Where is the logic behind applying Fibonacci to trading? | Page 7 | Forex Factory

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Where is the logic behind applying Fibonacci to trading?

  • #121
  • Feb 6, 2016 6:23am Feb 6, 2016 6:23am
Quoting venzen
{quote} Sometimes you draw off the candle wick and/or sometimes off the body, well of course you have to adjust your Fib tools as a wave develops. That's not a punishable crime is it? And right back at you: I can show you the fibs but you can select not to perceive them. With 24/7 markets, there is no practical outcome in arguing worldview and philosophy, and we can differ on that. The thread owner asked, as I understand his question, what the reason is for using Fibonacci geometry in TA? I answered the topic question but your diatribe is neither...
Reductionist? Believing in hard science has a word now? If you are empirically trying to prove fibs are profitable and then allow a margin of error of basically how much you want, then you are just bending some random lines on a chart until it fits.
Price-Action Extremist
  • #122
  • Edited 6:49am Feb 6, 2016 6:37am | Edited 6:49am
Quoting bagman
Your logic when applying fibs is not consistent. You fit it until you see a pattern. I invented my own proprietary indicator based on your chart. Have a look: {image}
Teacher to little bagman: "Excellent work. Gold star for effort and creativity!"

But today, grown-up bagman, it's going to be three black stars on your fraudulent work:

One black star for being disrespectful in the thread
One black star for plagiarism and bickering
One black star for expending valuable time
Instead of developing your trading!

Come on ball- , I mean, bagman. Live and let live.

Some people believing in things that one doesn't understand or care for... it's just a part of life, the universe and everything, right?

Good luck and prosperity to you.
cryptocurrency everytime
  • #123
  • Feb 6, 2016 6:45am Feb 6, 2016 6:45am
I do not like fibs, I think they are useless and I will argue that point in a topic about fibs. If you can not handle me disagreeing with you without getting personal, you do not have to argue with me at all. Just skip the personal attacks and stick to the topic if you want to continue discussing fibs.

Seriously you can't just throw words like bickering and disrespectful at people when they disagree with you.
Price-Action Extremist
  • #124
  • Feb 6, 2016 8:09am Feb 6, 2016 8:09am
Quoting venzen
{quote} Scott! The one and only! Good to hear from you and I should say: "I've been better", but due to the state of things and the stage of global economic devolvement, I'm doing well by comparison! A lot of shorting these days, but my temperament favors bullish trading lately. Luckily there is the long awaited gold rally, eh? a 3.618 Fib extension target at $1,182. Interesting that the 2.618 Fib extension of the first wave intersects the point where gold breached its longterm declining trendline (and retested it last night). Will we see 4.618...
Hey Venzen,

