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Why Fibonacci Retracements are Bullocks

  • #121
  • Sep 15, 2009 2:29pm Sep 15, 2009 2:29pm
Fibo stuff is meant to give you a tool to assess how reasonable it is to expect a certain amount of price change.

It is supposed to be used in conjunction with fundamentals to find yourself the best price and takeprofit objective and where trend is likely to break down.

For obvious reasons no system or retracement can work perfectly. It is totally a naive thing novices believe when they expect perfect retracements of each move.
  • #122
  • Sep 8, 2011 9:50pm Sep 8, 2011 9:50pm
Quoting triphop
"Well, good luck finding anything that stops exactly at a specific level my friend."

Mr F, but that being the case, would you accept that the Fib levels are fairly arbitary? In fact, forget the golden ratios, I reckon it'd be just as useful having 20,40,60,80,100% to draw on your charts.

I think they work because prices retrace full stop, and that you could have virtually any set of numbers fairly evenly spaced apart and they'll hit one of them. I don't think there's anything special about fib numbers in relation to forex...
Sorry to dig up an old thread... These are my thoughts exactly triphop... Instead of "Fibonacci" retracement, why not "Metric" retracement? The price is bound to find support at some of these levels. (I am not advorcating this BTW)

Poor old Leonardo Fibonacci, his original number series was describing the "growth of a population of rabbits based on idealized assumptions"

He'd probably be quite surprised to learn that his number sequence has been "shoe horned" in to Forex Price Charts; and even more surprised that a mysterious newcomer has been added to his sequence - "The 50% Retracement" (which BTW is not even a fibo number anyway) Metric Retracement anyone?

That aside, i do not believe that the SNB - Schweizerische Nationalbank were looking at ANY fibo lines when they went ahead and purchased ~€2 Billion last Tuesday 6th Sept 2011 - subsequently devaluing CHF by ~10% and blowing through everyones "Fibos" in a matter of hours.

The SNB have said that they are "prepared to buy foreign currency in unlimited quantities" - I Bet the Fibos didn't see that coming

Just my 2 cents
  • #123
  • Sep 9, 2011 11:47pm Sep 9, 2011 11:47pm
.....did not see that coming. Nope indeed.


Bullocks! Yes.....Bullocks I say!!

Pay no attention to that fib trader behind the curtain. He is a hum-bug. A vewy.....vewy bad man!

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  • #124
  • Sep 10, 2011 1:30am Sep 10, 2011 1:30am
Trading FX is so much more complex than just fibs alone. Fibs are just 1 of dozens of tools that you can use to assess the market. Fibs are fine.....until a novice trader starts to believe they are the cure all to every situation.
  • #125
  • Sep 20, 2011 2:04pm Sep 20, 2011 2:04pm
Fibs are a dangerous tool in the wrong hands. True, but do not discount them in the right hands.

Brun, is that you behind the curtain?

MD.
Keep smiling
  • #126
  • Feb 20, 2014 1:31am Feb 20, 2014 1:31am
Bullocks INDEED..LOL
GU Chart......21 years
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Get Pips, Keep Pips, Repeat
  • #127
  • Feb 20, 2014 4:03am Feb 20, 2014 4:03am
Fibonaci is based upon the Golden Ratio that "soothes" the eye.

In modern art the whole concept is passé as in fact it is a restriction on our creativity.

Traders learn to think and act creative, "outside the box". The first thing a trader drops are the dogma's like Fibonaci.

Like many here before, i have not found one thread of evidence in my trading to use Fibonaci. The only functionality it has, is that it helps overcome the greed and fear of traders by showing some lines that say DO NOT CROSS.

It's a psychological tool but has nothing to do with price.
  • #128
  • Feb 20, 2014 4:12am Feb 20, 2014 4:12am
Quoting Akuma99
Ah fibonacci retracements, there isn't a day that goes by where I don't here some analysis claiming xxx/xxx is heading north due to a fibonacci retracement here and a fibonacci retracement there, and like most I followed the masses, trod the same well worn path and threw fibonaccis around on my chart like they were going out of style. Only thing is, to me there are much more logical explanations as to why price is turning then the mathematical phenomenon that is fibonacci in nature applied to price. I could go into a thousand words on the topic,...

Don't care whatever is written here, thread title says it all... Well put! I would of changed "bollox" to "Fucked" but anyway.. Nice thread,good times.
Howlin' at the Moon on the Roof
  • #129
  • Feb 20, 2014 1:18pm Feb 20, 2014 1:18pm
As the study of chaotic non-linear systems continues, we're increasingly finding more and more 'order' within the universe where previously we thought there could or would be none.

I believe market behavior is a non-linear system for which there is an underlying, chaotic order. I believe wave theory and fibo retracements/extensions help to model that behavior. Of course both wave theory and fibos are subjective, and when applied only provide a sort of framework to describe what has happened, what is happening, and what may happen in the immediate future. If you think fibs are not effective because sometimes price ignores them completely, or sometimes it's just a little short or long of the level, you're not applying them correctly (and imo, you shouldn't be using fibs without some aspect of wave theory as the two meld together well). You're trying to fit a chaotic noisy system into a rigid mechanical framework and they're simply not meant to be applied that way. Think of them conceptually and what they're trying to tell you about what the market is doing and where it may be going instead of as some line in the sand that can't be crossed.
  • #130
  • Feb 20, 2014 7:56pm Feb 20, 2014 7:56pm
Quote
Don't care whatever is written here, thread title says it all...
Quote
Like many here before, i have not found one thread of evidence in my trading to use Fibonaci.


I just posted a GU chart where every major move was a fib retracement (many to the PIP)...for the last 21 years!!!

