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Fibonacci

 
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radiojj

Fibonacci

I like experimenting with different indicators but I've always felt like with most indicators I was trying to drive a car while only looking in the

rear view mirror.  I hope that makes sense.  Looking backwards doesn't help you know what the future looks like.  Of course looking backwards or

to the left helps you see previous support and resistance levels which is helpful as you place trades in the here and now.  One of the reasons why I'm

working on my fibonacci proficiency is because it seems to be a forward looking indicator, helping you know where retracements may stop and turn

around so you know where to place your trades.  Of course nothing is fool proof but fibonacci seems to me to give you more of an advantage and

any advantage we can find in trading forex is a good thing!   I welcome others experience & thoughts or trading videos on using fibonacci.  Thanks!

Sat, 02/10/2018 - 11:32am
 
cuttoheal

rad,

Fibs are based on the "rear view" assumption that future price action will be proportionate to (recent) past price movement. Sometimes it is. If you think about it statistically, the Fib projection numbers have to match up occasionally. As with all indicators, you can easily find historical data sets that seem to demonstrate amazing predictive accuracy with Fib values, historically. But have you ever seen data showing how to use Fib values that lead to high probability trade set-ups? Not exactly. Also, like all indicators, Fibs, in combination with other indicator (ADX, RSI, MACD, etc), in the hands of certain experienced professional, during appropriate market conditions .... blah, blah,blah .... have produced no millionaires to date.

It's true, I am anti-indicator. I think teaching beginner traders to use them is a sinful but (possibly) necessary evil; it also stunts growth and muffles native talent development. I also believe that the Apiary model provides the best, most supportive, trial-by-fire, training environment available for learn-by-doing trader development. All you have to do is provide effort. Just trade, trade, trade; it's fun! Apiary software then spits out invaluable feedback data offering beautifully specific-to-you Pavlovian trade-enhancing hints that will help you make money! It's enough to make your mouth water.

Anyway, back to Fibs ... consider this alternative approach to technical analysis:
Every trading day I "eyeball" support and resistance (S/R) levels on the D1, H1, and M5 time frames (TF) and then use them while trading on the M5 chart to guide my entry and exit decisions. The process of choosing and marking the S/R levels on 3 TFs makes me a more informed Price Action (PA) trader than staring at Fib lines ever could. The day I removed indicators from my charts was the day my pip gains started moving up.
Why? No distractions. The only thing in front of me was Price Action. So I studied PA trading. Tried to trade it. The more I learned about trading PA, the more the charts spoke to me. A few thousand trades later and the conversation is still expanding. PA trading has no limitations; works on all TFs, with any underlying (Forex, stocks, options, bonds, derivatives, ETFs, metals, commodities), in all mkt conditions, and for anyone who takes the time to embrace it.
Price Action trading is the soul of trader-market interaction because price ation IS the market.

Give it a try instead of wasting your time with Fibonacci flatulence.

Let me know if this is at all helpful.

Good luck trading,

Tom

 
wwfriedland

I use the fibonacci retracement drawing tool a great deal after huge one directional moves.

The 23.6 level is what I call the dead cat bounce level. If a big move consolidates around this level, I look for a continuation of the move.

 
FX Warrior

Agree with you wwfriedland, Fibonacci is an excellent indicator .Unfortunately, most traders fear taking a walk on the wild side.

 
triguylm1

I like to think of it as anti-nightingale trade set-ups. If you think about how a retail trader places SL @ 1 ATR and another one Places it about 2 ATR from a cross-over setup, that most traders use for entry positions: Thus the creation of these S/R levels. AND . . .Thus, you may see "Price" move several times in an hour that will spike one direction or the other to reach out and trigger the pending SL orders!!

Best approach is to use S/R levels and trade one direction in favor of major trend. That way, even if you're Stopped out on a counter trend, that just means, you will make it back plus more as price moves back into major trend direction. (Let winning positions run)

See Example below of the EUR/USD H1 chart

Note: entries are added rather fast as price breaks out of consolidation, and letting winning trend positions run over 24 hours.

Capture  Fib Anti-Nightingale.PNG
 
lawollin

Rad I like the Fibs. If used the correct way you can make some large gains and find the highest probability trades.

 
DC Capital Cons...

I'm not sure who cuttoheal/Tom is, or why he would be bashing indicators, that is silly actually. Furthermore, Fibonacci is not an indicator, it is a mathematical sequencing method. It is found everywhere in nature and everywhere in the markets.

I find often times, ignorance comes because of lack of understanding.

Trade Wisely!!

