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List members,
Fibs are a lot of fun, and can be very accurate and consistent. But
not on their own! You can't just blindly trade Fibs, you need to
combine some lagging indicators..
Fibonacci gives you a look into the future. They tell you where
future support and resistance is, BEFORE price gets there. This
is very powerful. But to the novice, it is very dangerous too. Novices
are usually wishing for a magical indicator that will easily tell them
when to get in and out.. Hehehe..
As with ANY trading tool, you will find they work sometimes, but
not others. How do you decide when to believe them?
After years of studying and applying, I can say that this is a
learnable skill and that you can become very good at it. But don't
expect a computer to figure it out and make decisions for you.
It would take a lot of explaining, but here are some pointers:
1) Trade only with the trend, OR with a good directional pattern.
(directional patterns can over-rule trend, actually predict a change
of trend before it happens).
2) Get good at watching the MACD and Stochastic in different
time-frames. This will tell you exactly which fib level is most
likely to turn price.
3) Give preference to trades which put your entry or stop in
an area of Confluence or Agreement (some people call this
clustering).
4) Employ entry techniques which reduce the need for you
to guess! Enter when a Fib level is actually supporting
or resisting, not before. This is not essential, but is highly
recommended for those who are learning Fibonacci techniques.
There are more advanced techniques to make your win-loss ratio
really impressive, but you're not going to learn all of those via email..
The above is a good start. With some study and experience you
can boost your performance with Fibonacci techniques.
Years ago I did a web-based survey, asking traders why Fibonacci
techniques work.. The results were interesting.. What is important,
is that they work.
-Neal.
At 03:13 PM 5/16/2001 +0000, you wrote:
>To me, there are two practical problems with fib #s on their own: 1)
>lack of consistent precision -- people still put stops just beyond
>them, tempting the boys to run them when they can. So while they are
>sometimes precise enough to be useful, it isn't consistent. Also,
>there are times when log scale works and times when lin does. 2) How
>do you decide which fib # is going to work? Sometimes clusters help,
>but not consistently.
>
>I have come to respect angular geometry techniques like Andrews more
>than fib for turning points. Much more precise. Amazingly, there is
>usually an Andrews reason for those turns just above, just below, or
>nowhere near fib #s. I still look at fibs, but as a secondary
>consideration.
>
>I don't know how this could ever be tested other than manually
>though, not in TS anyway. The code for the best fit for Andrews
>would be pretty darn big.
>
>Chris
>
>
>--- In realtraders@xxxx, "Dan Harels" <harelsdb@xxxx> wrote:
> > This is directed to Research, however, I encourage others with
>insights to
> > reply.
> >
> > In a previous post, Research indicated that he is fond of figuring
>things
> > out and that a good share of his trading profits go towards
>computational
> > power. Mr. Research has established his credibility in my mind and
>I am
> > curious if he has performed any studies related to the statistical
>validity,
> > from a trading point of view, of Fibonacci retracements and
>expansions. Any
> > information he cares to share on this subject will be appreciated.
> >
> > Thanks,
> >
> > Dan
> >
> > _________________________________________________________________
> > Get your FREE download of MSN Explorer at http://explorer.msn.com
>
>
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