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Donald Thompson wrote:
>
> The only thing that hasn't been brought up is that before there were
> fibinaccii trading systems..and technical analysis practiced in a mass
> cultural way. I believe that I would be correct in stateing that
> historically the "market" held to these relationships. I think that was
> the point of Prector's book in validating them was that these
> relationships were found at critical juctures of the markets.
>
> Don
Don,
This is an interesting point, which can be dangerously misleading.
In the past, I have run tests on statistical relationships of FIb
ratios in the market. I found that no Fib ratio value held a
major signifigance. this meant that no Fib value could be
mathematically defined as having relevance.
If this was the case, then the only recommendation you could make for
the use of Fib ratios in today's markets, is the psychological
significance, because so many subscribe to the methodology.
Well, if THAT is the case, then how can one explain Fib turning points
before the use of Fibonacci became popular?? :)
Enter Random statistical analysis. Take three popular Fib values, like
1.618, .618, and .314. Apply them to any market of the past, and
indeed they do seem to work.
NOW, do the same thing with ANY three numbers from ANY ratio set.
These numbers could be derived using Gann, or your laundry list,
for that matter. :) VOILA, they work just as well!!
this suggests that past performance of Fib ratios before Fibonacci
became popular, is a random occurence.
Before Fib followers freak here, I would like to state that this is
what *I* found to be true. To each trader his own. :)
Walt Downs
CIS Trading
http://cistrader.com
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