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Which Fibo level do YOU use and why?

  • #61
  • Jul 5, 2013 12:27am Jul 5, 2013 12:27am
Quoting drumdude
{quote}if you are looking to trade with the GR then I think you should rethink what the tool does. The fact that Phi is never ending also lets the ratio fit anything on your chart......meaning that it will hit a GR line 100% of the time...not some random number.
Time turns trend. - W.D. Gann
  • #62
  • Jul 5, 2013 12:35am Jul 5, 2013 12:35am
Quoting vox dei
{quote} Definitely an interesting idea and a logic one (strong/weak close = continuation). Testing I've done long ago, showed that chance of previous daily high being re-tested is significantly higher when close is above pivot (or median). The opposite is true for low re-test. For EURUSD the probability is about 70%, and this happens virtually in any pair to a higher or lesser degree. The thing is I've never found this info alone to be diagnostic of future direction. Then again, I've never done any study controlling variables in the exact same way...
I second that. In regards as to where price is at, on a daily close. Above or below the daily pivot. Above it, I'm bullish. Below it, I'm bearish. And 70 percent sounds just about right. It helps me out a lot when I plan my trade.
Time turns trend. - W.D. Gann
  • #63
  • Jul 5, 2013 3:28am Jul 5, 2013 3:28am
actually expansions are way more interesting. 2.3 expansion could be a point of reversal. it's a sign of exhaustion of the move.
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  • #64
  • Jul 5, 2013 8:09am Jul 5, 2013 8:09am
Quoting genghistar
..." what value fib should be used for what currency pairs". The very basic of forex is One must first know what object is to be measured or quantified then will he knows whether he has to use a ruler ...
I have to disagree slightly...If we are going to use the metaphor of a ruler, then we must use the same ruler each time to ensure accurate measurements. To use a different ruler on one pair is the same as not using a ruler at all...ie guessing (gambling).

However, using a different point on the same ruler makes a great deal of sense, and this is the point of my question. Which point on the ruler lends itself to the highest probable outcome. That point may indeed be different in different markets...but WHAT is it that makes it different? Is there some other factor (apart from the ruler) that will help you determine that?

Quoting drumdude
{quote} What is BayView trading?
BayView Trading Corporation is the company I founded to trade (for tax purposes). If you would like to know more about our company please IM me with your email address.

Quoting drumdude
...I think what most people miss when talking about "fibs" is that the numbers lead to Phi. ***The real discussion should be about the golden ratio. When you put the stock MT4 GR tool on your chart it makes no sense, in-fact the way most traders use it is completely useless and random. Notice that tool I work with is nothing but the GR over and over....if the yellow lines represented a price move.....which tool makes more sense? Im not sure you are going about this in the right way....if you are looking to trade with the GR then I think you should...
I'm not quite sure I follow this. My understanding of the "Golden Ratio" is that this is the ratio that exists between any two sequential Fibonacci numbers, i.e. the ratio between 13/21 = 0.619047...repeated to infinity. Further the greater these number are, the closer that ratio comes to 0.618. The meaning of Phi (again as I understand it) is that this ratio has no end. You can continue dividing this number and never find the end point (mathematically) like the mathematical number we all know in geometry, we have to cut it off somewhere.

However, in trading we are applying the fiboacci ratio as a observation technique to note with a given probability where a retracement will exhaust its counter trend movement and rejoin the trend and even continue/extend it. Of the many levels we observe, I am trying to determine which has the HIGHEST probability that price will strike and reverse. Each level has a different probability of return 38.2 being the lowest.

I am not understanding the connection between this observation and phi. Perhaps you could explain?
  • #65
  • Jul 5, 2013 9:25am Jul 5, 2013 9:25am
Hi Guys (and gals)..I have a little gem for you..I developed this years ago...I call it stop levels...111.0% and -11.1%...I scalp FX from a 1m chart...If price has returned to '100' or '0', price will either bounce...and go to the 38.20% at least..usually 50%..then return to the 100/0 line..then sharply drop (or go up) to the 111.0%..taking out all the stops..then bounce rapidly...if you are quick, you can catch the bounce. This is the big dogs in action....put it on your levels...and watch what happens..
good trading ...Bryan
  • #66
  • Jul 5, 2013 10:34am Jul 5, 2013 10:34am
hello bryan

glad to meet a 1m scalper. there are so few of us scalpers.
Interesting insight on using fib levels on 1 min tf
why didnt i think of it before
just loaded my charts and am seeing its wonder
  • #67
  • Jul 5, 2013 10:55am Jul 5, 2013 10:55am
Quoting gspajon
{quote} My understanding of the "Golden Ratio" is that this is the ratio that exists between any two sequential Fibonacci numbers, i.e. the ratio between 13/21 = 0.619047...repeated to infinity. Further the greater these number are, the closer that ratio comes to 0.618. The meaning of Phi (again as I understand it) is that this ratio has no end. You can continue dividing this number and never find the end point (mathematically) like the mathematical number we all know in geometry, we have to cut it off somewhere. However, in trading we are applying...
The point I was trying to make is that when you break down the fib numbers (take 34/21) it comes close to .618 (lets call it .62) .....and what is that number? It is 62%
62% out of what?
62% of 100%
What is left over?
38%

62+38=100 and this can be any scale you need (ratios always stay the same)

So if all you had was 100-62-38-0 on a tool (the blue tools on the chart) depending on the scale of the 0-100 the .38 and .62 can fit any number you can think of.




