Dow Theory = Crap Theory ??

Discussion in 'Trading' started by dozu888, Jan 4, 2002.

  1. dozu888

    dozu888

    For long time I have had doubt about 38%, 50% and 60% retracement theory.
    Anybody out there trading with Fib retracement, do you set buy limit at retracement whenever there is a initial run, or do you wait for it to form a base around 38-62% retracement area?

    I just put together some C++ coding to run through 2 years of NQ data. If a limit order is put in, when ever there is a run-up (reverse if there is a break-down), without waiting for a low risk set up, the result shows there is no edge whatsoever.

    But if you wait for a low-risk set up, ( a narrow range, or a triangle for example), I think anywhere you take the trade is good, without considering the amount of retracement.

    Please provide any input you may have.

    I will be glad to send you the C++ code and the NQ data to run the test, and hopefully you can find a bug in my logic and successfully defend Charles Dow.

    I think Thomas Edison said after hundreds of failures in looking for a material for light bulb filament.... now at least I know they don't work :D
     
  2. i would like to share with you my extensive analysis of fib retracements.. basically, i rigorously backtested the actual DOW over a period of 12 years and the results speak for themselves.. =)

    -qwik
     
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  3. rickty

    rickty

    dozu888,

    I'd be interested in looking over your code and data.

    tymerski@ee.pdx.edu

    Thanks,
    Richard
     
  4. hey man =)

    i was joking.. the 12 year monthly chart of the DOW bouncing at its 38% retracement was supposed to be humorous.. guess ill have to do some more backtesting on my humor.. anyway =)..

    -qwik
     
  5. Wake me up when Dow Theory is inclusive of Nasdaq, SPX and SOX
     
  6. jem

    jem

    qwik it was pretty funny. I was expecting tradestation results and complicated rules. By the way I would like to see how a test could be designed because DiNapoli said he couldn't desgin a Fib system. I bring his name up because I thought his book was pretty good.
     
  7. Cheese

    Cheese

    It might first help to get to the nub of what is Dow Theory: "An uptrend is defined by prices that form a series of rising peaks and rising troughs (higher highs and higher lows). In contrast, a downtrend is defined by prices that form a series of declining peaks and declining troughs (lower highs and lower lows)." (StockCharts.com)
    :)
     
  8. I agree... DOW theory has little to do with fibbonacci retracements... saying that fibonacci is crap.. well that´s another story...