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----- Original Message -----
<DIV
>From:
DIMITRIS
TSOKAKIS
To: <A title=amibroker@xxxxxxxxxxxxxxx
href="">amibroker@xxxxxxxxxxxxxxx
Sent: Saturday, June 12, 2004 8:08
AM
Subject: [amibroker] Re: Oblique
Fibonacci Lines : A more realistic approach.
Bill,when we use Fib lines [horizontal or oblique] we expect some
accuracy for both time/price.The crowd is no way responsible for the
main market pivots, the crowd usually follows two or more days
later.Do not tell me that the crowd shorted CSCO on Jan20, 2004 and
decided to push CSCO for the next 4 months. The crowd was buying every
moving CSCO share the very previous bar [Friday, Jan16]at any price [even
above +7% !!!] and the crowd is the 91M shares. I doubt if anybody
remembers the reason for this crazy "BUY" day.[N100 80% advissues
!!]The crowd began to "smell" the bearish odour 8 bars later. The first
7 bars of the decline Vol is low to moderate and began to increase
after the 8th bar.It is the potential traders who turn the market, not
the crowd.And these traders have a clear perception of the recent
trend.So, if it is to speak for ACCURATE Fib relations, let us forget the
crowd and their psychology, they [we] always act with a characteristic
delay.
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The understanding and
quantification of crowd psychology and behavior under market conditions, at
least as practiced by non-experts such as ourselves, is simply opinion.
To be sure, a few (i.e., Plummer, Prechter, etc.) have attempted to model
and/or explain the "beast" and such efforts are useful in furthering our
understanding. Having said that I do not view crowd behavior as
necessarily turning on a dime (a rare occurrence) and the models proposed
by the "experts" suggest the opposite. Yes, individual traders do turn
on a dime but collectively the crowd turns over a period of time (think of
momentum) that I am sure can range from short to long periods. I would
also suggest that the behavior is fractal and even when it appears that price
turns on a dime a closer look at shorter periods mirrors the "slow" turn in
momentum characteristic of longer periods. This is not surprising to me,
reflecting the fact, as noted by Plummer, that the crowd (i.e.,
investment community) is a very large, ill-defined group that is much larger
than the immediate trading subset.
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Beyond that, and more
importantly, the application of Fibonacci logarithmic growth to a trend
vs. a specific level in the grand scheme of natural phenomena is one that I
have not yet gotten my head around. Arguably, this is not important as
in the last analysis only bottom line results count. Those of us that
routinely use Fibonacci constructions and similar methodologies know that they
work (for whatever reason) a reasonable percentage of the time (particularly
some of the non-standard methods). So that is a good benchmark and
moving to a new variation should be approached cautiously, requiring
verification of efficacy under a variety of markets and conditions. Of
course, such caution applies to the use of any new method and some will follow
this course and others will not but that is a characteristic of the "crowd"
that makes markets.
Dimitris
Tsokakis--- In amibroker@xxxxxxxxxxxxxxx, "wavemechanic" <wd78@xxxx>
wrote:> DT:> > You say that "... oblique lines offer a
more realistic approach to Fib relations ... Fib lines should not be
static, if they express any psychological reactions, they should follow
the trend." It is not obvious to me that either statement describes
the reality. As Ara notes, the crowd controls and Fibonacci and Gann
retracement targets are often found to be important. It is hard to
imagine that the crowd can keep track of trends in their collective head
with sufficient accuracy, as opposed to a relatively simple pivot
level. Beyond that, it has been argued that retracements from pivots
are consistent with the "natural order of things" as expressed by the
Fibonacci series and logarithmic growth. Given this to utilize a
trend versus a pivot one would have to figure out how successful
pivotal retracement techniques can morph into a retracement that
follows a trend and converges with pivotal targets. If that is true,
it will certainly take a significant effort to verify.> >
Bill> --- In amibroker@xxxxxxxxxxxxxxx, "DIMITRIS TSOKAKIS"
> <TSOKAKIS@xxxx> wrote:> --- In
amibroker@xxxxxxxxxxxxxxx, "Ara Kaloustian" <ara1@xxxx>
wrote:> > Dimitri,> >
> > This is a rather ingenious piece of creativity....
in considering > the oblique
fibs...> > > > This is the first
time I have heard of them...> > >
> Wondering if this is your creation or is there a following to this
> theory / technique.> > I have
had a discussion this morning about Fib lines.> My opinion
was that the oblique lines would offer a more realistic
> approach to Fib relations [if any].>
Fib lines should not be static, if they express any psychological
> reactions, they should follow the
trend.> In the usual approach we decide one sunny morning,
for the next 20, > 30 or more bars, that the "target"
is , say, a 38% of the recent > trend. This is static and,
in technical terms, makes an unrealistic > assumption
:the support line is horizontal. We all know it is not >
true. The "targets" should change according to the evolution of the
> market.> The first, crude
approximation was to keep the linear character of >
these lines and assign to them the slope of the recent market
action.> Some next step would be to replace the
straight lines with curves, > something similar to
sigma bands etc.> This is the main concept, the rest is
AFL.> Dimitris Tsokakis> > >
Reason I ask is that I have seen the static fibs work very
> well ... > and even though it make
clear sense that the oblique one should be > better,
these things work on "herd mentality" ... so wondering how
> much of a herd there is ....> >
> > Have you been using this for some
time?> > > >
Kalinychta> > > > Ara
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