Why 61.8%? | Page 20 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Why do indicators not work/work? Why is Forex not truly random? 129 replies

How to find out why the euro is strong or why the dollar is weak? 8 replies

Why do we trade?... no really, why? 51 replies

Why is Sentix Investor Confidence influentional on EURUSD! Why ??? 0 replies

Why oh Why .... 19 replies

Attachments: Why 61.8%?
Exit Attachments

Why 61.8%?

  • #381
  • Nov 17, 2015 10:10am Nov 17, 2015 10:10am
Quoting hanover
However, because I've spent a considerable number of hours studying charts and testing systems since 2007, along with the fact that what I'm doing makes comfortable sense to me, leads me to believe that - as long as I maintain discipline - I have a genuine edge.
Wow. Looking back now, I see just how wrong I was back in 2010!! A few weeks of riding one profitable trend, and I believed that I'd turned the corner. Which tends to confirm my belief as to just how difficult and cruel the journey can be.
  • #382
  • Nov 17, 2015 10:18am Nov 17, 2015 10:18am
Quoting hanover
{quote} Wow. Looking back now, I see just how wrong I was back in 2010!! A few weeks of riding one profitable trend, and I believed that I'd turned the corner. Which tends to confirm my belief as to just how difficult and cruel the journey can be.
that is why they say they only constant in the universe is the CHANGE
As Above, So Below
  • #383
  • Nov 17, 2015 11:28am Nov 17, 2015 11:28am
Quoting tashkent
i do not think anybody can prove or disprove God's existence. it is just a matter of belief.
FWIW I tend to agree, one looks at the world and intuitively perceives ultimate causation as being either design or chance.

However, unlike the poster before you (shanewatson), I don't believe that religious or philosophical thought -- or even "nature" -- has any bearing on how predictive (or otherwise) Fibo levels are. IMHO markets are the product of very different belief systems: they represent the collective result of how traders believe that price will behave henceforth. This creates orderflow which in turn drives price, potentially creating a circular 'self-fulfilling prophecy'. As with all support/resistance, price reacts at Fibo levels as a direct consequence of the total volume of orders that have been placed at those levels.

If a trader can somehow discover where the highest volumes of orders are being placed, and devise a system of entries and exits to exploit this, he will be profitable. Of course this is not necessarily the only road to success.
  • #384
  • Edited 12:43pm Nov 17, 2015 12:20pm | Edited 12:43pm
61.8 is the phi the alter ego of the Golden Ratio...... Multiply 61.8 by 61.8 and what do you get.... divide and what do you get? same as with 1.618 the Golden Ratio, multiply by itself and divide by itself and what do you get? answer: the same proportions that are multiples and divisions of itself....self similarity is important when it comes to fractals....in fact its the very definition of fractals.... Fibonacci's fractals, i.e The Golden Ratio fractal can be formed with only 2 points. its the only way in the universe to do that with only 2 points. its the only proportion that does that. That is why it is called the Divine Proportion. There is only one way that does it perfectly every time. Only one. Period.



That is NOT the same as 1,1, 2, 3, 5, 8, 13 etc. because that is merely that is the fibonacci sequence and does not equal the Golden Ratio. it simulates the golden ratio and allows for approximations, but it isn't the GR.

http://vashti.net:44131/mceinc/RGPHIGRA.htm

look at this sequence>>>> it calculates to PHI/phi using multiplication division addition! that's all i'm saying. http://vashti.net:44131/mceinc/DERIVPHI.htm

just my understanding of it is all i could be off a bit...but no matter...only one opinion here
  • #385
  • Nov 17, 2015 12:25pm Nov 17, 2015 12:25pm
for every fibo level, those makes, you find the right girl, each time, for each level
  • #386
  • Nov 17, 2015 3:53pm Nov 17, 2015 3:53pm
This little website from Lock Haven University might interest those who like Fibonacci: https://www.lhup.edu/~dsimanek/pseudo/fibonacc.htm
  • #387
  • Edited 7:02pm Nov 17, 2015 6:46pm | Edited 7:02pm
Quoting hanover
{quote} FWIW I tend to agree, one looks at the world and intuitively perceives ultimate causation as being either design or chance. However, unlike the poster before you (shanewatson), I don't believe that religious or philosophical thought -- or even "nature" -- has any bearing on how predictive (or otherwise) Fibo levels are. IMHO markets are the product of very different belief systems: they represent the collective result of how traders believe that price will behave henceforth. This creates orderflow which in turn drives price, potentially...
applying fibo ratio to markets in order to predict the turning points is plain naive idea. golden ratio exists in nature because of the laws of natural selection. this particular pattern has evolved as one the most efficient for growth, reproduction and survival. meanwhile not everything in nature respects the golden ratio. unfortunately the fibo ratio has become one of the hottest marketing tools as some has gone beyond sanity attempting to apply it to irrelevant things. for them anything with spiral shape is golden ratio. this insanity has found its place in financial markets too and now fibo levels are one of the most widely used tools. but again, it is a matter of belief. just as i believe in the rule of thirds.
As Above, So Below
  • #388
  • Edited 7:30pm Nov 17, 2015 7:09pm | Edited 7:30pm
Quoting hanover
{quote} If a trader can somehow discover where the highest volumes of orders are being placed, and devise a system of entries and exits to exploit this, he will be profitable. Of course this is not necessarily the only road to success.
The 1st step is to know what we are looking for. That is a milestone breakthrough in our journey because once we know what we are looking for, is it oranges or cats or clouds or whatever then only can we start our 'journey' to discover or find this whatever, isn't it? We can't go looking for something which we don't even know the form, shape, color or whatever. That's why if we know what we are looking for it's a fantastic discovery in itself, there is a sensible beginning, everything else before this is hogwash or plain guesswork, to put it more politely. Not difficult to understand this, right?

