Registered User
Joined: 10/7/2004
Posts: 2,181
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I'm just curious about the thoughts of some of you as to why the entire human race is so cooperative about buying and selling with such consistency at established fib numbers. Or why one can draw a trendline over a 6 month or, say, 1 year period and then zoom out only to find that trendline matching up to significant points on the chart 5 and 10 years ago. All (related) comments welcome.
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Registered User
Joined: 1/28/2005
Posts: 6,049
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I think its baloney.
(otherwise everyone who draws lines on their charts would be a billionaire)
Just for laughs I went to a random number generator.
Came up with the line values of:
39.26
34.96
25.54
Within 5 seconds of going thru the space bar came across
ILMN.
It bounces thru that rage in 6-09 and 2010 almost perfectly.
Its low of late Nov. goes right down to the 25.54 level.
Needless to say they also "worked" on other charts.
The problem is no one looks at any other values.
You would have to not use fib levels to see their worth.
How many who swear by fib levels have used other values? (my guess would be no one)
There's a whole bunch of other reasons why they don't matter but hey lets face facts
traders need something to be smart with.
They want to pretend they control where price goes.
So if it makes you "feel" better draw your lines.
By the way, with thousand of tickers I'm still trying to figure out how the
stocks I didn't draw lines on knew where to go?
(did you tell them?)
Thanks
diceman
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Registered User
Joined: 3/21/2006
Posts: 4,308
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Tobydad, at various times over many years I have wondered the same things. When plotting Fib lines on past charts there seemed to be a correlation between the Fibonacci levels and that of support & resistance. I found to my dismay that the glove did not fit as well to the right side of the chart however. Emotions cloud that side of the chart and seem to render all indicators impotent.
On occassion, as of recently in related threads, I will renew my interest only to find the same results. In general I have come to believe that Price alone be the only true and reliable indicator...
Just my opinion and observations..
Apsll.
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Registered User
Joined: 3/21/2006
Posts: 4,308
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Chapter two is more about trend lines. It seems that trend lines act as support & resistance over the history of a given chart. When price is in close proximity to these levels you will see that there is an effect on price. I believe the answer lay in the fact that there are many & varying kinds of traders all with there own agenda. Where a long trader is looking for the momentum to push through these levels a short trader see's an opportunity to sell. Options traders have there own ideas and so on. This could explain the varying price patterns that we see at these levels. Complicated algorithms are designed to trip a buy signal or a sell short signal near these sensitive areas. In the end the forces that yield the greatest power will win the day and price will move in their favor.
These levels are important because great battles have been waged there before making them self fulfilling in their ability to spark a change in momentum.
Just one mans opinion.....
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Registered User
Joined: 1/28/2005
Posts: 6,049
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One thing to remember, not to many years ago you didn't even see
candles on a chart.
The vast majority of what's used/done today is because of the computer.
That's why you don't hear things like:
Livermore used Bollinger Bands and MACD on his charts and bought fib retracements.
50% was an important retracement level because you could do it in your head.
Things like pivot highs/lows and Gann Swings were popular because you
could see them and draw them by hand.
Things like price breakouts and price support/resistance were much
more popular. (because you could see that without a machine)
Point & Figure was popular because you could have a lot of data on one piece of paper.
(and wouldn't have update unless price met certain levels)
Imagine calculating standard deviation each day for Bollinger Bands.
Lets put it this way.
Imagine starting on Monday you were not aloud to use a computer for charting.
Do you think the tobydad profile would be getting a makeover?
Even if you were ambitious enough to calculate, Bollinger Bands, OBV, Linear Regression lines by hand.
(what happens when you change your chart?)
Thanks
diceman
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Registered User
Joined: 10/7/2004
Posts: 2,181
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Excellent thoughts thus far. Thanks so much. Interested in any other thoughts.
