are both successful and full of love.

Some come here to collaborate and improve; others come here to vent their disappointment. Which are you?

"If you don't get it the first time, then back-up and try it again." - James Brown
cryptocurrency everytime
  • #195
  • Apr 17, 2013 1:16am Apr 17, 2013 1:16am
Quoting venzen
I have noticed this person posting with extreme vitriol and negativity in other threads. Maybe it is just a passing psychological state - look at the poster's sentiment on their profile: Bullish Gold since March 2013. Strong conviction. I would be very fricken annoyed with the world too. MapleLeaf, this is a trading forum. There are winners and losers here. Winners also lose but have strategies to minimize losses and extend gains. If taking a calculated risk on a probable outcome is equivalent to gambling, then every business venture, every book...
Some people, when they lose, decide to learn and challenge themselves to improve. They never give up and find a way to succeed. Others resign themselves to the belief that they cannot do it and it must be someone else's fault. It is much easier to blame the market or the broker or some unfair business model than to accept our own failings and go to work on improving them.
  • #196
  • Apr 17, 2013 1:18am Apr 17, 2013 1:18am
Quoting Seneca pilot
Some people, when they lose, decide to learn and challenge themselves to improve. They never give up and find a way to succeed. Others resign themselves to the belief that they cannot do it and it must be someone else's fault. It is much easier to blame the market or the broker or some unfair business model than to accept our own failings and go to work on improving them.
Well said ...
MT4/MT5 EAs/Indicators/Alerts coder
  • #197
  • Apr 17, 2013 1:22am Apr 17, 2013 1:22am
Quoting venzen
Some come here to collaborate and improve; others come here to vent their disappointment. Which are you?
Those who are in the 2nd category will never admit it
MT4/MT5 EAs/Indicators/Alerts coder
  • #198
  • Apr 17, 2013 1:54am Apr 17, 2013 1:54am
On the topic.

I use Fibonacci in my analysis and trading because it represents the principle of growth and decay in the Universe, which by extension, manifests in the mass psychology of the markets. PA respects Fib ratios and sometimes an important Fib level's influence will still attract or cause reaction in PA months and years later.

What is amazing about applying the Fib tools to PA is that Fib levels and zones will show PA reactions when drawn between almost any random high and low (or vice versa) on a chart. This is how pervasive the influence of Fib ratios is. But to make it useful to us in trading we should apply Fib tools to Elliott Wave (itself a Fibonacci-based analysis) structures. That's how the greatest benefit can be obtained.

You don't even need to do any maths to understand or apply Fib ratios - the Fib tool does all the hard work for you - you just need to know where to apply it. Personally, I have never been particularly good at maths, but I think most people find Fibonacci maths to be intuitive and actually quite easy: 1+1 1+2 2+3 ...
cryptocurrency everytime
  • #199
  • Apr 17, 2013 2:41am Apr 17, 2013 2:41am
Quoting GEfx
Hi foxybunny. Entry is when PA is within 2 pips of the .50, or 2 pips of the .618, depending on which is being traded at the time (.50 is my favorite entry point). Stop is 7 pips beyond the .786. Look at the 4H for trend, and the 1H for fibs (although when a move is underway, I use the 10M chart for incremental fibs). I have more examples on my Journal. Good trading to you! Edit: I put a few charts from today on my Journal for you to review.

Hi GEFx, I have just gone through your 20-pages of journal, good charts with notes on them.
Your approach seem very consistent and low risk over the years.

How do you determine whether to enter at the 0.50 or 0.618 ??

Are you usually watching the screen at that time to manually enter or you put in automatic entries ?

What have you change this year in your trading method compared to previous years and AFTER you talked with your Banker friends?

I prefer the retracement to 0.786, and then wait for it to bounced back to 0.5 to enter at 0.5.

I see that you do multiple fibs per day for multiple entries to add positions, whereas I am just looking for 1 fib with good deeper retracement for single(or double) entry per day.
  • #200
  • Apr 17, 2013 2:48am Apr 17, 2013 2:48am
I think one should apply things to the currencies of the pair first, then to the pair itself, in order to not miss two-thirds of the chart.
Play the players, not the cards.
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