Good to hear you are doing ok. Took a look, had pause 1174, most likely targeting top based on formation and next would 1210. Let's see... Then we would have more information. Have to admit really got a kick out of this thread.... Clearly fibs do not work and are completely random and invalid, just don't ask me how to use them.
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The world you desire can be won. It exists.. it is real.. it is possible..
  • #125
  • Feb 6, 2016 9:12am Feb 6, 2016 9:12am
Quoting Ponzi Jr
Can someone please explain to me why Fibbonacci levels are used in technical analysis? Where is the logic behind assuming that price will respond to these 'magic' levels? Or do they just form a self fulfilling prophesy due to the vast number of people who watch out for them?
I use fib levels in my trading, and have explained how I use them in my FF journal and in several threads (along with proof that the market is not random, but that's another story). Fibs have no/zero/nada predictive powers. There is nothing magical about them. They are, however, useful tools that can show you how professionals are trading the market, when professionals are trading the market (professional traders know when and when not to trade). For the record, every professional trader on planet earth knows the trading fib level and fib extensions. As a wanna-be trader, your job is to figure out the trading fibs (along with a lot of other stuff), and ignore the other crap that you might draw on your charts. Or, you can believe fibs are junk, and TA is useless, and the market is random, etc, etc, etc.
  • #126
  • Feb 6, 2016 11:31am Feb 6, 2016 11:31am
GEfx exactly my point. People who never bother to learn proper fibonacci trading rules are most loud, saying it's all mambo jumbo. Next thing I'll hear is that japanese candlesticks patterns (shooting starts, morning stars, hammers, engulfing candle, dark cloud cover, percing line etc.) don't work either and that western chart patterns (triangles, flags, wedges, peanats, H&S, double tops etc.) are just random price walk, revealing nothing. I don't care what anyone thinks. I'm making my trading decisions primarily based on them and I have been probitable forex and commodity trader for last eight years. I don't need any proof. Maybe I'm just one lucky self-delusional son of a ...
  • #127
  • Feb 6, 2016 12:48pm Feb 6, 2016 12:48pm
Quoting Tom81
GEfx exactly my point. People who never bother to learn proper fibonacci trading rules are most loud, saying it's all mambo jumbo. Next thing I'll hear is that japanese candlesticks patterns (shooting starts, morning stars, hammers, engulfing candle, dark cloud cover, percing line etc.) don't work either and that western chart patterns (triangles, flags, wedges, peanats, H&S, double tops etc.) are just random price walk, revealing nothing. I don't care what anyone thinks. I'm making my trading decisions primarily based on them and I have been probitable...
I don´t take these kind of signs in consideration, since I can see tons of examples of candle and chart patterns behaving different way than expected, so I don´t trust them. But if they work for you, keep it up!
Every trader is different, and has his/her own way to do things. When something work out for you, it doesn´t matter what others think, just keep doing it while last.
  • #128
  • Feb 6, 2016 1:50pm Feb 6, 2016 1:50pm
Quoting Tom81
GEfx exactly my point. People who never bother to learn proper fibonacci trading rules are most loud, saying it's all mambo jumbo. Next thing I'll hear is that japanese candlesticks patterns (shooting starts, morning stars, hammers, engulfing candle, dark cloud cover, percing line etc.) don't work either and that western chart patterns (triangles, flags, wedges, peanats, H&S, double tops etc.) are just random price walk, revealing nothing. I don't care what anyone thinks. I'm making my trading decisions primarily based on them and I have been probitable...
Could not agree more! Good trading!
  • #129
  • Feb 6, 2016 2:10pm Feb 6, 2016 2:10pm
http://gattissimi.com/2016/02/05/gat...tti-fibonacci/
  • #130
  • Feb 6, 2016 9:57pm Feb 6, 2016 9:57pm
Quoting GEfx
{quote} Could not agree more! Good trading!
Hi all fib adherents and one last fibbish note from me and I am out of here for good. Even amongst some die-hard fibbers I believe there are still many who is using it in an arbitrary method and thus the result is far than optimal. In my long period of using fib I have found out that the better way to use it is to first identify a fixed value(pip counts) for a particular pairs/assets then only then does the fib levels come into play. E.g in forex there is an orderly random structures based on intraday, intraweek(m/t) and multi week(l/t) which has a fixed pip counts in each different time structure. Once that is being identified and determined then the hold/breach (r/s) levels according to the fib levels of each structure becomes apparent and it allows you to be always right on the directional path viv-a vis the said structure. Of course its impossible to project/forecast the final destination/level where price would be going BUT it will keep you on the right side of the trade in all market conditions. Therefore the antiquated way of pulling the fib from the price high/low level is flawed and therefore needs to be corrected and adjusted instead to the fixed pip counts of the individual pairs/assets. Different pairs/assets have their own pip counts. This sort of method shall yield anyway between 1.3 to 1.100 RR and to me its fantastical edge.

Cheers good luck to all fibbers.

GS
  • #131
  • Feb 6, 2016 10:28pm Feb 6, 2016 10:28pm
Quoting genghistar
{quote} Hi all fib adherents and one last fibbish note from me and I am out of here for good. Even amongst some die-hard fibbers I believe there are still many who is using it in an arbitrary method and thus the result is far than optimal. In my long period of using fib I have found out that the better way to use it is to first identify a fixed value(pip counts) for a particular pairs/assets then only then does the fib levels come into play. E.g in forex there is an orderly random structures based on intraday, intraweek(m/t) and multi week(l/t)...
This is a great post ,each period of time relevant to those requirements can be measured in a number of different ways ,identifying the relevant cycle is the key .your chosen tool of measurement be it Elliott,gann Fibonacci or what ever will yield positive feedback ,whilst the rest are left scratching there heads as to why it is a 50 50 outcome .i dont use any of these tools but i am able to measure the market structure to gain slight advantage.

once again a great post
  • #132
  • Feb 7, 2016 12:43am Feb 7, 2016 12:43am
Quoting Mr. Scott
{quote} Hey Venzen, Good to hear you are doing ok. Took a look, had pause 1174, most likely targeting top based on formation and next would 1210. Let's see... Then we would have more information. Have to admit really got a kick out of this thread.... Clearly fibs do not work and are completely random and invalid, just don't ask me how to use them. {image}
Hi Scott, yes, it's all going on at FF, I tell ya!

1210 looks good too... hey, how come no-one drew pentagrams all over you chart submission?

See you at your hangout soon.
cryptocurrency everytime
  • #133
  • Feb 7, 2016 5:07am Feb 7, 2016 5:07am

its a statistical tool to calculate the average percentage of a corrective movement before it continues its move


statistically fibo61 chance is more than 60%

50 is almost the rest and very small chance of 38


i did a study it was interisting



cheers

  • #134
  • Feb 7, 2016 7:31am Feb 7, 2016 7:31am
Quoting genghistar
{quote} Hi all fib adherents and one last fibbish note from me and I am out of here for good. Even amongst some die-hard fibbers I believe there are still many who is using it in an arbitrary method and thus the result is far than optimal. In my long period of using fib I have found out that the better way to use it is to first identify a fixed value(pip counts) for a particular pairs/assets then only then does the fib levels come into play. E.g in forex there is an orderly random structures based on intraday, intraweek(m/t) and multi week(l/t)...
Excellent!
  • #135
  • Feb 9, 2016 10:27am Feb 9, 2016 10:27am
Near perfect fibonacci short entry signal based on 61,8 % Fib retracement and 88,6 & Fib Fan trendline (plus touch of downtrending TL , 200-1H SMA, divergence RSI-PA).

