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1a2b3cppp
Registered: Sep 2008
Posts: 2636 |
02-27-10 03:00 AM
Since fibs are voodoo and you have no way of knowing if price is going to retrace to the 33, 50 or 66 line (or somewhere else completely random, since fibs are just as good as completely random lines, or somewhere else entirely, since price movement is random), I propose the following method of trading them:
Draw your diagonal line to establish your 3 fib lines.
Wait for price to retrace to 33 line. Buy. If price goes back up, you win.
Wait for price to retrace to 50 line. Buy more. If price goes back up, you win.
Wait for price to retrace to 66 line, buy even more. If price goes back up you win.
Stop loss: if price retraces to the 0 line. Come on, don't be a dumb noob and hold your losers forever. This is a definite hard loss.
Basically you're averaging down, buying at each fib line, and then hard stop lossing at the 0 line, and selling at the 100 line.
(In before people bitch about averaging down).
COME ON GUYS!!! PRICE RETRACES AT FIB LINES, doesn't it? Fucking books have been written about this shit trying to come up with explanations for "natural harmonics" and other such hocus pocus that makes no sense yet we can all draw the conclusion that ZOMG PRICE REVERSES AT FIB LINES.
If price actually reverses at fib lines, then this method is the holy grail.
If price even reverses at fib lines most of the time (come on, even natural harmonics of teh natures can't be right all the time), this method will still be profitable.
If fibonacci lines in trading is a bunch of hocus pocus BS then this method won't work.
This should be easy enough to backtest.
Oh wait, no it won't, because even knowing when and where to draw fib lines isn't specific. I think they just draw them after the fact where it looks good in order to sell their books.
Discuss.
For bonus points, trade in another account in the opposite direction (you'll have to work out the position sizing yourself, I can't give everything away) and make money regardless of which direction price goes.
(In before people who don't get it complain that trading in both directions at the same time is the same as being flat)
This is the best and only legit thread about Fibonacci lines on this entire forum.
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1a2b3cppp
Registered: Sep 2008
Posts: 2636 |
02-27-10 06:01 PM
Only 1 reply?
I thought ET LOVED magical fibonacci threads. I thought I would wake up this morning and this thread would be on page 2 or 3 (with 30 posts per page, not the ET default). I thought half of the replies would be about how I was wrong, 25% of them would be about how fib numbers are magic universal harmonic powers, and 25% would be about how being long and short at the same time is pointless.
To be honest, though, I think this method would work better if you used a different % for the 3 entry lines rather than 33, 50, and 66%. But then it would no longer be fibonacci and no one would pay attention to it. 
OTCkrak, what's wrong with this post? I've laid out a more complete method than 99.9% of all the other threads. I also didn't use any doublespeak or JH gibberish.
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konviction
Registered: Dec 2009
Posts: 1360 |
02-27-10 07:35 PM
its 38.2, 50 and 61.8. not 33, 50 and 66. I guess trend lines, channels, wedges, triangles, flags, pennants..thats magical too right?
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1a2b3cppp
Registered: Sep 2008
Posts: 2636 |
02-27-10 10:02 PM
Quote from konviction:
its 38.2, 50 and 61.8. not 33, 50 and 66.
Oh. I knew it was something like that. That's putting the 3 lines even close together than what I had. Close enough really.
I guess trend lines, channels, wedges, triangles, flags, pennants..thats magical too right?
Trendlines are open to interpretation as to how exactly to draw them, but they're based on fact. Price went here, then here, connect them.
Channels are just two parallel trendlines. When that happens (rare), that's fine. Although there's no guarantee that price will stay within them.
Wedges, that's just Highs and Lows getting close together, right? That's a PA pattern. So are Triangles and Flags and Pennants.
Fibs are magical because they're based on some random calculation that has nothing to do with trading, that someone applied to trading by thinking that ZOMG TEH NATURE OF TEH UNIVERSE IS CONTAINED WITHIN!!!!
In other words, all those things you mentioned come from trading and apply TO traiding.
Fibs don't.
Fibs are the same as this:
Increase by 3. 3, 6, 9, 12, etc. Now divide each number by its subsequent number. You now have .5, .66, .75. Now, let's apply these numbers that I randomly got to trading because THEY ARE MAGICAL!!!!
Draw lines at 50%, 66%, and 75%. TRADING MAGIC POWERZZZZZ!!!!!
Look, if they work consistently, then do whatever. I don't care.
All I'm saying is I just gave a better method for fibs than any that anyone has been able to quantify in the entire history of this forum.
EVERY fib explanation I've heard basically boils down to:
- sometimes price reverses at the lines, although there's no way to predict which line, if any it will reverse at, or how high it will go once it does reverse.
It was then accompanied by some awesome after the fact charts where it worked perfectly.
Sounds pretty vague to me.
Sometimes price will also reverse at my magic .5, .66, .75 numbers. HOLY SHIT THEY ARE MAGIC!!!! But sometimes they also won't reverse at my numbers because HOLY SHIT PRICE IS RANDOM.
If price consistently reverses at fib lines more frequently than at any other place as all the fib nazis seem to claim, then the method in this thread will make you a profitable trader (especially if you play both sides at the same time).
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TraderZones
Registered: Mar 2008
Posts: 6707 |
02-27-10 10:09 PM
Quote from 1a2b3cppp:
Since fibs are voodoo and you have no way of knowing if price is going to retrace to the 33, 50 or 66 line (or somewhere else completely random, since fibs are just as good as completely random lines, or somewhere else entirely, since price movement is random), I propose the following method of trading them:
Draw your diagonal line to establish your 3 fib lines.
Wait for price to retrace to 33 line. Buy. If price goes back up, you win.
Wait for price to retrace to 50 line. Buy more. If price goes back up, you win.
Wait for price to retrace to 66 line, buy even more. If price goes back up you win.
Stop loss: if price retraces to the 0 line. Come on, don't be a dumb noob and hold your losers forever. This is a definite hard loss.
Basically you're averaging down, buying at each fib line, and then hard stop lossing at the 0 line, and selling at the 100 line.
(In before people bitch about averaging down).
COME ON GUYS!!! PRICE RETRACES AT FIB LINES, doesn't it? Fucking books have been written about this shit trying to come up with explanations for "natural harmonics" and other such hocus pocus that makes no sense yet we can all draw the conclusion that ZOMG PRICE REVERSES AT FIB LINES.
If price actually reverses at fib lines, then this method is the holy grail.
If price even reverses at fib lines most of the time (come on, even natural harmonics of teh natures can't be right all the time), this method will still be profitable.
If fibonacci lines in trading is a bunch of hocus pocus BS then this method won't work.
This should be easy enough to backtest.
Oh wait, no it won't, because even knowing when and where to draw fib lines isn't specific. I think they just draw them after the fact where it looks good in order to sell their books.
Discuss.
For bonus points, trade in another account in the opposite direction (you'll have to work out the position sizing yourself, I can't give everything away) and make money regardless of which direction price goes.
(In before people who don't get it complain that trading in both directions at the same time is the same as being flat)
This is the best and only legit thread about Fibonacci lines on this entire forum.
there have already been studies on Fib levels and they were found not to be any more likely than other numbers. OF course, no one ever posts legitimate studies than demonstrate the outperformance value of studies.
Of course, the Fib Defenders than tried to go after the study. When in doubt, obfuscate.
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