Finally, Fibonacci in Perspective

Discussion in 'Technical Analysis' started by Thunderdog, Nov 12, 2003.

  1. T-REX


    Fib is exactly what it is a big fib.

    no truth to it at all except measuring the possibility of a retracement/decline.

    #31     Nov 14, 2003
  2. In fact, according to a mathematician that has written a whole book dedicated to the Golden number, the Mysticism about the Golden ratio appeared much later than during Fibonacci life (he was born around 1200), it was due 3 centuries (1500) later to a monk and mathematician Pacioli who wrote a book untitled "Divina proportione" which has a great impact at that time. That Monk had many friends among artists who were using the Golden ratio in their paintings. But it was then forgotten again - except by artists of course - until about last century when the Golden number get famous again thanks to architect like Corbusier. To prove that the Golden number was not so famous before at the beginning of the century in dictionary (Larousse which is the reference in French culture) the Golden number was designating the 19 years lunar cycle :D. It is also as mystic but as far as I know there is no link between the two kind of significance of Golden number one that designate the Divina Proportione and the other the Lunar Cycle. Later the same dictionary changed its definition to (SQRT(5)+1/2) :).
    #32     Nov 14, 2003

  3. Harry,

    You are correct about Fibonacci and the rabbit business. Although I had heard about Fibonacci earlier, I first read about him in Bernstein's "Against the Gods: The Remarkable Story of Risk." The only reason I cut and pasted the Innerworth column was because the 2nd half of the column addressed the fact that Fibonacci's number sequence had no logical application in trading. I just happen to agree with that view.


    #33     Nov 14, 2003
  4. mojo59


    In the introduction to his book, Joe Dinapoli talks about Professor Herbert Riedel writing an article in 1989 in Technical Analysis of Stocks & Commodities magazine. His study proved that applying fibonacci logic to the market didn't work. Dinapoli goes on to say that this was wonderful news because the number of people trading fibs was already making it more difficult to trade the method successfully.

    So T-Rex and others, nope it doesn't work, never has and never will so stay away from it. Leave me to blow out another account. I'll never learn I guess.
    #34     Nov 14, 2003
  5. newtoet


    It certainly is no two bar chucky system.


    #35     Nov 14, 2003

  6. Hi mojo,

    Please forgive me, but I think Mr. Dinapoli is a snake oil salesman and a spin meister. I believe that Fibonacci numbers are difficult to trade successfully because they do not really work. For anything so "out there" to even have a remote chance of working at least some of the time, I think that it would have to be on the basis of a self-fulfilling prophesy. This would suggest that more, not fewer, people would have to subscribe to the belief that it works. Otherwise, it just gets way too mysterious for me. Even so, I firmly believe that the only way people actually make money from Fibonacci numbers is by selling books, courses and seminars on the subject.

    Mojo, only you know if you are actually making money consistently using Fibonacci. And only you can determine whether the Fibonacci component is an integral part of that success or whether it is incidental, sort of like a "non-medicinal" ingredient in a pill. Stated differently, are you sure that your success is not more the product of risk control, money management, and other elements of a good trading plan? I hope you have the intellectual honesty to address that question objectively. Whatever the case may be, I appreciate your friendly discourse, and I wish you well.


    #36     Nov 14, 2003
  7. mojo59


    Hi Thunderdog,
    I think all of our successes rely on risk control, money management and a good trading plan. I am not going to knock what anybody does here as long is its successful. No two traders trade the same way and that's what makes this interesting. All I can say is this method works for me and other like minded traders that I chat with during the trading day. I feel to dismiss something without exploring it in a little more depth and attacking a well respected author is close minded. Good luck in whatever method you're using Thunderdog.
    #37     Nov 14, 2003
  8. It is true that the justification given by most traders are unscientific - not to say ridiculous. But there is now some scientific researchers like Didier Sornette and Jean Philippe Bouchaud - IBM laureate of young Researcher 10 years ago - who said in "Stock Market Crashes, Precursors and Replicas":

    "It is intriguing that the log-periodic structures documented here bear some similarity with the "Elliott waves" of technical analysis [citation Elliott Wave Principle by Frost and Prechter]…. A lot of effort has been developed in finance both by academic and trading institutions and more recently by physicists (using some of their statistical tools developed to deal with complex times series) to analyze past data to get information on the future. The "Elliott wave" technique is probably the most famous in this field. We speculate that the "Elliott waves"…could be a signature of an underlying critical structure of the stock market."

    I myself didn't believe in Fibonacci and Elliott Wave since as I said my model didn't make any ADHOC hypothesis about them so it was a surprise for me to discover that there was a link with what I used to look at very suspisciously :D.

    #38     Nov 14, 2003
  9. interesting how many closed minds there are out there regarding this issue. whilst fib isnt the be all and end all it helps me trade the ES with uncanny accuracy giving low risk entries on the short and longside. i use it for indices as there are less outside influences pushing the numbers than individual stocks. it is simply amazing how many times a range from peak to peak retraces 50 to 62% of the range to then overshoot the previous high by 38 to 50% of that same range . the current peak to peak range is 1031 to 1074 . the high was just short of the 38% extension of the previous range . the 50% retracement of current range is 1052.5 with the 62% level at 1048 , lets see what happens as this pans out . i think we will find that this pattern occurs over and over. now when the retracement levels dont hold as support we go to longer time frame fib levels being 1/4ly , 6 monthly and yearly to find the next fib support levels . have a go instead of bashing it , put some fib fans on charts and see what you find . it may surprise many of you . there is more to my trading methods than fib but i'll tell you it makes up the basis of it. i use no MA's RSI etc. looking forward to some of you opening your minds to it .

    cheers bris
    #39     Dec 7, 2003
  10. cosmic


    Do you also use Fib Time Cycles?

    Interesting clusters form both in Price & Time. But I also think Price is more reliable as Time in case of clusters.

    But to support your post: Fib does have values, its just a very practical tool from you box to stay in contact with your market.

    Do you ignore spikes when applying Fib ratios? Sometimes this will give more accuracy for the groth process...

    #40     Dec 7, 2003