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Ton,
I'm surprised that you would be so critical of fib levels when they are so
heavily used in Elliot wave analysis, which I believe you showed an interest
in early this year. ELwave, also a product of the Netherlands, uses it
extensively, which I've integrated into my trading systems. (Side Note: An
engineer that works for me is from that area - Delft I believe) I'm always
skeptical of University studies which are performed by professors that have
never traded in their life.
Also take a look at "Dynamic Trader" - Rober Miner. I've never used his
software or method, but have read his book. He's considered a super-trader,
much more that I can say for myself. But I'm sure he would disagree with
your comments. Although not objective by any means, the securities I follow
rarely pass through a significant fib level without some sort of bounce. I
believe that these fib retracements have appeared in markets well before
Charles Collins started using them in Elliot Wave analysis, which Elliot
didn't originally use, which is well before computerized system traders.
I certaintly don't believe there is any magic in fib ratios, but there does
appear to be tendencies as a result of large numbers of people interacting in
the makets. It seems to me that is that there would be some tendencies for
interactions of traders to result in some repeating patterns, ie. people make
the same mistakes over and over. The ones that learn from their mistakes are
replaced by new players that make the same old mistakes. The result is that
there is always a minority that is smart money and the majority that is not.
(eg. there is always going to be a certain percentage of bad drivers out
there) Another way to say this is that markets are competitive. I doubt if
a handful of system traders turn liquid markets by themselves at a 62%
retracement level. But it could be that by the time a 62% retracement has
occurred, most sellers have already bailed, ie. mostly buyers left.
Kevin Campbell
In a message dated 5/16/99 5:12:36 PM Central Daylight Time, anthmaas@xxxxxx
writes:
> Subj: Re: re:gann
> Date: 5/16/99 5:12:36 PM Central Daylight Time
> From: anthmaas@xxxxxx (A.J. Maas)
> Sender: owner-metastock@xxxxxxxxxxxxx
> Reply-to: metastock@xxxxxxxxxxxxx
> To: linda@xxxxxxxxxxxxxx (Linda Swope)
> CC: metastock@xxxxxxxxxxxxx (Metastock-List)
>
> You realy want to know this?
>
> Uhh, well you will have to read up on this GANN or Fibonaccy guy to get the
> drift of their
> writings.
>
> The items you highlighted are mainly my critisism to those who want others
> to believe
> that a few fantasies/theories originating from some doubtfull ancient
> history do also
> apply nowadays, on humans or on humans in the financial (stock-) markets.
> Whatever the geek(Fibonaccy) or the GANN-tastic were on about is not clear
> to me,
> except that they were gifted with a lot of fantasy and had a lot of time to
> spare.
>
> To start with Fibionaccy, this guy has lived somewhere back in the 12th
> century(forgive
> me if it is the wrong century, as I do not keep track of it).
> The guy had come up with a number-sequence-theory(or fantasy) that he has
> found to
> be applicable for repetative mathematical tasks, and that was also taking
> place in
> those days. Whatever went on in those days, I do not know, i.e. I was not
> there and
> I wasn't tought on it at school. Besides, whatever mathematics has to do
> with human
> behaviour, tho, I do not know. What I do know, is that the 2 should not get
> mixed up.
> Also, the sequence has not done anything for or in this world. It is much
> like other
> (historical) believes and religions, lot of talk no deeds.
> Having also been an engineer in large buidings, houses, technical
> installations and
> some internal architectures, you can be most certain that I have never been
> able to
> use this sequencing in the trade(s), and I would not recommend you or
anyone
> to build
> your house's fundament and internal structure on it either!!!!!, eg see
also
> the
> examples given below.
> The decimal countings, eg 10, 20, 30, 40, 50......and their halves
> 5,15,25,35........came
> into the world after the Golden 17th century and have served mankind for
the
> better.
>
> Let's use the Fibonaccy sequence in a few examples (human behavior &
> resistance):
> 1. Buy a car and start hitting the road. Do you slowdown at certain milages
> because that is
> your behaviour or do you do so because it is common sence not to speed
> (or tickets
> will be flying in) or that there is a great wall ahead of you? When
will
> you reverse(slow-down)?
> Are they at 23.4%, 38.6% or 63.6% ? Nada, niks, eg thus nothing of this
> non-sence.
> 2. Buy a computer and check on the time you spend per day on using the it.
> Are they at 23.4%, 38.6% or 63.6% ? Nada, niks, eg thus nothing of this
> non-sence.
> 3. Go to a swimming-pool and take a dive in the water. When will you
> slow-down?
> Are they at 23.4%, 38.6% or 63.6% ? Nada, niks, eg thus nothing of this
> non-sence.
> 4. In your memory go back to your school-days. In the classes did you find
> resitance?
> Are they at 23.4%, 38.6% or 63.6% ? Nada, niks, eg thus nothing of this
> non-sence.
> 5. Go to work each day. On what days do you find resitance?