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Registered User
Joined: 4/13/2009
Posts: 122
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Many years ago I read "Think and Grow Rich".It put my life and "way of thinking" on a better path. I have studied and listen to lots of motivation speakers.In one that Bob Proctor did, He had a man talking about wanting to buy 10 acer of land. The man found the right 10 acre of land because as he says "Thats was I was Looking For"
We tend to find what we are looking for.If we seek positive that is what we find and seeking negative that is what you will get. Universal laws state that positive attracts positive and negative attracts negative, "The Secret" is based upon this and is interesting its effect on peoples life.
In this video http://forums.worden.com/default.aspx?g=posts&t=3555 where Craig S talks finding Fibonacci Retracement Levels...you will see that there are many stocks in his scan that are not at the Fib levels. Those stocks in between the levels see to be many. I did not do that scan and there for will not say that the fib lines will or wont find support or resistance levels on any of them,But I would guess that some will....if that is what you are looking for.
amg32 wrote "you have your fib retracements drawn from the wrong pivot point. what constitutes the one to use is a whole new subject."
This enlightened me that when one places the fib lines on a chart it creates the s/r levels somewhat to what one is looking for it to be at.
On a few charts I placed fib lines and started at random points and ended at random points on the same chart. Depending on the movement of the price action there was s/r points at the fib levels. After placing the start of the fib lines and slowly raise the end up...you can see many different levels of s/r depending where you end. "Just experimenting" because this is a tool I have not studied properly to use correctly.
Just like ink blots people tend to see what they want to see.True stock charts are not ink blots but people will tend to find in a chart what they are looking for. That is why so many here "discuss" the postings of charts when members do.
Some see what the posted sees and others don't, there for "discussion time".
I wonder how many look at charts naked.No MA's no trend lines,,,just line charts. Take away the candles and bars. Would you buy or sell?
Thanks for reading..
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 Gold Customer
Joined: 11/11/2006
Posts: 359
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A good point, Diceman. AND it takes a little bit of brass to make it.
I see this type of thinking a lot. "You should watch for volume spikes! That is the KEY!!" Well, I see that this happens a lot. It also happens a lot that they go up without volume spikes, in fact, they go up with less volume. And they also fall after volume spikes. This seems a weak peg to hang your hat on.
Of all the folks who buy and sell stuff to make money, we traders seem to be the only ones infatuated with
indicators and such.
Tobydad has a small construction company, with his brother. Does he use the Tobydad Profile in his business? Does it help him decide how much steel to order? Welders, etc to hire? Does Starbucks buck up the number of Latte machines because they think the demand for Double Tall, Non-fat Pumpkin Latte's will increase due to their study of Bollinger Bands?
Does Walmart, Costco? I don't know, but maybe G.M. should study SOMETHING!
Does Apsll?
Do they uses things like this? Should they? Why, or why not?
I notice that recently I have been more aware of strategies such as Connors R2 strategy. If RSI 2 is lower than something or other for two days, BUY!. Then there is the "3 down days in a row" strategy. BUY!
There is a four down days out of 5 strategy. BUY!
DeMark: 9 days down (With some other count) BUY!
Well, Hell! WHICH IS IT!! Choose a Number! Git in line! Make millions!
Write a book.
How many MACD settings are there? Stochastic? et.al. And how much money have you made? Like Diceman says: Give me a number and I can find you a chart. ( or makes the implication)
Sometimes things work. Sometimes they don't. That why we have whipsaws.
When one strategy works well, guess what? They will ALL work well!
When one strategy seems to crash and burn, guess what? They all will!
When the general market is booming, load'er up.
When its collapsing, get out.
Thats why we have fishing.
(with the usual disclaimers)
The shape of one mans opinion.
