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Are Fibonacci retracements and projections useful?
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Are Fibonacci retracements and projections useful?

  #171 (permalink)
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As noted earlier some of the debate here reminds me of political or religion arguments. Something like religious beliefs can not be proved. Both subjects can create heated discussions and emotional responses from both sides.

Once again, some of us that see value in applying certain fibonacci methods, look elsewhere for confluence and confirmation. Our trader mindset, experience and the ability to read price action is far more important. I don't think that anyone is having consistent success by taking a trade solely on touching "the line". Funny but maybe it really isn't due to that line any more?

On a positive note, I think this thread is important and worthy of debate up to a point. I urge both sides to consider the counterpoint and reflect on what they may be missing in the discussion. Why does there have to be only one right answer?

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  #172 (permalink)
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trendisyourfriend View Post
It seems obvious from certain arguments that Fib. projection has no place in the reality of price movement.

But i would go even further in saying the same goes for any other type of mathematical guess at future S/R levels – floor pivots, camarilla equations, VWAP deviation bands, Value area bands, Noise bands, average daily range and whatever else is out there. They add no value but still people are constantly mentionning them in a lot of threads that are popular here on BMT, oops! sorry futures.io.

i would tend to agree with MOST of what you said. however, the vwap still features prominently in trading algorithms and can be of some substantive help, but not to the degree that most traders attach to it. what i believe you are alluding to is the fact that data easily accessed by the masses via the internet and blogosphere quickly becomes over analyzed and discounted. what most traders fail to consider is who is doing the buying and the selling, and are their decisions sensitive or insensitive to price. for example, a risk parity or VaR strategy is insensitive to price. when one of these funds acts they could car less about any of the levels you referenced. different actors, who drive price, behave differently. in treasuries for instance, the fed, banks, and sovereign nations are intrinsically price insensitive, whereas private foreign investors are price sensitive. the unifying traits i see among retail traders is the way they view or approach the market. few of them are aware of market fundamentals, sentiment, market structure and who or what truly drives price. so they tend to participate in this "groupthink " mentality where the myths of trading continue to be perpetuated.


Last edited by tigertrader; November 1st, 2015 at 06:03 PM.
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  #173 (permalink)
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canyon View Post
As noted earlier some of the debate here reminds me of political or religion arguments. Something like religious beliefs can not be proved. Both subjects can create heated discussions and emotional responses from both sides.
...
On a positive note, I think this thread is important and worthy of debate up to a point. I urge both sides to consider the counterpoint and reflect on what they may be missing in the discussion. Why does there have to be only one right answer?

I agree very strongly.

Everyone likes to be right, and, for some reason, some topics fire up the "I am right, you are wrong" response more than others.

I have changed my views many times after going through some of the discussions on this forum.... which means, I was not right. There, saying it didn't kill me.

Besides, it's not always really just right or wrong. There are nuances, and the fact that different things may work, at different times, under different conditions and for different people.

Plus, it can be an interesting surprise to find that a rational person actually disagrees with one's opinion. At least it could make someone curious to understand the reason.

There's no need for the negativity of the "you are wrong" response -- basically, who cares about a simple discussion on an internet forum? When you go to trade tomorrow, if you do, that's when the being right part will actually matter, and then it's just between you and the market, not anyone else's opinion. In the meantime, the chance of learning something in the discussion is not something to be sneezed at.

Bob.

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  #174 (permalink)
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the purpose of this and any forum should be to provoke thought. that being said, if you can't explain your point-of-view simply to others, you probably don't understand it well enough yourself...

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  #175 (permalink)
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My hypothesis is that since there are a few fibs lines to go by they may use the fibs as a benchmark of sorts. If they feel strongly about the trend they might got for a fib under 50%, if not maybe 50% or greater.

I think the fibs just give the person a way to measure. In all honesty I think 8ths, like fat tails mentioned, might be a little better since they're easier to conceptualize.

