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Fibonacci-based tools: Surely nonsense?

  • Post #1
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  • First Post: May 9, 2014 9:29am May 9, 2014 9:29am
As someone who's relatively new to trading and any form of technical analysis, could someone please explain the logic behind fibonacci levels, harmonic price patterns, etc? I mean, why is price any more likely to react to a fibonacci level than any other level randomly drawn on a chart. Is it just a self-fulfilling prophesy, witchcraft, or what?
Quoting Ponzi Jr
As someone who's relatively new to trading and any form of technical analysis, could someone please explain the logic behind fibonacci levels, harmonic price patterns, etc? I mean, why is price any more likely to react to a fibonacci level than any other level randomly drawn on a chart. Is it just a self-fulfilling prophesy, witchcraft, or what?
The reaction is due to traders believing in these levels. Maths or anything else have nothing to do with price movement.
MT4/MT5 EAs/Indicators/Alerts coder
fibonacci is one of those things nobody agrees on. you can read whole books on fibonacci, how and why the work, filled with background data and information, but you can also read numorous studies proving the exact opposite. truth is it doesn't really matter if the theories can be proven or not, they work, either because the fibofanatics are right, or because it's a self-fulfilling prophecy in the end it doesnt really matter wich one it is...
Absolute nonsense.
Quoting nevie2
they work, either because the fibofanatics are right, or because it's a self-fulfilling prophecy in the end it doesnt really matter wich one it is...
MT4/MT5 EAs/Indicators/Alerts coder
Quoting TranceTrader
Absolute nonsense.
http://www.lhup.edu/~dsimanek/pseudo/fibonacc.htm
Quoting FerruFx
{quote} The reaction is due to traders believing in these levels. Maths or anything else have nothing to do with price movement.
Agree but disagree.Regardless to fibs or any other calculus .they wont tell you the next tick and forthcommi g ticks but they on occasion work like a second hand on a clock.why is that so.to exclude maths is a lost opportunity .i think to find anything on this planet not connected to maths is some what odd.just because it is not understood .
Quoting Ponzi Jr
As someone who's relatively new to trading and any form of technical analysis, could someone please explain the logic behind fibonacci levels, harmonic price patterns, etc? I mean, why is price any more likely to react to a fibonacci level than any other level randomly drawn on a chart. Is it just a self-fulfilling prophesy, witchcraft, or what?
fibonacci levels are just lines or tools to understand the relationship between internal accumulation and capitulation cycles. The depth of the cycle and aparentness of the zones in conjunction with confluence across price levels provide only a momentary edge before the normal price movements of the market begin and price resumes its course. Statistically speaking fibonacci levels will not react to with anymore certainty then just drawing a random line on the chart and trading it. As i have done extensive statistical analysis of markets through my learning process I can assure you that you should stay away from trying to understand the technicality of the market and in turn push more into the trade management side. Think of your path of learning like the matrix neo is offered the blue pill or the red pill ... one pill you will be lumped with every other trader on this site thinking they can create a system to overcome the market and out think it while only becoming a mindless technical zombie donating cash to the market like a casino ... you may be profitable for 4 years straight before the house wins... or you can take the other pill ... step back and watch how people talk on this forum and analyze realize how the confusion builds together to create the market and take advantage by being different. your choice good luck.
I think the OP has answered his own question.

Whether they work or not is not the question, everyone has an opinion. But can you find an edge to be profitable and that applies to any indicator
or system. If you are unwilling to try anything & dismiss everything - you will still be looking another year from now.
Why concentrate your energy on what doesn't work, reverse the thinking and find what does work.
Follow the Money
What's so ridiculous about Fibonacci, it defines a range, and shows you % levels of that range.. Don't over think it

http://m.youtube.com/watch?v=XsZKrctSDaw
Howlin' at the Moon on the Roof
I use the inner Fibonacci levels to assist me in managing my risk once I identify a phase. I then trade to the extensions. It has been my observation that the vast majority of traders use the fib tool incorrectly. Measuring the obvious swings has never been very helpful to me in figuring the direction of price and high probability targets. I have spent the past 4 years pulling fibs every which way and have found something that works very well for me. Fibs and price action (J-16/Pring) style allows me to trade profitably.

I am sure that there are many other profitable ways to trade. This is my experience and I would be lost without the Fibonacci levels.

K.I.S.S.
All I am going to say is: Murrey Math level is more better for newbies because it "split" more level so you can see the s/r easier...

While Fibonacci is just "patient" people...


Long story short, If you intra-day trade and newbie... play Murrey Math level


If you play daily weekly trade then ... fibo work better. But the patience might be waiting too long.


To answer the question: Yes , Fibonacci is nonsense. I usually wait until 50% retraction ... you don't need fibonnaci to see that it retrace to 50%.

Nor do I ever see the fibo projection TP beyond 100% ..ever really work well... lol.

----

I see the market "horizontal" support / r is either in Murrey Math, Pivot, and "the golden 4 number at the end on a 4 digit : 00, 25,50,75 level"

That's all I believe in horizontal support.
It's a load of Hefer Dust.
Quoting johnvr
It's a load of Hefer Dust.
Explain to me something that is not
Howlin' at the Moon on the Roof
Quoting KissFan
I use the inner Fibonacci levels to assist me in managing my risk once I identify a phase. I then trade to the extensions. It has been my observation that the vast majority of traders use the fib tool incorrectly. Measuring the obvious swings has never been very helpful to me in figuring the direction of price and high probability targets. I have spent the past 4 years pulling fibs every which way and have found something that works very well for me. Fibs and price action (J-16/Pring) style allows me to trade profitably. I am sure that there are...
This is the best answer.
Follow the Money
Quoting KissFan
I use the inner Fibonacci levels to assist me in managing my risk once I identify a phase. I then trade to the extensions. It has been my observation that the vast majority of traders use the fib tool incorrectly. Measuring the obvious swings has never been very helpful to me in figuring the direction of price and high probability targets. I have spent the past 4 years pulling fibs every which way and have found something that works very well for me. Fibs and price action (J-16/Pring) style allows me to trade profitably. I am sure that there are...

Keep an open mind when using the fib tool. There are so many ways to utilize the function. Used to measure a market's structure, fibs can show you some really excellent low risk trades. Fibs can be a precision instrument.

The black fib to the left is what the vast majority of retail traders are using to measure obvious swings. What information are they looking for? When are they going to enter a trade and why? Most will trade in the same direction, using similar thought processes. Which extension do you trade to? Which retracements do you enter on and why? Fibo based tools are nonsense if you are haphazardly placing fibs on just any swing because it is a "swing". The market moves according to the dimensional properties of the Fibonacci sequence. It is a natural occurrence. The black fib on the left has no place in my trading. It might be useful in some way, but not to me. The yellow fib on the right is one of a dozen variations I use to understand where price is in relation to where it is headed. Does this yellow fib look like a place someone might draw a fib from which to trade? It does to me. There are several very good reasons why I placed this fib in this spot. I know what I am looking for and I know what I am measuring. I hope that this helps someone. Good trading to all.


K.I.S.S.
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  • Post #18
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  • Last Post: Oct 18, 2016 7:03pm Oct 18, 2016 7:03pm
the question is what do you do with any level
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