Am I only dreaming or is it Fibonacci at work here?
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  • #136
  • Feb 9, 2016 11:32am Feb 9, 2016 11:32am
Quoting Tom81
Near perfect fibonacci short entry signal based on 61,8 % Fib retracement and 88,6 & Fib Fan trendline (plus touch of downtrending TL , 200-1H SMA, divergence RSI-PA). Am I only dreaming or is it Fibonacci at work here? {image}
Fibos are so vage, you screenshot predicts that something interesting might happen anywhere you want. Repeating myself, selective perception. And don't you see how the interesting points are often far off from the magic fibo ratios?
Price-Action Extremist
  • #137
  • Feb 9, 2016 11:59am Feb 9, 2016 11:59am
Quoting bagman
{quote} Fibos are so vage, you screenshot predicts that something interesting might happen anywhere you want. Repeating myself, selective perception. And don't you see how the interesting points are often far off from the magic fibo ratios?

It's all about establishing where confluence zones are. You shouldn't trade fibonacci levels alone, but if you have established trend, confluence of 50 or 61,8 % fib retracement and trendline or 50, 100 or 200 SMA, there is a good chance that price will reverse and continue it's main trend. If 88,6 % fib fan trendline or 78,6 % fib retracement gets broken, your trading idea is invalidated and you exit at small loss. You can see how price consolidated around 61,8 % fib retracement and price candle never closed on the upper site of 88,6 % fan trendline. Before that it briefly found resistence at 23,6 % retracement, and retested 50 % fib after breakthrough.
  • #138
  • Feb 9, 2016 12:07pm Feb 9, 2016 12:07pm
Quoting bagman
{quote} Fibos are so vage, you screenshot predicts that something interesting might happen anywhere you want. Repeating myself, selective perception. And don't you see how the interesting points are often far off from the magic fibo ratios?
They may be vague to you pal, but they're as obvious as a one legged man at an arse kicking part to me, and a good deal more useful.
  • #139
  • Feb 9, 2016 7:29pm Feb 9, 2016 7:29pm
Quoting Tom81
{quote} It's all about establishing where confluence zones are. You shouldn't trade fibonacci levels alone, but if you have established trend, confluence of 50 or 61,8 % fib retracement and trendline or 50, 100 or 200 SMA, there is a good chance that price will reverse and continue it's main trend. If 88,6 % fib fan trendline or 78,6 % fib retracement gets broken, your trading idea is invalidated and you exit at small loss. You can see how price consolidated around 61,8 % fib retracement and price candle never closed on the upper site of 88,6 %...

Just to illustrate a point...the entry you picked could also have come from something as arbitrary as an RSI divergence, as in the picture.
Not just RSI, there are other simple oscillators that could have picked it.

Not to say your entry was bad, I just question the predictive powers of Fibo over any other tool.
I see your PT is at the bottom. Well, with Yellen speaking tonight anything can surely happen, but right now your trade is closer to BE than a profit. Whereas the RSI divergence entry has already reached a theoretical 1:4 RR at the bottom. A proponent of simple divergence trading would have grounds to claim fibo would have delayed entry on a good trade.

Again, I'm not saying i trade that way, what i'm trying to point out is that there other ways using stock standard indicators that a price movement can appear to be predicted and the users of them would argue they are more efficient.

The challenge as laid out earlier was:

Quote
I invite anyone to start a new thread. On that thread, choose 3 pairs as a maximum. On each pair choose 1 time frame. In real time, plot the fibo lines with the current price, and then call the next price.
Simple.
If over a significant number of examples, the accuracy of prediction (not retrospective adjustment) is 70% or over, i will admit I'm wrong.
The reason for the 1 timeframe rule being; fibo users are quick to modify expectations by flicking through timeframes..."oh, the H1 "x" didn't make the next level because the H4 rejected "y."...

Anyone who's interested in a scientific approach to back up their claims will not have an issue with this.
Remember, this is about the validity of fibo levels as a predictor of future price movements.

@Tom81, I take on board your points on confluence for trade entries, but the more extreme fibo users here have claimed that fibo levels are a universally accepted law, that their levels are important. If the levels are respected more than 70% as one poster previously claimed, then I will concede. If not...then the golden ratio has no more bearing on price movements in Fx than anything else.
That is an easy thing to test with the challenge above.
But in general, thanks for posting your chart, and good luck with the trade.
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  • #140
  • Feb 10, 2016 6:37am Feb 10, 2016 6:37am
Quoting Tom81
Near perfect fibonacci short entry signal based on 61,8 % Fib retracement and 88,6 & Fib Fan trendline (plus touch of downtrending TL , 200-1H SMA, divergence RSI-PA). Am I only dreaming or is it Fibonacci at work here? {image}
Yep, great entry for you, and I hope you got all of the bounce. Well done!
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