The other good thing about measuring retracements and extensions is that you'll have an ongoing reference point to measure other trades in similar circumstances. You won't have to put as much guesswork into it if you have a regular habit of recording and using this type of technique.

(that being said I don't believe that fibs are any more significant than 8ths, 3rds and so on)

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  #176 (permalink)
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Looked at last 2 weeks of ES charts. I try to trade the 10-point rule, so I have 9 point zigzag indicator. This zigzag indicator is not of much use on the hard right edge as the trend/pullback can continue.

Fib Extensions seem provide pretty good clue when the trend/pullback is about to reverse. Between Oct 16 and Oct 29, there were 19 10-point move (ignoring the FOMC dance). In each and every one of them, the reversal occurred at more then .618. The first reversal candle pattern after .618 is usually the reversal bar.

Using this in combination with S/R levels, Trendlines etc, could be very powerful.

In this 2 week period, .618 is hit 100% of the time which makes it a very good target.

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  #177 (permalink)
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how many fibs, resistance levels, etc. did the recent~220 point rally in the es blow right thru?

it's very easy to hand pick examples post facto of retracements that conform to some measurement metric, yet i see very few people on this forum taking more than a few points out on any given trade

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  #178 (permalink)
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tigertrader View Post
it's very easy to hand pick examples post facto of retracements that conform to some measurement metric, yet i see very few people on this forum taking more than a few points out on any given trade

They are not "hand picked" examples. As I said earlier, there were 18 (actually 19) 10-point moves since Oct 16th excluding the FOMC shakedown. One was gigantic move which I did not include either. Looked at ALL of them. Posted only two charts. Here are couple more. Check for yourself.

Obviously the 2 week sample is not significant enough. I will do a larger study once I figure out how to setup the back testing for this in IRT. For now, this information is good enough for me as I intend to try using fib extensions as secondary confirmations.

And, they are not retracements, they are extensions.

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Are Fibonacci retracements and projections useful?-10_20_3_.618_p.png   Are Fibonacci retracements and projections useful?-10_21_1_100.png   Are Fibonacci retracements and projections useful?-10_21_2_100_p.png  

Last edited by cogito; November 1st, 2015 at 07:07 PM.
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  #179 (permalink)
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few more....

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Are Fibonacci retracements and projections useful?-10_22_1_100_p.png   Are Fibonacci retracements and projections useful?-10_22_2_618.png   Are Fibonacci retracements and projections useful?-10_22_3_382_p.png  
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  #180 (permalink)
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Bored on a Sunday afternoon after watching the Cards beat up on the Browns and forced to root for the hated Cowboys against the equally hated Seahawks, I hopped on the forum and came across this hotly debated subject.

I used to be a huge fib defender....now I just concur with @Fat Tails and think that to the extent they work, they work due to being a self fulfilling prophecy. Price often times appears to honor the levels and other times it appears as though those levels are non existent.

That said, I think they can be useful in contextualizing the daily range but not for any predictive properties. In a trend, you pick your pull back fib level and put your stop behind the 100% pull back level.....if its a strong trend, it won't break that level and you'll eventually be right even if you picked the wrong fib and don't bail to early.

I think if you look at the hindsight major fibs, you'll discover they often correspond to previous support or resistance areas and that is the reason they appear to work. Does the fibs cause the S/R or does the S/R cause the fibs? And does any of that really matter anyway?

Lastly, this is one of those areas where the true believers will not be swayed by any argument and the unbelievers belittle and make fun of the believers. If believers were open to hearing a different view point and unbelievers didn't lead with sarcasm, ridicule and name calling, perhaps these discussions wouldn't devolve into name calling and shouting matches.

I'm just saying.......

Simplicity is the ultimate sophistication, Leonardo da Vinci


Most people chose unhappiness over uncertainty, Tim Ferris

Last edited by PandaWarrior; November 1st, 2015 at 07:19 PM. Reason: spelling
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