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At 01:53 AM 9/5/98 EDT, you wrote:
>In response to some of the posts on this list, I spent some time fooling with
>the Fibonacci retracement tool built into Metastock. I dismissed it in the
>past without looking at it, but, it appears there may be something to it.
>Does anyone know the theory behind Fibonacci numbers as they relate to
>securities? Do they work just because the technical analysts think they are
>going to work and act accordingly or is there more to it than that?
>
>Then again, maybe it doesn't matter why they work as long as they work.
>
>Thanks,
>
>Dan
>Pocatello, ID USA
>
Dan, no-one really knows why Fibs work. If we knew, everyone would use them,
so they would no longer give me an edge in the markets, so I'm not looking
forward to the day when we figure it out. Since we don't really know, it
takes a leap of faith, which stops most people from using them, just the way
I like it.
I studied some old charts printed in the old classic book "Technical
analysis of
stock trends" by Edwards and Magee. Those charts date back to before Fibs were
popular, before computers and charting software. Fibs worked great in those
times!
That's before they could have "worked because they are self-fulfilling"..
There are more advanced Fib techniques than the simple retracement tools in
charting packages, which give me a further edge. Follow the link at the bottom
of this message to explore those techniques.
I once wrote a page or two on why I think fibs work, read it here:
http://www.halcyon.com/neal/fib.html
Best wishes,
-Neal.
---
DiNapoli Fibonacci techniques -
http://www.fibtrader.com
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