1 PIP = .0001
1 PIP = One Ten Thousandths
1 PIP = Fractions of Fractions of a Penny
It takes 166 PIPS to = 1% move (On G/U)

Trading is a bunch of small and very small moves to make up a larger move.....
Fibonacci ran on a 1 min, 5 min, etc.--- is just absurd IMO.

Example: Your friend is going on a 500 mile road trip. He wants you to guess where he is going.
He could be going ANYWHERE, to any town or city. North, South, East...
He could go 200 miles South...then 300 miles North.....300 miles East...then 200 miles South....etc.
The information you use to determine this long 500 mile road trip??......He left the driveway and made it to the local store down the street.
.006% of the entire trip......to understand where it is going
Does this sound logical?
Of Course Not

Fibonacci isn't rubbish, bullocks, or unreliable.....as long as it's used on the ACTUAL move..and not just random 5 min price points.

What is rubbish, bullocks, and unreliable....is trading at high leverage and picturing a 50 pip move as something BIG
In reality....it's fractions of a penny, even if the account profit/loss doesn't say so......

FX-HedgeFund
Get Pips, Keep Pips, Repeat
  • #131
  • Feb 21, 2014 12:40am Feb 21, 2014 12:40am
Quoting FX-HedgeFund
{quote} {quote} I just posted a GU chart where every major move was a fib retracement (many to the PIP)...for the last 21 years!!! 1 PIP = .0001 1 PIP = One Ten Thousandths 1 PIP = Fractions of Fractions of a Penny It takes 166 PIPS to = 1% move (On G/U) Trading is a bunch of small and very small moves to make up a larger move..... Fibonacci ran on a 1 min, 5 min, etc.--- is just absurd IMO. Example: Your friend is going on a 500 mile road trip. He wants you to guess where he is going. He could be going ANYWHERE, to any town or city. North, South,...
Market retraces to eliminate the weak hands and fill the remaining orders. That's how it has been working long time. This understanding is coming from knowing who is moving the market. It's institutions such as banks moving the market. If you don't believe this just see the news next time and see how banks releasing some meaningless news and using that to their advantage. In this highly manipulated market, understanding market dynamics is the only way to make money. Why should pro money use the fibanocci for their trading?. There is no edge for them in that all.Most traders use fibanocci number 50 and say it's working. But 50 is not a fib number at all. this pretty much shows the false idea behind this.


All our education on trading has been built on false premises which creates the sheeps for the wolf out there. And knowing this only first and last freedom for the traders. That's where real trading begins.
  • #132
  • Feb 21, 2014 1:11pm Feb 21, 2014 1:11pm
Quoting Fxyogi
Market retraces to eliminate the weak hands and fill the remaining orders. That's how it has been working long time. This understanding is coming from knowing who is moving the market. It's institutions such as banks moving the market
What are markets? Groups of people making decisions. What drives human behavior? Basic human emotions and thought patterns. It doesn't matter who is moving the market, human psychology is human psychology. Professional traders experience fear of missing out, fear of future regret, greed, etc. just like the rest of us. No, they're not trading micro lots for 10 pip moves, but human psychology IS behind market movements on a day in day out basis, period.

You will find the same structural patterns in virtually any liquid market in existence, regardless of whether the market is controlled by any major institutions, market makers, or players, dating back as long as you can find reliable prices, and you will find that fibonacci retracements and extensions (particularly the golden ratio, 1.618) are existent in many if not most major price movements and trends.

50% is not a fibonacci number and has nothing to do with this discussion.
  • #133
  • Feb 21, 2014 1:49pm Feb 21, 2014 1:49pm
Imho, Fibos are just like any other indicator. They can be a reason to enter/exit a trade, but not THE reason.
"To hold, you must first open your hand. Let go." - Lao Tzu
  • #134
  • Feb 21, 2014 3:03pm Feb 21, 2014 3:03pm
Quoting cgldsmth
the fact that a large number of traders do actually believe in fibs make them a self-fulfilling prophecy. That in large part is how a lot of popular indicators work, just by massaging crowd behaviour
This is basically how I feel about it, and to a significant degree it is the same for most other popular forms of technical analysis for that matter. Just because these methods have no basis in "reality" doesn't mean that they cannot be useful. This is also why I generally stick to using very well-known, and widely-used technical analysis methods in my own trading. It takes masses to move markets (usually) so this kind of thinking does not apply with lesser known and used technical analysis methods and indicators. If using lesser-known/lesser-used methods and indicators, then you darn well better believe that they do have some basis in reality.
  • #135
  • Sep 7, 2015 8:10am Sep 7, 2015 8:10am
Quoting vox dei
Imho, Fibos are just like any other indicator. They can be a reason to enter/exit a trade, but not THE reason.
Fibo is not an indicator, MT4 not put it on the indicators. Fibo has its own section.
astroganndotcom
  • #136
  • Mar 6, 2017 6:10am Mar 6, 2017 6:10am
Hello,

I am doing a school project on the Fibonacci Retracement rule. Firstly, is there no evidence to prove it at all, if so please can you link it? Also, what markets does it work on? Sorry, this is probably a very stupid question, but I know very little about trading or economic in general. Thanks.
  • #137
  • Last Post: Apr 13, 2017 11:59pm Apr 13, 2017 11:59pm
I am a swing trader and Fibo is my most favorite technical tool! Because, I can easily track good swing points of market by using this useful tool! Even, during news session I comfortably use this tool, For scalping trading I mainly use lower time frames like M30, M15 with the Fibo! Besides, I identify the status of market trend according to my news trading knowledge!
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