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

  #71 (permalink)
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  #72 (permalink)
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Big Mike View Post
Are fibonacci retracements and projections useful in a quantifiable way?

I know it's a subject on which people tend to have some quite strong views, and I suppose I'm no exception to that: personally, I think they're nonsense.

I've never seen anything other than purely anecdotal and cherry-picked evidence in their "favour". They don't impress me any more than randomly drawn lines. (Those, on the other hand, interest me quite a bit, especially after reading a certain forum thread on the subject).

And lastly, here's an interesting website from Lock Haven University: Fibonacci Flim-Flam.

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  #73 (permalink)
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Absolutely yes. However, for me, only the 50% PB and 127.2 and 161.8 extantion for target.

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  #74 (permalink)
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Personally, I see no rational reason for Fibonacci to work other than perhaps self fulfilling prophesy.

But, who am I to tell someone else what works and what does not.

People use all sorts of things to trade. I think many of the things like Fibs people use to basically form a framework around which to make trading decisions. They make up for the fact that the method has no statistical positive expectancy by using money management to control risk.

Also, I think many people say they use Fibs but in reality, perhaps even subconsciously, they are picking up cues from market context to help with trade decisions. With enough screen time I can easily see that happening.

For sure trading Fibs straight up taking every signal will fail miserably.

Just my own view...

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  #75 (permalink)
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Seahn View Post
...
For sure trading Fibs straight up taking every signal will fail miserably.

Just my own view...

Just as anything else. But some sites offer stats on a derivative of Fib. known as harmonic patterns.

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  #76 (permalink)
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trendisyourfriend View Post
Just as anything else. But some sites offer stats on a derivative of Fib. known as harmonic patterns.

And dont forget the grand derivative of fibs, Elliot Wave Theory.. Its just fibs with more rules.

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  #77 (permalink)
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This is a giant "IT DEPENDS" type of question.

Do fibs have a place in how I trade? Yes, absolutely.

Do fibs have a place in how YOU trade? Maybe and maybe not.

A lot of trading is personal style, risk tolerance and how a person sets up their own charts. Fibs may or may not fit into your own personal style and methods of trading.

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fibs probably do work for some people but the important question is what's their bottom line?
If someone says they use fibs and can show profit for at least a few years then we can say yes, fibs are useful. In reality, what's really working for them is their psyche, risk, and trade management.

Some traders online pride themselves on not using indicators, but again, that's not what's important in trading.

Psychology > Strategy ≥ Money

Last edited by Massive l; October 29th, 2015 at 03:10 PM.
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  #79 (permalink)
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Massive l View Post
fibs probably do work for some people but the important question is what's their bottom line?
If someone says they use fibs and can show profit for at least a few years then we can say yes, fibs are useful. In reality, what's really working for them is their psyche, risk, and trade management.

That's the whole point of this discussion. I felt the same way, and felt the thread would also reach the same conclusion, and help others in the process (those that want to be helped).

Some have said that fibs are useful, but none have demonstrated why. I believe they don't give themselves (as a person) enough credit. In my opinion, it isn't the fibs that make a good trader, and in fact the fibs are holding them back (or the lack of understanding of what was discussed in that "other" thread that no one here wants to talk about).

The ones that say fibs aren't useful have demonstrated why they believe that to be true.

I am not immune from assigning weight to lines on a chart. VWAP is my biggest enemy in this regard, because I believe VWAP is a useful tool. So often, I see price interact with VWAP. It's alluring, just like fibs are, and very easy to rationalize and especially easy for confirmation bias or "believe what you want to believe". The human mind is amazing in this regard. Luckily for me, I am the author of the Random Line Theory thread, and I believe I have a firm grasp on that part of human psychology. It helps balance out the usefulness with reality.

Still, it seems to me VWAP isn't controversial or debated, disputed, etc like fibs are. Hypocritical?

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  #80 (permalink)
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Big Mike View Post

Still, it seems to me VWAP isn't controversial or debated, disputed, etc like fibs are. Hypocritical?

I'll admit I dont know too much about fibonacci tools as some others here who use them successfully but I think there is a distinct difference between the VWAP and a Fib tool (retracement or projection) to say that supporting the VWAP is not hypocritical.

My point of view is when fibonacci's are being used on charts it only focus's on price (and more specifically how price "looks"). We can also change the look of that chart and therefore change the parameters of how to use the tool. for example, when measuring a pull back we first have to visually find the first leg from which to measure on a chart. Given the same instrument, that leg can be seen differently if we are using a 5 min chart or a 30 min chart.

Even still we can go and change the chart further by using Tick bars or Range bars or even Renko or point and figure charts, etc to find legs from which to measure. In short, because we can change the way the chart looks, the use of fibonacci's is quite subjective compared to the VWAP.

the VWAP is the same no matter what the chart looks like. Its more robust because it includes volume into the equation. and volume is black and white. a chart is not. (comparatively speaking)

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