DC

 
agustinbulay

Being new to the Fibonacci series, I wonder how much probability the Fibonacci numbers will be hit every 100 trades I make.

 
vesskrastev

I am still a newbie, about 8 months after I started from a scratch, but I dare to say that the Fibs are everywhere in the charts. The Support and Resistence levels are Fib levels of previous moves of price, you may check that out. Every big move gets retraced, and almost always it goes back to 0.5 Fib. I know, 0.5 is not a Fibonacci's ratio, but it is used all of the time as a way to entice new participants to join the original move. We know, it is the market makers (the big boys) who move the candles, and when they run out of steam (or when they don't have enough space to the next target and it results in a bad risk/reward ratio, by the way the next target is a fib number) then they retrace price. All the big moves are retraced, and they move almost always to the 0.5 (please excuse me for repeating that), the unsustainable moves (those 3-4 huge candles, which produce a parabolic move) are retraced to 0.382. Why - because the previous unsustainable move has created a lot of attention and they don't need to give such a big discount. The retracements are exactly that - a discount, in order to get more participants to join (of course, you should make sure that the structure of the market - which wave, divergence/convergence, etc.- does not mean that a new trend is starting). If you liked the original move of price, before the retracement started, you would LOVE to join it after the retracement, when you will have a 50% better starting position.

All of that is complicated by the fact, that on the way to the next target (fib) you will have to cross bariers. These bariers are former support/resistance levels, which on their own are former fibs. The first time price approaches a barier, it bounces off it (usually, unless the momentum is very strong), but when it returns back after the bounce, then it goes through that same barier, because it already "was taken out." Then it is the turn of the next barier. And when price approaches the walls of the trend, it bounces off them (unless the market makers/big boys have decided to exit the trend, for which there will be some indications). When they finally get to an area, where there are no more bariers, to an Wide Open Space, then they run it as crazy - getting to that wide open space was the reason for all of their efforts. And since the gaps between the fib numbers (and ratios) get bigger and bigger as you go to the next number, the Wide Open Spaces become bigger and bigger. That is the purpose of them creating a trend - so they can run these increasingly bigger Wide Open Spaces. Meanwhile there will be head fakes, huge wicks, ABC corrections (which actually serve both sides - the retraceent is your friend, it is inevitable and you have to plan for it, AND IT ALLOWS YOU TO ENTER A NEW POSITION). All kind of tricks are employed in order to mess up the retail traders (after all, they spend around $400 billion a day, and on top of that the market makers are paid to fill their orders - so they get paid and they take your stop loss).

Every currency pair has its specifics, they run a different length, and on top of that no trend can exceed 1000 pips, because it will change significantly the value of the currency - in the case of the dollar crosses, 1000 pips will add/subtract about 10 cents. So, if the bankers/market movers/big boys don't stop, then the central bank comes and says: "No more!" That is why all the trends eventually end, just so a new trend could be started. The big boys make about 80% of their money in trending environment, the other 20% in randing, but the timing of the market is as follows - it spends about 30% of the time in trending, and about 70% in ranging. It is not easy for the big boys to create a trend and that is why they try to keep it going at any price. The bariers make it complicated to trade a trend, but it is worth the effort. And all of these bariers, retracements, etc. don't change the fact, that the target of the move is a fib, and then the next target is a fib again. The price method language is the way the big boys communicate their intentions, even they cannot do everything on their own and need the support of the other big boys. Of course, there are different camps among them, and they fight, but the bankers are not in a hurry. Today the other camp prevailed, but a few day later, or a week, we will turn the market in our direction and will get to the place where we want to go... The foundation of that price method language are the Fibonacci's ratios and numbers. In the case of ranging market the moves are smaller, the changes occur faster, but everything is a lot simpler - all you need are the fibs (the support/resistance are former fibs).

I did not mean for this to be that long. It is just that rejecting the use of fibs seems unwise to me. Yes, everything else in price method has its place (twins, engulfing candles, patterns, etc., and I still have so much to learn in that area) , but if you check carefully, you will see that all of them happen at a place, which has to do with a fib of a previous move. The fibs help us to take a glance at the future, if we know how to use them.

 
Rookie

@DC, Tom is a good trader, well read etc, Note hw is G3 same boat as you. Each of us has our own learning and the right to there own opinion moreover especially in forex trading. Be king no bashing just present your point as he did.
Have a nice St. Pats Day.

 
ledabrown880

Let's talk about Fibonacci levels.

First and foremost, The Fibonacci Tool is just that, a tool. It is not an indicator. If you keep thinking it is an indicator, you will lose money.

There are many books written about fibs and you can do some research for more detailed information if you like. However for the purposes of what we do as trades, the Fibonacci tool is there to show you where a reaction might take place in the market. Fibonacci levels shouldn't be used by itself to make trading decisions, but in conjunction with tools(Support/Resistance) or indicators(RSI, Stochastic, or MACD).

