I'm sure someone has mentioned this already, but @Q3D, the Fibonacci sequence is not random as your title states. The lines plotted on your screen may have little significance to trading, but this title is difficult to anyone who has ever attended a technical job interview.
Between this thread and Q3D's previous thread, I am beginning to think his posts are random. Charts and TA do work but only BETWEEN the news. News is what usually changes the direction of the charts. So between news stories that can impact the stock is where the charts and TA work. Why? Because what else is there to go on between the related news stories? So everyone is using them at that point. Some companies seem to only have any related news once per quarter (earnings), so what else would someone base short term trade decisions on between quarters besides charts? In an absence of news, TA becomes a self fulfilling prophecy. The key is to figure out which indicators most of volume is looking at. By related news I mean anything about that company (earnings, product announcements, layoffs, scandals, etc.), anything about that companies competitors, and anything about that companies sector.
Price Behaves Randomly At and Around Moving Averages and Fibonacci Levels were not good titles so I improvised. Although the common addition of the 50% retracement into Fibonacci drawing tools suggests what constitutes Fibonacci for traders is somewhat random.
I agree with what Adam Grimes says - if you really think about it, fibo, elliott and gann are just a lot of mumb-jumbo that have made a few snake-oil salesmen rich. A similar albeit succinctly expressed point of view I found here: http://www.jltrader.com/2015/06/17/debunking-the-myths-of-technical-analysis-1-fibonacci/
Q3D, Not many people use Fibonacci levels and not many educators promote them. I don't know why but they seem to be not that popular any more. Thus, you can call it useless, random as much as you want... You will get very few replies about them. In contrast, moving averages has always been popular with those that use indicators and its something I frequently see on charts at data vendors and such. Just remember this about TA...don't use it by itself. I truly do not believe any profitable trader is using TA by itself and nothing else. TA to them is a tool with their other tools that help them make trade decisions and on any given trading day...the deciding factor to profits may be the risk management, another day it may be the discipline, another day it may be the position size management, another day it may be the TA, another day it may be the trade management, another day it may be the trade experience and even a little luck on another day. I think there are too many people (e.g. traders, educators, data vendors, charting vendors) that give an unequal amount of discussion about TA while limiting their discussion about other trading tools they're using. Thus, gives naive folks the impression that they are using TA and nothing else. Also remember it really doesn't matter if markets is random or not or random some days and not other days or random for a few hours and not random other hours in the same day... The issue is this...can you exploit such ? Do you know how to recognize noise in the markets and be discipline enough to stay away from all that random crap and the are you prepare to minimize your losses and let your profitable trade run to their targets ? Simply, you are the key to your success and failures...not your TA because its just a tool. Don't let any other guru try to convince you that you are not the key and that his/her trade methodology will fix whatever flaws you have as a trader nor will it compensate for flaws in your trading plan. Its just a tool.
I agree...TA is a tool, to be used in combination with other variables. if someone uses Technical Analysis alone...then they are a tool, for simply using that tool
> 50% retracement is nice to take profits off as a volatility stop, if you're into taking profits as a trend-trader. It's miserable trading it, but when it works, it really works. Nobody says it works all the time. You gotta work out when it's applicable and what you want to be trading. Heck, you don't need to use it if you don't wanna. Maybe not a strict fib level, but often stated as one, and you could do the 61,8% if you wanna go for golden mean. @Q3D : My rhetorical question right back to you would be, what defining role does the Golden Ratio play in mathematical deterministic chaos?
Yup fibs don't work. Indicator divergences don't work. Elliott Wave doesn't work And when they do ... well it's only because they are self-fulfilling, right? Like in this chart pic: Note the day of high down at the bottom of chart: Sept 3rd, oh yeah and the year 19freaken29. Long before most had heard of old Elliott, never mind a trading oscillator too. 100% projection of wave 1 from wave 4, 61.8% projection of wave 1-3 projected from wave 4 low ... ding, ding. BTW who is Grimes?