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At 11:00 AM -0400 6/21/00, TradeWynne@xxxxxxx wrote:
>I agree that the exact science of fibos in the market is not clear
>cut, but you only need contemplate your navel (we are about 62% from
>the navel down to our feet, 38% from the navel to the top of our
>heads), or the structure of your hands and arms (each joint relates
>to the next by the fib ratio), to see the growth patterns of the
>Universe reflected in Man. It is a small leap to assume the market is
>a reflection of us.
I did not intend to say that using fib ratios does not work in market
pricing. It often does, particularly short term and in certain
markets, especially bonds. I just think that if it works, it is
because people think it will and make it self-fulfilling. Nothing
wrong with that, of course.
But for it to work, the fundamentals must also be there to some
extent. If the market is overbought and about ready to move down,
then it may tend to do so at a fib number.
As for using them for longer term forecasts, I have never seen any
consistent way to make or test such forecasts. As someone sort of
said "we correctly forecast 10 of the last 3 bear markets". We all
know that only a small percentage of the "experts", the market
newsletter writers and mutual funds, beat the averages. (But you
would never know it from their advertisements.)
At 11:39 AM -0500 6/21/00, Jimmy wrote:
>In my own trading I find when I am really on target it is more
>discretionary than technical. I find good technical rules to apply to
>trades after the fact. The human brain has capabilities beyond our
>conscious ability to understand. If I can remove the fear and greed
>from my mind then successful trades come easily. I know enough about
>technical analysis to find a good reason for what I did in retrospect
>though I had no clue at the time. Sometimes I know to get out or in
>and quickly find a good technical reason to do so other times I just
>take action then find a reason the rest of the time fear and greed
>take over with exactly the results I deserve.
I don't quite follow the thought that you could find good technical
reasons after the fact. It sort of seems as if you mean you can see
head & shoulders, pennants, RSI crossing under 20, and those sorts of
"technical" patterns after the fact. I firmly agree that if you put
enough indicators on the screen you can always find two or three that
will confirm anything you want to look for.
What I meant by "short-term patterns exist that can be used to
extract a profit from the markets" was not that sort of thing. I was
referring to any characteristic that you can write a program to find
that signals an upcoming price move with some statistical
significance as provable by backtesting. And I agree that there are
many more such characteristics that the human brain can find that are
very hard for a computer to "recognize".
Bob Fulks
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