The most important Fib levels to pay attention to would be 38.6%, 50%(not really a Fib number, but the market reacts to it constantly) and the 61.8%.

In the picture you can see there was a reaction at each Fib level but the market didn't completely reverse until it hit the 61.8% level in conjunction with previous structure resistance and RSI(7 period) turning down.

https://www.tradingview.com/x/VrrDGqu7/

 
Brian-Dream-Trader

Thanks for making me smile. Arguments about Fibonacci - entertaining, to say the least. There are few philosophical arguments worthy of intelligent discussion, whether or not this is one of those would be a whole other argument!

I wish I had taken screenshots in the time frame where I had drawn these lines and the big green box, but alas, it was the wee hours of the morning and I was pretty "out of it" at that moment. Indeed, completely out of it as I closed my winning trades on one little reversal candle... I blame the codeine laced cough medicine and darkness. I'm better with caffeine in the light of day.

The point I'm making (to myself as much as to anyone else) is that having drawn these levels to look at potential price targets (which is primarily how I use Fibs) with a little more rest, better attention, and looser stops, I might have stayed in this trade for the rest of the move. The top of that green box was completely arbitrary and the bottom was based on the last Apiary Pivot as I expected price to push right through that... My trade was closed right around the 100% Fib retrace line at 1317- something, at that blue candle that drew a couple of bars before that minor pivot showed up (around 7:30 on the timeline.)

Looking at this image, I have to ask myself, which way now for XAU? It's back to longer time frames and some new Fib projections for that hypothesis. What's in the news for Monday? I'll see you later in the week with answers...

Enjoy!
BDT

XAU Overnight a Perfect Setup X 2.PNG
 
Rookie

@Brian, arguably too much of that green ale last night...

 
tburn98

I'm not sure about these 'modern' times, but Joe DiNapoli was long considered the guru of Fibonacci research and application.
I've just recently revisited his book which has been on my shelf for 20 years and then became curious if he was still active. For anyone interested in really drilling down into the world of Fibonacci, I highly recommend his book "Trading with DiNapoli Levels".
This book can now be accessed free online, in .pdf format.

Go to Google and search 'Joe DiNapoli Trading Course'. Look down the listings (6th on my screen) to find the header
'Trading with DiNapoli Levels - Forex Factory', click the link and download the pdf.

It's quite an exhaustive discussion of fib techniques, and written in a straightforward and entertaining style.

Hoping someone can find some useful nuggets contained within.

Regards .. Tom

 
Rookie

@tburn thanks for the post;

this like may help

Trading with DiNapoli Levels - Forex Factory
https://www.forexfactory.com/attachment.php/1926073?attachmentid=1926073...
PDF made by Traderman ... In commodity trading, as in stock, and mutual fund trading, there can be no assurance of profit. Losses can and do occur. As with any investment, you should ... FibNodes, DiNapoli Levels, Oscillator Predictor, and D-Levels are trademarks of Coast Investment Software, Inc. Windows is a registered ...

 
tburn98

Thanks rookie007. Don't know why I just didn't post the link myself?? :-) I think I have already mentioned elsewhere about being technically challenged - ha!

 
Rookie

@tburn, YW and that's we are all here for. My the hive be with you my friend!

 
steelyjaynes

Thanks, for all your info will study the Fib tool and the ATR to try to develop a better trading routine with it. I like looking forward! CHEERS!

 
fregency

I love the Fibs and have been using them for years now.

 
onthebeach

triguylm1

I like your take on Fibs.

 
adi.goka

Guys - Fib levels Elude me - i have not been able to use them Profitably - I guess I am doing something wrong!
But I am now encouraged to Give em a Fresh look after listening to you all

Gratitude Hive!

 
adi.goka

Hive - I cannot Find Fib on Alveo - Help! Where do I find it?

 
tburn98

adl.goka - use the drop down for Drawing Tools, in the upper right corner of your active chart (the icon appears as a pentagon w/ circle in it). Click the Fib Retracement icon (second row, 2nd from right). Your cursor will now look like a pointer - select your desired swing - draw from upper left to lower right on your chart (in the case of a downtrend) or from lower left to upper right (in the case of an uptrend. Hope that helps ..

Cheers,
Tom

 
adi.goka

Nevermind guys I found it in Drawing tools - Thanks!

 
adi.goka

Thanks tburn98 :)

 
Okore

adi.goka
You can find Fib under the drawing tools on the top right hand tab ribbon in ALVEO

 
Okore

adi.goka
You can find Fib under the drawing tools on the top right hand tab ribbon in ALVEO

 
mulliongc

Can someone tell me how to rotate my photo 90 degrees clockwise.

 
Rookie

open with paint or media player, toolbar click rotate