Here Is a chart with one tool of fib numbers 0-377 and the other two tools only have 38 and 62%
Do you see how it works?
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  • #68
  • Jul 5, 2013 1:12pm Jul 5, 2013 1:12pm
Quoting drumdude
{quote} ...It is 62% 62% out of what? 62% of 100%
Perhaps I am over simplifying...but the 100% mark is the measure from one swing high to one swing low. That distance in pips is "100%" Then if/when price retraces it is measured in a percent of this distance...thus the fibonacci levels. Arbitrarily placing these lines anywhere on the chart does in fact show nothing of significance. What I am measuring is the relationship of the retrace to the previous "leg's" move. You are correct. The ratios stay the same. But what is important is the relationship to the last leg or last move from one swing point to the other. Regardless of the distance in pips, this "structure" should remain in tact and if it doesn't we have a failure.

Quoting drumdude
{...Do you see how it works?
I'm sorry I do not...again we (I) am measuring the distance between swings, not just any point on the chart. I have a process as to which point I use to select those swings and has been shown to have a very strong pobability (70% or better) of producing a lead. Again, I am not seeing what you are trying to show me. My process is not random where you've places the lines on the chart without referencing any prior market price points, seems like you've randomly selected points and drawn the fibonacci retracements.
  • #69
  • Jul 5, 2013 2:20pm Jul 5, 2013 2:20pm
Quoting gspajon
{quote} Perhaps I am over simplifying...but the 100% mark is the measure from one swing high to one swing low. That distance in pips is "100%" Then if/when price retraces it is measured in a percent of this distance...thus the fibonacci levels. Arbitrarily placing these lines anywhere on the chart does in fact show nothing of significance. What I am measuring is the relationship of the retrace to the previous "leg's" move. You are correct. The ratios stay the same. But what is important is the relationship to the last leg or last move from one...

Let me try and illustrate better

If we call the yellow lines price, then wouldn't the *fib number/default MT4 tool* look "random and arbitrary where as the tool that is divided only in to the GR. Does that make sense?

All I am showing here is something that is understood in "harmonics trading" *price makes exact points that relate to the GR.

Harmonic trading also over complicates what is happening. With the tool on the right of the chart it is possible to make any swing high and low on a chart break down in to a GR.
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  • #70
  • Jul 5, 2013 2:30pm Jul 5, 2013 2:30pm
Again here is an example of the fib you are talking about that looks like it is failing, then when broken down in to the GR it does not appear random at all

Getting statistics based on "zones" is VERY different from understanding what is happening on an exact level.
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  • #71
  • Jul 7, 2013 10:16am Jul 7, 2013 10:16am
Quoting drumdude
Again here is an example of the fib you are talking about that looks like it is failing, then when broken down in to the GR it does not appear random at all Getting statistics based on "zones" is VERY different from understanding what is happening on an exact level. {image} {image}
I'm beginning to see why I am having difficulty understanding your point of view. (1) My "zones" of entry are where you have placed you 3rd box (higher low), and I hold into this estabilshed trend until it is no longer a trend or until it hits my limit order. I run my stops up along the higher lows and my position is either stopped out in small profit or limited out in even larger profit. (2) You and I draw our fibnoacci lines in completely opposite directions. My above described entry point would be at the 61.8 (which is where you see 38.2 on your chart). Again, of the many levels where price MIGHT bounce I am looking for ways to determine that 1 or 2 levels where price will PROBABLY bounce. (3) I typically trade on larger time frames in an effort to weed out some of the "noise" inherent in the smaller charts. I typically do not look at hourly charts or lower. (4) I can't really say I care too much about what is happening at each level, because I am quite confident in what the probabilities tell me about trend continuation under these circumstances. When the fibo structure fails...as it clearly did here...I get stopped out in a small profit and start looking to sell rallies using the same method on the opposite side of the fence. (5) I repeat...I'm trying to find out which level in this structure has a higher probability of holding price on a retrace, then reversing to continue the trend. I see nothing to do with the golden ration nor do I care to speculate if the future price will or will not correspond to some higher level golden ratio (i.e. 2.618, 4.618 etc).

I've found that price will turn and retrace several times before reaching these levels, and that provides yet another opportunity to either scale in or enter a completely new trade.

