Article Trading with Fibonacci

Mr. Charts

Legendary member
7,366 1,181
a320,
The idiots don't bother me at all - they think they do and that's why they pursue their ramblings, but I know they are very sad individuals who don't even realise they need help. Anyway, enough of such nonsense.

To get back to the purpose of this thread: Naz, that is a very useful article and post 14 is excellent, illustrating what a useful tool Fib really is when used your way.
Richard
 

Trader333

Moderator
8,536 909
Regarding abusive email sent from internet addresses, the IP address should still be traceable if a complaint is made to the provider and hence identifcation of the party sending them. I have had my share of this as well so I know what it is like.


Paul
 

TheBramble

Legendary member
8,395 1,170
Mayfly said:
Guys,

The 0.5 ratio, is simply the ratio of the second two Fibonacci numbers 1 and 2,
Fibonacci didn't actually ever use 1 in his series, but I do take your point - in 'standard' modern day usage, the 1 is present.

Of course, the ratio between all the others Fibs is 0.618/1.618 so the 1:2 ratio is an obvious anomaly.

But, hey, if it works....
 

Mayfly

Established member
514 28
Tony,

So far as I know the Fibonacci sequence is derived by starting from 1 and adding the adjacent two numbers in the sequence to derive the next, as follows:

1,1,2,3,5,8,13,21,34,55,89,144, etc.

The ratio of one Fibonacci number to the next in the series approximates and eventually approaches 0.618, but as you know the earlier numbers in the series do not equal this figure precisely. And the ratio of alternate numbers also approaches 0.382 eventually, which is equal to (1 – 0.618).

So, I guess you could say that it doesn’t do to be too pedantic about this, but so far as I’m concerned the 0.5 ratio, as I said before, is simply the ratio of the second two Fibonacci numbers 1 and 2.

HTH :)

Cheers

Mayfly
 

TheBramble

Legendary member
8,395 1,170
Mayfly said:
Tony,

So far as I know the Fibonacci sequence is derived by starting from 1 and adding the adjacent two numbers in the sequence to derive the next, as follows:

1,1,2,3,5,8,13,21,34,55,89,144, etc.

The ratio of one Fibonacci number to the next in the series approximates and eventually approaches 0.618, but as you know the earlier numbers in the series do not equal this figure precisely. And the ratio of alternate numbers also approaches 0.382 eventually, which is equal to (1 – 0.618).

So, I guess you could say that it doesn’t do to be too pedantic about this, but so far as I’m concerned the 0.5 ratio, as I said before, is simply the ratio of the second two Fibonacci numbers 1 and 2.

HTH :)

Cheers

Mayfly
A problem in the third section of Liber abaci led to the introduction of the Fibonacci numbers and the Fibonacci sequence for which Fibonacci is best remembered today:-

A certain man put a pair of rabbits in a place surrounded on all sides by a wall. How many pairs of rabbits can be produced from that pair in a year if it is supposed that every month each pair begets a new pair which from the second month on becomes productive?

The resulting sequence is 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, ... (Fibonacci omitted the first term in Liber abaci). {my emphasis}

One rabbit, by itself, doesn't reproduce - it just tells stories about all the bunnies it's had... :LOL:

Pedantry doesn't give me an edge in the market - and I fight it - daily. Please give generously.
 

Mayfly

Established member
514 28
Tony,

One rabbit, by itself, doesn't reproduce - it just tells stories about all the bunnies it's had...

Pedantry doesn't give me an edge in the market - and I fight it - daily. Please give generously.
OK, but for me it still takes two (1+1=2) to party and so I guess we’ll just have to settle for the fact that bunnies have to do what bunnies have to do? :)

Cheers

Mayfly

PS Here's a link for anyone who's interested: http://www.math.utah.edu/~beebe/software/java/fibonacci/liber-abaci.html
 

a320

Established member
689 8
I think people are slightly misunderstanding the progression of the golden logarithmic principle for the ratio's 0.382 , 0.618 ect...

As for the 0.50..... The benchmark for the division of unity (1.0).. is first the half (0.50).

Mayfly points out a good Arithmetic ratio ( generated from the simple division of whole numbers by other whole numbers).

Also when I view the 0.50 I see the harmonic ratio series of the square.

I know many may see this as a little pedantic but for those who venture into Sacred/Dynamic Geometry the differences are stark. Many will say whats the point?....but identifying rhythm is powerful tool for technical traders to use.

To quote Naz
Trading is an individual thing and i always use fibs in my own special way
That's the key... we all have special ways with ratio's, but if they work for the user.. who cares how they differ in application..

The hard part is first finding your own way.. ;)

CJ
 
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Naz

Experienced member
1,391 22
It's true everyone can use fibs in their own special way.This is how i use them again.

I use a Nasdaq level 2 screen to spot the turn at a fib level,(if i'm wrong i get out immediately with a small loss.) In the big picture i hope that it slowly dawns on others that we've now turned and they hit their internet accounts to enter,then we make some kind of small breakout of the last high which drags another lot of day traders in and hopefully the breakout of the days high which attracts so many others.....and all the time i watch each pullback to make sure the level 2 guys are still running with it.When they've had enough or start selling at any time i'm gone.

Its those guys who make the prices that cfd's,spread betters and others take their quotes from.So for me its better to watch and understand them than to look at a quote from someone else or to look at a chart which is a reflection of someones reaction to their pricing.

My idea is to spot t/a set ups that are coming up and then watch to see if its going to be played or not on the Nasdaq level 2screen.Because i know that if it forms on a chart,so many people in the market believe in t/a that they will blindly go in and create a momentum that enhances my profit. By doing this i've found that my profits will more than out weigh my losses often by staggering amounts.Like the trade i showed in my last post.

Naz
 

timsk

Legendary member
7,204 1,963
Alan,
Your enthusiasm for Level II is unparallelled, but I don't think I've ever read another post from you where you've expressed the reasons for your enthusiasm so succinctly and so persuasively. I'll start putting some loose change in my piggy bank so that one day I can attend your course!
;-)
Tim.
 

JohnHL

Junior member
19 1
Naz.
Thanks for the insight.
Does Connors produce data for the converse of buying on strength or weakness?
e.g. what would be the effect of shorting after three consecutive up days, compared with three down days?
 

Weezle

Newbie
3 0
Out of interest i attended a seminar given by Marc Rivalland. His strategy was very similar to what Naz suggests. His method of timing the entry was to wait until there had been three consecutive down days and then set a buy limit order one tick above the previous days high. This way it would only be triggered if there was a turn in the market.
 

Hate2Lose

Active member
155 3
Thank you for such a nice post.

I also found the following post is very useful about Fibonacci Retracements http://www.financialtrading.com/fibonacci-retracements/
 
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