Apologies if my point has been made because I didn't have time to read every comment but the first thought that comes to my mind is - and I'm somewhat familiar with the Fib concept - what about the fib extensions 1.27 and 1.62 etc? Personally the only fib number I use in my trading is the 50% line and thats more of a coincidence than anything else. JMO
I only use 100% and 0% as my extreme markers (stop loss and target profit). I don't use any projections in this method. Using those requires price to go where it may have not gone before, and I only feel comfortable trading on known ground.
I've started a journal in the "Journals" sub forum. Here is a link: http://www.elitetrader.com/vb/showthread.php?s=&threadid=193086 I didn't want to fill up this thread with trades when there's another subforum specifically for journals. So this thread will be for method discussion, and that thread will be for my journal.
While I don't think Fibs are magical by any means, the fib retracement tool is all that I use to define areas of support and resistance. I picked up most of what I learned from a website ( I don't know if I can list it here, as I am new and don't know the rules of the forum), and things have gotten much better with my trading ever since applying what I learned. If anyone is interested, here is the basis of how I draw fibs and how I use them: 1. I only trade the ES, as it's the instrument I am the most comfortable with 2. I only use the 50%, 61.8%, and -23% (for profit targets). 3. I draw my "fibs" on a 15 minute chart 4. I look for reactions at 50% lines almost exclusively. If I see a reaction at that level then I will only look for longs during the day until the -23% target of that measured move is hit via price. 5. If a -23% target is hit, then I draw the next measured move from the 50% bounce of the last move, to the new high or low. 6. I sit and wait to see what happens when we get to that price, if all of my criteria for entering a trade is met, I will enter the market with the profit target being the next -23% line. 7. If a -23% is hit,and price continues in the same direction without a proper retracement, then the next measured move is actually drawn from a swing HIGH to swing HIGH, or swing LOW to swing low, depending on the trend. 8. If a 61.8% line is pierced by 3 ticks or more, then I anticipate that we can pull back to the 50% of the entire series of moves, so I will draw up the next counter trend retracement and anticipate a reaction there. 9. My entry criteria is based off of NYSE TICK patterns, and that's about it. Here are examples from the past 2 weeks of price action on the ES. This is a 15 minute Globex chart. Also, if it is allowed to credit the website that I learned this, I would like to, as the guy that owns the site deserves the credit. I hope this helps! p.s. of course there are other rules and nuances, but this is the basic idea.
fibs rule. look into fib zones created by multiple fib overlays. fibs need to be combined w/ other indicators too for signal strength. use them like other pivots. so many other traders use them in that like other indicators there is always interest in the fib levels especially on the larger time frames.
Mar 11 ES full day This is how fib believers are born. (i'm being slightly sarcastic) Like anything in trading, this junk works so well sometimes, its navigating the times it doesn't work thats important. <IMG SRC=http://www.elitetrader.com/vb/attachment.php?s=&postid=2766940>
lol nice pictures; good to see you playing with your scrapbook while taking a break trading your demo account; here is something for those who trust in other people's research. you will wonder whether to cry or laugh at yourself after seeing this. http://www.youtube.com/user/kiranjicom#p/u/69/j8cK1k8557U