Your second chart is complete greek to me...I do not understand it at all...I have no idea what those lines are or where you drew them from, but they appear to be the same percentages as the retrace percentages however with no price context that I can see. Quite frankly I just don't understand it correctly and if I can't understand it easily, then I know I can't use it to improve my trading. Thank you for your time...I hope there is someone else out there that perhaps understands drumdude's message. He seems highly intelligent and way beyond my ability to comprehend.
  • #72
  • Jul 7, 2013 11:31am Jul 7, 2013 11:31am
Quoting gspajon
{quote} Again, thank you for your response. But I am still not seeing anything to substantiate what you refer to as scientific research. Of course price will rarely (if ever) turn at exactly the given Fibonacci level. Price action is just not that precise. What I am trying to find is a way to target a specific area of the Fibonacci scale, that has some statistical probability. I have done my own study of the different levels and have found the price will strike and reverse as follows: 38.2 - level - 4% of the time 50.0 - level - 35% of the time...

I think what you should do is only pick one fib number. And that numbers relation to how far it is from the 100.00 and 0.0 fib level. I personally believe in 23.6 So being that 23.6 is 23.6 away from 0.0 Then I also use 76.4 which is 23.6 away from the 100.00 fib level. I then use the close over, and re-close across those levels. What do I think 23.6 is the best fib to use? Well because based on how I connect my fibs. The price always seems to bounce or accumulate right off that price level.
  • #73
  • Jul 15, 2013 4:35am Jul 15, 2013 4:35am
Is anyone aware of a Lucas numbers indicator in MT4?

Thanks,
  • #74
  • Jul 15, 2013 7:29am Jul 15, 2013 7:29am
Quoting chriss72
Is anyone aware of a Lucas numbers indicator in MT4? Thanks,
Never even heard of a "Lucas" number...I looked it up on google...seems the same thing as a fibonacci number with a different starting place.
  • #75
  • Jul 15, 2013 10:13am Jul 15, 2013 10:13am
Quoting chriss72
Is anyone aware of a Lucas numbers indicator in MT4? Thanks,
I've actually done a few calculations of my own on Lucas numbers. It seems the ratio between the numbers are exactly the same as they are in the Fibonacci sequence. The only difference I see is the starting place. And while the actual numbers are themselves different the ratio between any given number and the following number is always the same (61.8%)...as with the Fibonacci sequence. Again, the golden ratio. And as with the Fibonacci sequence, the ratio between a larger number and its preceding number is 1.618%.

Thus if you want to find an "indicator" that shows the ratio or percents from one move to the next, you need only use the Fibonacci tool present in default on almost every platform. The numbers themselves can be calculated by adding the last two numbers together as with the Fibonacci sequence with the distinct difference that you start with 2+1 = 3, (where as the Fibonacci sequence starts with 0+1 = 1),

Lucas sequence: 2,1,3,4,7,11,18,28,47,76,123,199,322...
Fibo sequence: 0,1,1,2,3,5,8,13,21,34,55,89,144,233...

I don't see any significant difference to how I would use this information, nor does it potentially change how I would find entry/exit points.
  • #76
  • Jul 15, 2013 11:02am Jul 15, 2013 11:02am
33% for trend strenght
50% for decisions
  • #77
  • Jul 15, 2013 11:15am Jul 15, 2013 11:15am
Quoting timos
33% for trend strenght 50% for decisions
I assume you are indicating the levels you enter at. Tell me...how do you determine "trend strength" when entering at the 33% level. As well, what do you mean by "decisions". Does that mean that if price retraces past the 50% level, the market has "decided" to reverse? (in your opinion)

How do you deal with trends that resume after striking the 61.8 or 78.6 levels? What do you use to determine whether the price will resume after striking the 33% or 50% level (neither of which is a fibonacci level, they are DOW levels).
  • #78
  • Jul 16, 2013 2:07pm Jul 16, 2013 2:07pm
Thanks for this.
With Fibs i believe retracments strength is perceived to be diminishing as the depth increases.
So anything beyond 61.8 hints at weakness ahead and possibly a genuine trend change / ranging period ,rather than retracement. I find using a confluence of overlapping fibs from various swings across time frames to help pick out the most useful retracements
  • #79
  • Jul 16, 2013 2:17pm Jul 16, 2013 2:17pm
Quoting gspajon
{quote} I assume you are indicating the levels you enter at. Tell me...how do you determine "trend strength" when entering at the 33% level. As well, what do you mean by "decisions". Does that mean that if price retraces past the 50% level, the market has "decided" to reverse? (in your opinion) How do you deal with trends that resume after striking the 61.8 or 78.6 levels? What do you use to determine whether the price will resume after striking the 33% or 50% level (neither of which is a fibonacci level, they are DOW levels).
Well,i didn't explained fully because the the thread asks the levels and why only,not how,so here you go.The use is mainly in higher time frames
1-> 33% simple, you wait for the candle to hit 33% or lower (without going higher than 33% ) and once it resumes into your direction you enter at new high/low (using smaller time frame)

2-> 50% you wait for the candle to hit 50% and then switch to lower time frames to see for signs of entries.


The levels indicate watching only,not entries.Entries are your personal methods on lower time frames

P.S,open any chart you wish and see that strong trends had 33% or less retrace

Best regards,
Tim
  • #80
  • Jul 16, 2013 9:50pm Jul 16, 2013 9:50pm
In reality when using the Fibonacci it really depends on what you are trading, because sometimes your fib will not work for you at certain levels and you need to learn how the fib works according to what you are trading.
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