Yup, spend 10,000hrs staring at the charts until your eyes bleed then magically you will 'discover' what you should be looking for. It's a pattern, a channel, a Fib, SR or SD level or bigfoot, lochness or martians, UFO........are traders so gullible? In the absence of anything better, traders have no choice but to be superstitious and gullible?
  • #389
  • Edited 9:56pm Nov 17, 2015 8:31pm | Edited 9:56pm
  •  Neio
  • Joined Oct 2012 | Status: Can't think outside?Enlarge the box | 688 Posts
Firstly, respect to anyone who claims to trade these levels successfully and has done so consistently over the years.

I am yet to see any evidence that proves that these levels work better than 50:50. I agree it is up to each individual trader to prove to himself even if presented with such evidence but a first step would be agreement or a definition on what swing points are valid to apply the fib retracement levels too. I stand to be corrected but so far what I have seen just for that definition is very subjective. If someone reading this thread can provide a clear followable definition on what constitutes a valid swing then it should be quite easy to identify and make an indicator to mark those on a chart and extract the data for objective analysis.

Regards

Neio

PS. I cannot code myself so if anyone does post a definition I will be happy to work with the data in Excel if there is a coder that is willing to extract the data based on it.
An expert is a man who has made all the mistakes which can be made
  • #390
  • Nov 29, 2015 6:31pm Nov 29, 2015 6:31pm
Quoting Neio
Firstly, respect to anyone who claims to trade these levels successfully and has done so consistently over the years. I am yet to see any evidence that proves that these levels work better than 50:50. I agree it is up to each individual trader to prove to himself even if presented with such evidence but a first step would be agreement or a definition on what swing points are valid to apply the fib retracement levels too. I stand to be corrected but so far what I have seen just for that definition is very subjective. If someone reading this thread...
It's definition is subjective to a great extent because its effectiveness depends on the way the majority of traders draw them. One could go on and on about how to "correctly" drawn fib retirements in theory but in the end it is the consensus of real world traders that defines their "correct" application.

This is one reason why I would not trade them on their own (just like I would not use MAs on their own either).However, they might add that additional technical credence to a trade setup that might convince me to pull the trigger, when I otherwise would not. Other experienced traders on this forum also look at overlapping fibs from different TFs.

Btw, this also relates to the inaccuracy inherent in drawing diagonal trend lines, which I would not trade as is either.
  • #391
  • Nov 29, 2015 6:38pm Nov 29, 2015 6:38pm
Quoting fxpipper
I've recently really taken an interest in the Fibonacci retracement tool...but something's been bugging me, and that is the 61.8% ratio. What is it about this number that makes it the most significant of all the ratios? I've heard it be called the "golden ratio", but don't understand why. Is there a reason? Or is it just something that has been firmly ingrained into the minds of traders, that the reasons don't matter anymore. I've been trading the EUR/USD since the start of the down trend in December and watched it pretty much blow through all the...

Both .50 and 61.8% are significant for two separate reasons:

50% is an important level for the simple reason that during price discovery buyers and sellers tend to end up agreeing in the middle of their respective bids and offers. This is reflected in any market, not just FX. Now this obviously does not always happen in the real world, but it is the reasoning behind its significance and points to a tendency.

At 61.8% price tends to be deeply oversold and it more likely that it will retrace from this level than from the lower numbered fib levels.
  • #392
  • Nov 29, 2015 6:43pm Nov 29, 2015 6:43pm
the 61.8 number is the golden value, and is the most important of all the fib numbers,
because if you take all the other fibonacci numbers and divide them, calculate them,
substract and add, you always endup with this 61.8,
thats why it is considered to be the most important fib.
you also find the same number in the pyramids of egypt,
and just about everything else in the universe.
50% is not really a fibonacci number, it have been added by traders,
because it is considered fair value.

they say all roads leads to rome,
but all the numbers leads to 61.8
Bulls are stupid Animals!especially when Im short!
  • #393
  • Nov 30, 2015 8:18am Nov 30, 2015 8:18am
Golden ratio is fractal>>>

http://www.theguardian.com/science/a...harriss-spiral

recursive

iteration or reiteration are other properties


https://nrich.maths.org/2737

http://stackoverflow.com/questions/1...ogolden-number

furthermore it is asymptotic so that it approaches 0 but never quite makes it there.....

https://www.khanacademy.org/math/geo...e-golden-ratio

i'm not an math expert. luckily one can just look at the chart
  • #394
  • Nov 30, 2015 8:41am Nov 30, 2015 8:41am
Yes the math aspect of 61.8 is important in math but for traders, you can find and confirm what ever it is you want to confirm!!!