> Are they at 23.4%, 38.6% or 63.6% ? Nada, niks, eg thus nothing of this
> non-sence.
>
> However, many financial educating books (yes you will not believe it, but
> those on T.A.
> as well) assume that the guy has also found this sequence to be true on
> human behaviour
> (???? in those days, without computers being able to check on it ?), and as
> such and in
> writing on and supposibly teaching you, the human, the behaviour in the
> financial markets
> while reading the books) these books do find this sequence "automaticaly"
> and to be
> applicable in the human behaviour (in general as well as in human
behaviour)
> on the
> stock markets or on the financial markets.
>
> Many studies to this effect, have proven these books naturaly to be wrong,
> actualy litterly to
> be just way-off (hoaxes).
> The Uni of Amsterdam have done a study into repetative retracements and
> their levels, taken
> form previously made highs and lows. The outcome to this was that, if there
> is a sequence
> (or any cycles) to this effect present in the financial markets, these to
be
> the regular decimals
> 5,10,15,20,25,30,40,50,60,70,75,80,100 percentage retracements, where also
> the dividing
> 1/3, 2/3, 3/3 and the 1/4, 2/4, 3/4, 4/4 were of the most frequent
> re-appearing nature as well,
> and that pure rounded figures, eg $50, $100, $150, $200, $250 or 1000,
2000,
> 2500, 3000
> etc. etc. were truely human price(points) barriers as well.
>
> Other studies have also made clear that a lot of mechanical system-traders
> have adopted
> the Fibonaccy-ranges in their trading-systems, eg the computorised
> mechanical trading-systems.
> These ranges levels are then also naturaly the levels in between the
decimal
> numbers ranges
> given above, and will also, naturaly (depending on the state of the market)
> fluctuate from
> time to time, and from trader to trader. As these ranges are also decimal,
> adopting it in their
> computorised system-trading is quite natural, as lines for their targets
> (buy or sell) must be
> drawn somewhere (i.e. statistical lines).
> The most effective though, for retracements, where the latter mentioned
> market divisors
> 1/3, 2/3, 1/4 , 2/4. From studies made to their origin, they have been also
> used by the same
> 17-centuries trailers' Captains sailing the world to agrree on arrival of
> their cargos.
> Actualy, they would give the owners a guarantee(option) that their goods
> would arrive,
> contrary they would also give the future owners unguranteed the assurance
> that their future
> goods would arrive. Naturaly, they have had to do this on certain terms or
> other with a feather
> written down financial conditions (1/3, 2/3, 1/4, 2/4) and as such the
first
> options were born.
>
> For trading the markets, go with the rest, eg use the traders tail(s), as
> they also make or brake
> the market, only in the very short term perspective. But do not come back
> crying if it did not
> workout for you, as the markets will tell what will happen next, not the
> traders or their Fibonaccy
> retracements.
> For investing on the markets, skip the fact that you've ever heard about
the
> Fibonaccy goof
> and at the most try to read on up on GANN, but since it involves a lot of
> "fantastics" too, then
> do practise it first for real or better omit, it will be your best way out.
> There are plenty of other,
> better and true sensible tools to use to enable you to read the markets.
> Note that even though,
> you are able to read the market, there is no guarantee that your readings
> will be 100% proof.
> In that, the market gives, takes and decides.
>
> Most of these F & G tools are buid-in in MetaStock, but cannot recall
anyone
> using them
> consistantly AND providing others with clear evidential means (eg to
> convince others, enough
> to also start using them).
>
> Regards,
> Ton Maas
> ms-irb@xxxxxxxxxxxxx
> Dismiss the ".nospam" bit (including the dot) when replying.
>
>
> ----- Original Message -----
> From: Linda Swope
> To: ms-irb@xxxxxx
> Sent: zondag 7 maart 1999 3:17
> Subject: re:gann
>
>
> Hi!
> Read your post re:gann.
>
> Could you elaborate on:" Much like the fibionacy theories, they miss out
> on markets' bindings
> too much too make sence, eg financial, economical, human or otherwise
> (let alone common sence)."?
>
> And:"But not prior to the
> last 2-3 years tho, and therefore there goes these type of theories,
> because of the missing bindings, no guarantees can be given that
> the markets will relive these type of traders' fantasy theories over and
> over again. In that respect, swamps and quick sand are more of the
> same solid grounds to build a house on."?
>
>
> I am a new student of the psychology of tech. analysis. Nothing formal,
> just trying to add a big chunk of psych to my trading plan. I'd love to
> hear more of what you mean here!
>
> Thanks,
> Linda
>
> Swope's Mountain Photography
> http://www.swopephoto.com
> linda@xxxxxxxxxxxxxx
> Climb the mountains & get their glad tidings: Peace will flow into you as
> sunshine into flower; the winds will blow their freshness into you & storms
> their energy, & cares will drop off you like autumn leaves. John Muir 1838
-
> 1914
>
>
>
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