|
PureBytes Links
Trading Reference Links
|
I'll 'fess up - I've been using Fibonacci ratios in trading stocks,
funds, and all manner of commodities ever since a sugar trader taught me
the ropes of using Fibonacci retracements and projections nearly 15
years ago. A year or so later, I bought Joe DiNapoli's workshop to hone
my skills and learn the use of Fibonacci ratio confluence i.e.
clustering of Fibonacci points projected from different structures
and/or time frames. More recently, I've spent a good deal of time
studying Bob Miner's book and workshop which further quantifies the
typical Fibonacci price and time relationships found in each type of EW;
again information which I have found quite useful in my trading.
Now, I will freely admit that the use of Fibonacci ratios is part
science and part art form, probably not a whole lot different than using
any oscillator (stochastics, RSI, etc.) effectively. I suppose that
ratios a few points off the Fibonacci ratios e.g. .35 instead of .382
would be just as effective (price rarely stops precisely on the exact
Fibonacci number), however I would suggest that the progression of
numbers does have value and since that progression is based on naturally
occurring phenomena, I don't mind hanging my hat on it. Consider that
the progression of retracements is really, like an oscillator, a
momentum measure - a deep counter-trend retracement indicates that the
primary trend has lost momentum, while a shallow retracement indicates
that the primary trend has strength. For indicator users, not unlike a
30% stochastic retracement compared to a 70% stochastic retracement.
In combination with retracements, I use Fibonacci expansion ratios of
.618 for w5, 1.00 for w.C, and 1.618 and 2.618 for w.3 as profit taking
targets. I will say that my most profitable trades are those where I
exit on a 1.0 or (especially) a 1.618 expansion instead of waiting for
price action to take me out at my trailing stop. Also, I am watching for
confluence of expansion levels from several structures as well as
retracement levels. Once again it is part art as I watch the overall
price pattern as each level is reached to see if it has enough "oomph"
to carry on to the next.
Finally, I will bring this to a close by offering the observation that
Fibonacci levels are widely followed by other traders, especially in
futures where a rally into a 1.618 expansion is certain to trigger stop
orders intended to exit positions - the reason why I fade my exits by a
couple of ticks. When a large number of your competitors are watching a
predictable set of numbers, it does not hurt to know what those numbers
are.
Earl (hanging on to his Fibonacci tools)
----- Original Message -----
From: "Kasanjian Research" <ed@xxxxxxxxxxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxx>
Sent: Saturday, October 21, 2000 4:20 PM
Subject: RE: [RT] Software - Pattern Smasher
> Regarding the use of fibo ratios for making projections. I think it
is a
> good example of the idea that you get what you look for. The theory
is
> convincing. After all, these numbers are found in nature and it is
logical
> to assume that they can be found in the charts as well. We all know
that
> you can find them all over the place in the charts. The truth is that
you
> can also find just as many cases using arbitrary numbers. Try using
0.58,
> 0.42, 0.65 or anything else.
-------------------------- eGroups Sponsor -------------------------~-~>
eGroups eLerts
It's Easy. It's Fun. Best of All, it's Free!
http://click.egroups.com/1/9698/0/_/152424/_/972223934/
---------------------------------------------------------------------_->
To unsubscribe from this group, send an email to:
realtraders-unsubscribe@xxxxxxxxxxx
|