Doses that mean it works 100% of the time ? NO!!!!

Thats why it is so important to follow a trading plan

Where is price ?
Where do I think price can go ?
Up down or sideways ?
If it goes against me I must be discipline.

There is only one type of discipline......perfect discipline!!
Learn, a forex trader must, unlearn and relearn he will.
  • #395
  • Nov 30, 2015 9:29am Nov 30, 2015 9:29am
Quoting hanover
{quote} FWIW I tend to agree, one looks at the world and intuitively perceives ultimate causation as being either design or chance. However, unlike the poster before you (shanewatson), I don't believe that religious or philosophical thought -- or even "nature" -- has any bearing on how predictive (or otherwise) Fibo levels are. IMHO markets are the product of very different belief systems: they represent the collective result of how traders believe that price will behave henceforth.

This creates orderflow which in turn drives price, potentially...
[/highlight]If a trader can somehow discover where the highest volumes of orders are being placed, and devise a system of entries and exits to exploit this, he will be profitable. Of course this is not necessarily the only road to success.



This i believe to be a sure truth,i also believe that these levels can be calculated using past /present volume,momentum and liquidity.i believe that regardless of the intension and requirment of the particepents they are bound by similar restrictions to us retail.if we add some time objective and the larger group of particating particepents are converging to a point in time and price we have such a place you describe .if this falls on a fib level all the better for fib fans ,but i believe these levels are unaware of such things.but as i have said calculating such levels concidering paramaters certainly helps.coupled with the overall markets present sentiment reveals enough .
  • #396
  • Jan 21, 2016 3:45pm Jan 21, 2016 3:45pm
The matter is more complex than it seams. Leonardo Pisano son of Bonacci, known as Fi'Bonacci or Bonacci's son, discovered the famous Golden Sequence in 1202. He did it because he wanted to estimate how many rabbits could reproduce starting from a given number and in a given time in a closed environment. The numerical sequence he pointed out wasn't considered interesting untill the 19th century when binary calculus and quantum phisics were being developed. Then some reaserchers started to notice how his apparently simple sequence did indeed appear in uncountable natural configurations, both in geometry (spirals, shells, pendulus deceleration) and in mathematics (disposition of leaves on branches, average raindrop sequences and such). So they ran through the books and found out that an Arab mathematician, Ibn al Kwerziz, stated that we as humans do not invent mathematics but that mathematics are within the nature of things and we only discover it, like uncovering a hidden root of a plant. According to al Kwerziz, one of the fathers of Algebra, math detrmines and rules reality from within, just like 2 apples are the sum of 1+1 or 3 apples in 2 bags are the sum of 2x3=6 and this is and would be even if we did not discover arithmetics. Grasping this concept let's us understand how Pisano Fi'Bonacci actually unearthed a somewhat weird mathematical progression that is "embedded" within reality wether we know or conside it or not. The sequence or harmonics of course are never exactly perfectly precise but ALWAYS repeat themselves in uncountable aspects of nature. The same happens with the markets and graphs simply because they too are part of reality. There are no actual statistics on how many exact times Fi'Bonacci retracements occur but what is sure is that they occur MOST OF THE TIMES which makes this "magical" sequence worth being taken into consideration. :-)
Quoting Ted1983
Its a huge slab of BS. I mean people talk about 50% fib' retracements. Good luck deriving 0.5 from the fib progression. LOLZ. You may have noticed that is why 5,8,13,21,34,55 etc period moving averages are popular. I find it funny that some people think they relate to some real underlying structure. Thats not to say you can't use them as a tool.
  • #397
  • Jan 21, 2016 5:58pm Jan 21, 2016 5:58pm
Is the 2 correction in Elliot wave more often more shallow, .382, than the 4 regarding a newer 5-3-5 cycle?
  • #398
  • Jan 21, 2016 9:10pm Jan 21, 2016 9:10pm
Do you know Pavlov experiment?. In his experiment, Pavlov used a bell as his neutral stimulus. Whenever he gave food to his dogs, he also rang a bell. After a number of repeats of this procedure, he tried the bell on its own. As you might expect, the bell on its own now caused an increase in salivation.

So the dog had learned an association between the bell and the food and a new behavior had been learnt. Because this response was learned (or conditioned), it is called a conditioned response. The neutral stimulus has become a conditioned stimulus.

Now you back to fibonacci, the fibo numbers as become mantras for the traders. They programmed, the price would move towards this numbers before it's resume i's trend. We know that the market's motion is due to traders psychology. As a result, we can assume that the fibo series is obeyed. But, not necessary the price should be halt at that level (same as Pavlov Experiment where the dog is not presented with food but still the was salivation).
  • #399
  • Last Post: Jan 22, 2016 3:20am Jan 22, 2016 3:20am
don't leave the cat after a dog is mentioned,
schrodinger is its name.
since we didn't really know where the price will move.
0 traders viewing now