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1. It gives any trader a reason to feel strongly about a trade, much like any "INDICATOR" (MP is also an indicator...)
2. A lot of traders put in orders at those locations because they believe in Fibs!
There is no magic, well, sort of in the sense that the collective conscious of the fibs seems to work a bit. I am amazed almost every day as I learn the fibs more and more every day.
Furthermore, as we all know, it's not necessarily the edge but the money management that makes/breaks a trader's account.
You can take just about any indy or method (MACD, RSI, Stoch, BB, Triangles, Channels, etc) and gain a statistical edge.....but it's the ability to maximize exit efficiency that really has the greatest effect.
RM99 has hit the nail on the head. Any indicator/method can work or fail. It's using the ones you like, with your particular setup, and having exit strategies on both sides of the trade. To say one particular thing doesn't work is probably what sets traders back as they then continue to look for that "one" indicator or holy grail. Poor in my opinion that a so called professional should say any tool doesn't work when he should be explaining confluence with multiple tools even FIB. Besides, why not let traders figure out what works for them, not telling us how something is an illusion or not.
Disclosure: I use Fibs everyday as a part of my trading.
1. Natural timing in nature.. (not sure about this)
2. The 'Crowd' uses Fib lines, so they are bound to cause a reaction in price
3. HFT Trading Programs use fibs/retracements to whipsaw people out. When you draw enough, places rules around what you see, and hook on to the price action when a program does.. They forcast price to the tick/pip. MUCH better than any historical Indy that is the 'grail'
Indicators .... like Religion... work ... if you believe they do...
One gold fish turns to the other and says... If there is no God... who changes the water every day?
"Not intended to be a factual statement" John Kyle Senator Arizona
Disclaimer: This post does not represent the view point the owners, managers, or moderators of this web site and is not intended as a slam against any moderator, board member, any banned former members whose name we dare not say, any other living person, any recently living person or any person or persons whose status we are not sure of and especially not for any platform vendor with a questionable product and a pit bull lawyer. This post is meant purely for entertainment and should not be confused with a real thought.
I'm just a simple man trading a simple plan.
My daddy always said, "Every day above ground is a good day!"
I'm finally ready to post about my system and try to teach it as best as I can. I've never really had strict rules on how to draw the fibs, so I had to analyze my way of drawing and create some rules for it. What I am going to try to teach is what I came up with. I have created some videos, hopefully you won't fall asleep while watching them as my voice can come out pretty monotonous. English is not my native language, so please forgive me for any mistakes in my English. Here is the original document with the rules which might change if I find I need to add anything to it (which I most likely will do in case something needs to be more specific).
I've recorded 7 videos based on what I had written as of June 1st 2011. I will most likely record some more videos as time passes by. If you have questions, feel free to ask. I'd recommend you watch the videos in the highest quality available so you can see everything more clearly on the charts. Here they are:
I recorded this video analyzing today's price action and showing how I start my day. It shows how to analyze pre-market price movement so you know how to start trading once the market opens.
