At least with VWAP, or any average + std deviations, for that matter, you're dealing with statistics which can be helpful to determine a probabilistic outcome using centuries of mathematical axioms. Of course, almost nothing is ever 100% predictive, but least there is a body of evidence that when things are "normal" (Gaussian) there is a certain distribution of probabilities one can use to their advantage in trading. And when normalcy goes out of the window, good trade and money management are going to keep you in the game. However, I guess the same could be said for trading using Fibs, pivots, R1/2/3 & S1/2/3, market profile area, and any other "meaningful" level as well.
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Here's an example of a problem I have with Fibs, or any line-based trading...
This is an image of John Carter's "Voodoo Lines" indicator. It is a set of Fib levels from multiple time frames. In their training they will talk about how price is attracted to these levels and how amazing it is that price reacts to these lines.
Green lines = tree lines
Red lines = fire lines
White lines = snow lines, less significant
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At any rate, if you draw that many lines on a chart, how can you possibly apply any significance to any particular one line?
Now, maybe "he's doing it wrong" and that may be so, but attaching the name "Voodoo" to these lines/indicator helps promulgate the mystical nature of Fibonacci-based trading to the noob, and attributing the price action's behavior to any particular line is, at best, cherry picking.
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i remember attending a trading chat room where the guys used fibonacci's and harmonic trading strategies exclusively. they praised the forecasting abilities of these methods. I've seen them trade the systems and make money, i've seen the extensive testing they've done and the results.
Funny thing was, despite their strong belief in fibonacci methods to forecast market prices; their system was 50% win/loss at best. What made it profitable was how they managed the trades. using fib tools to find good R:R trades, scaling in and out at multiple targets, protecting profits by adjusting stops, etc.
Its been said earlier I know but i really do think that when traders are successful using fibs, its most likely attributed to something else they are doing right. not necessarily their abilities to forecast prices.
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However, it is not likely that it will change anyone's opinion either way.... unfortunately.
To be fair, quantifying something in a meaningful way is hard. It takes mathematical skills, lots of data, ability to figure out the right cases to test and how to do it, understanding of probability, and an understanding of trading, and a willingness to undertake the project and devote the time to it.
Opinions, by contrast, are easy.
But I would like it if someone did give it a shot. (Probably not too many fit that bill, however. I certainly don't.)
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I have a magic 12-inch ruler that I use in lieu of fib retracement or extension lines. I mean a physical ruler I keep next to my desk that I put up to the screen when I am considering a trade. I used to it to measure my body parts when I was bored and waiting for a trade but have adapted it to work for my trading. It works because I can consistently apply the same exact method over and over again regardless of emotion and feeling. I've seen that price likes bouncing off the number 3. Sometimes price bounces off my number 3, sometimes it doesn't reach, and sometimes it goes right through. But I'm sure it works about 50% of the time which is definitely more than random. It's magical and I will punch your mother in the face if you say it doesn't because I've seen first hand that it works.
sigh. [sarcasm off]
Nothing in life is to be feared, it is only to be understood. Now is the time that we understand more, so that we may fear less. - Marie Curie
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