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Fibonacci Queen

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Market Wizard
Berlin, Europe
 
Trading Experience: Advanced
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centaurer View Post
Distributions of what? Distributions for any market for all time? Distributions for any time series regardless of the generating process?

Or you mean distributions that fit what you were looking to find while ignoring evidence that did not?

Nonsense. I don't think this is testable to prove in any real sense that fib levels are better than random levels when talking about data generated by a non-ergodic, non-stationary dynamic system like markets.

I am surprised an inventive con artist hasn't used this fact to come up with their own "better" set of fib levels.

Just have to have a nice pseudo science name that lends itself to a narrative and you could make a ton of money selling such a product to suckers.

Even better, say you found the levels from training deep neural networks for good measure. "Deep Fibonacci Levels, on sale for $49.95 this month".

How about if price is attracted to Fib levels are there price levels that are unattractive and repel price in all times, all markets, all time series, all generating data process?
Or is that too ridiculous an idea? lol

I like your comment, as it shows that you are not following any religion. Definitely Fibonacci levels have no scientific foundation when it comes to trading. The fact that Fibonacci pattern are omnipresent in nature is linked to optimal space utilization. Another argument in favor of Fibonacci levels: Wave patterns that follow Fibonacci ratios would exhibit the same behavior as fractals, when comparing lower and higher timeframe waves. Nice idea, but not convincing, as non-linear systems do not care much about Fibonacci ratios and their potential suitability for developing self-containing fractals.

When Fibonacci levels provide a small edge, this can only explained by mass behavior. Traders love story telling (Fibonacci is a good story), pseudo-scientific concepts and all sorts of occult ideas (Gann was a numerologist, much worse than followers of the Fibonacci religion). A religion - as arbitrary as it may be - starts working as a self-fulfilling prophecy, once it has attracted a sufficiently large number of followers. The same is true for fads. A fad is a short-lived religion.

Trend following was the religion of the Nineties. The Turtles were followed by the Turtle Soup strategy. Fibonacci levels in trading are a little bit more long-lived. Also they come close to eights so that you can use them as a degree of latitude for navigating the markets.

If markets were completely non-stationary and non-ergodic, nobody could possibly trade them. Did ever come to your mind that mass behavior might impose temporary patterns? Or what you recommend to shut down this forum, because discussing trading concepts is a waste of time anyhow?

For deeper understanding of how this works, I would recommend the reading of Robert Axelrods "The Evolution of Cooperation". This book - which is not about markets - has much contributed to my understanding of how markets work.

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