What is physically happening with fibs

[Scotty2Cues]

Hi, Newbie here

I know how important the fib sequence is in nature but why is it used in trading. What is happening in the markets when it works, why does it work when it does. I feel a little uneasy when seeing how its applied to the markets

I remember a tv program (approx 12 yrs ago) about a guy who claimed that the pyramid were much older than previously thought. He looked at astronomy records and found a time when the pyramids lined up with the constellations, looked very convincing. It turns out that if you take any city and look at certain landmarks, you can line them up with any constellation if you look long enough (its just a coincidence)

Another example is the bible codes. A mathematician thought he had found hidden messages in the bible (again looked very convincing) but a probability expert took the book Moby dick and show that there are hidden messages in that! again coincidence
Thanks

 

[GladiatorX]

Who said that Fibonacci are important to the market ?

The only USE i can see with fibonacci is that, if you percieve a potential continuation of a trend during a pullback - 68% retracement probably ain't a bad entry; seeing as you don't think price will go 100% and you do think it'll return to 0% giving you a nice Risk:Reward ... Other than guaging the size of a pullback, then i can't see its use; apart from maybe a self-fulfilling prophecy...

To win at trading; you need to front-run order flow ... If you percieve a collective bunch of bids @ Fibonacci, that are holding on touch; maybe your going to expect a bounce and so you'll buy too. The fibonacci itself isn't important here; only that you think that the market finds it important ... One of the ways to verify this is through comparing market depth with your levels to see if the market agrees....

Coolio ?

Fibonacci isn't like a secret code where market turns occur at... If you drew the 20, 50, and 90 level, you'd get just as many price bars 'spiking them ... but not closing above' ... and more likely at round numbers (50/100) as they are one of the levels that a orders are based at.

 

[A Dashing Blade]

For fibonacci debunking start here and continue googling

 

[Scotty2Cues]

For fibonacci debunking start here and continue googling

Thanks. Saw that earlier, a nice article! But then I saw a link on that webpage about the earth being flat

 

[FXTrend240]

Fibonacci, moving averages, trendlines,S/R: all means of identifying trends and then finding good pullback places to buy

 

[A Dashing Blade]

Thanks. Saw that earlier, a nice article! But then I saw a link on that webpage about the earth being flat

Was gonna put the link to the Cambridge Maths Prof's debunking site but couldn't find the link. Anyway, bottom line, it's about as relevent as Gann Theory <ducks head under parapet>

 

[hunter1]

Actually Fibs can be very helpful. There are however many different Fib methods and ways of projecting some work and some don't. For me the best way to use Fibs is to project the future. Once you have your future price to watch then you take a trade there if you see a trade setup occur be it MA pull back or cross or 2 bar reversal or shooting star or whatever you like to see to take a trade.

 

[N Rothschild]

bit of a self for filling proficiy fibs are

 

[arabianights]

Basically if you draw enough lines everywhere then some will work. Especially when you get fuzzy enough. (As opposed to getting enough fuzzy's, who seem to have shut almost all their outlets down now to my chagrin)

There is definitely no *theroretical* justification for fibs. The only possible reason they could work is, like a lot of TA, self fulfilling prophecies.

 

[hunter1]

Perhaps they are self fulfilling . I used to look at them that way but it doesn't matter.
If 50000 traders are all looking for a reversal around the same area lets say 1180 to 1182 and they all take shorts there and you make money does it matter. I park orders at my fib projections all the time sometimes hours before the numbers are hit. I make money. That's all that matters in the end. Fib projections are not the same as extensions or retracements and take time into consideration.

 

[maiden22]

Thanks. Saw that earlier, a nice article! But then I saw a link on that webpage about the earth being flat

The earth is flat. It just bends a bit round the edges .

Or possibly it's round, with flat bits in the middle.

Fibs don't "work", nor for that matter do candles, patterns, trend lines, support and resistance, the trend and all the rest. None of these things even exists except in your perception.

They are just tools that you can use.

 

[Scotty2Cues]

Perhaps they are self fulfilling . I used to look at them that way but it doesn't matter.
If 50000 traders are all looking for a reversal around the same area lets say 1180 to 1182 and they all take shorts there and you make money does it matter. I park orders at my fib projections all the time sometimes hours before the numbers are hit. I make money. That's all that matters in the end. Fib projections are not the same as extensions or retracements and take time into consideration.

Self fulfilling? How did it get started in the first place then?

 

[Scotty2Cues]

The earth is flat. It just bends a bit round the edges .

Or possibly it's round, with flat bits in the middle.

Fibs don't "work", nor for that matter do candles, patterns, trend lines, support and resistance, the trend and all the rest. None of these things even exists except in your perception.

They are just tools that you can use.

They dont exist? Im looking at a candle and fib line now?

 

[maiden22]

They dont exist? Im looking at a candle and fib line now?

LOL - sorry.

What I mean is that the candle has an appearence that is entirely dependent upon how you choose to display it. When the period starts and ends, what timeframe you use, and so on.

Same with fibs - where you choose to draw them, on what tf, and so on.

As for "THE TREND" - it's up on one tf, down on another, sideways on a third.

Support and resistance? Look at it on the 1hr, now switch to the daily. Is it still there? Sometimes yes, sometimes no.

The only constant, the only real thing, is price. Everything else is an illusion, but this doesn't mean you can't use these other things.

 

[Scotty2Cues]

LOL - sorry.

What I mean is that the candle has an appearence that is entirely dependent upon how you choose to display it. When the period starts and ends, what timeframe you use, and so on.

Same with fibs - where you choose to draw them, on what tf, and so on.

As for "THE TREND" - it's up on one tf, down on another, sideways on a third.

Support and resistance? Look at it on the 1hr, now switch to the daily. Is it still there? Sometimes yes, sometimes no.

The only constant, the only real thing, is price. Everything else is an illusion, but this doesn't mean you can't use these other things.

I thought you were getting all philosophical and metaphysical on me.

 

[maiden22]

I thought you were getting all philosophical and metaphysical on me.

Nothing so profound I'm afraid . I just find it helps to keep my feet on the ground and stops me pulling the trigger on poor trades. It stops me from thinking "Pin bar, 50% ret, all in" and so on.