Mammon
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Registered User
Joined: 12/2/2004
Posts: 1,775
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Excellent thread you started Tobydad. I can't really add much to the already interesting comments above, except to say that I no longer use fibs very often. What I will do on occasion when I'm thinking of buying a pullback and price didn't find support at other support areas I always use (moving averages, older prices, trend lines, etc) is then place the fibs on the chart out of curiosity. Some chart it's easy to know where to start and end the placement of the top and bottom of the fib overlay, but I guess I look at too ambiguos charts in that regard. One thing I've noticed is that some authors will show charts where they say the fibs worked, but then the author can place the fib boundaries where it will look best in hindsight. I mean, 90% of traders would pick bottom point of fib at a price of 10, but author places it at 11 because it makes the results come out perfectly predictable in the example.
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Registered User
Joined: 4/28/2005
Posts: 59
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Registered User
Joined: 4/28/2005
Posts: 59
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Interesting thread. I tend to not post on this forum very often for several reasons; however, I felt compelled to do so now. So, why does one person use fib lines while another uses something else? Does MACD work better than another indicator? Is the 8 and 12 DMA crossovers better than another pair? I personally dont know, and really doubt that anyone else does either. But then again, does it matter? As it has been said many times before, "find a trading style that fits your personallity, thinking, or belief system" and learn all you can about that approach. Why are there so many different approachs to trading? If one believes as Mammon does, and I do, 'sometimes thay work, and sometimes they dont.' So it seems to me one needs to find an approach to trading that is a fit for them and learn as much about that approach as one can, how does it behave in a bull market, bear market, or a sideways market (someone much smarter than I has said this over and over).. In the end what works for me, or what I am comfortable with, someone else will believe I am doomed to failure and my approach will never work. I think Tiger said it best above; "People tend to find in a chart what they are looking for", if they are right they make money, if they are wrong they lose money. Isnt real trick to not lose more than you make. As long as one is doing that, then should anyone tell someone they are wrong and their trading methods wont work. Finally, why does one pick one approach to trading as opposed to another? In my humble opinion it is simply a matter of knowledge, skill, experience, education, and personal beliefs. And as one gains knowedge, skilI and experience their approach to tradings begins to change. I guess what I'm saying is very much whay Mammon stated, "sometimes it works and sometimes it doesnt," and if that is really true, then what really makes one successful in trading would be money management and risk management, or is it? I guess now you understand why I dont post very often, I tend to babble and make no sense what-so-ever, much like my approach to trading when compared to anyone else's.
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Registered User
Joined: 10/7/2004
Posts: 2,181
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Excellent thoughts. Now I'll add one and, then, would love to hear any others. As discussed here before, I see methods and indicators just like budgets, diets and exercise programs; the best one is the one you'll use consistently. So someone committing themselves to David's Dragon's (alliteration unintentional) will do well with them and may consider them the best pattern to follow if they learn the pattern inside out. The same applies with fibs, elliot waves, etc. Do they work? Sure they do. The question is, Do you?
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Registered User
Joined: 6/6/2005
Posts: 1,157
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I think the same thing makes the winning trader successful that makes the winning business man successful that makes the winning contractor successful that makes the winning plumber successful that makes the winning banker successful: an affinity for what they do, a lot of passion, natural talent and tons of hard work.
I don't think it has anything to do with fib numbers, trend lines or methods. It takes time, understanding, effort and courage to make this work. You have to be willing to do what the non winning traders are not willing to do and that usually involves "boring" things like reviewing your own trades, your own psychology, understand money management and you have to allow yourself to lose, a lot -- and you have to be willing to do it again and again and again, refusing to give up or give in.
I have heard about writing that, in order to write well, you have to give yourself permission to write badly, and I'd have to agree that's the case with trading. If you're worried about appearences, about winning %, about being better or worse than someone else, about "profit" (in the beginning), then I think the point is being missed.
You have to learn how you exist in the market, with capital at risk. How you do it. What opportunity looks like to you. What risk looks and feels like. What winning feels like. What losing feels like. You have to come back day after day, month after month, year after year. To do that takes a lot of compassion, a lot of respect and a lot of love for what you do.
They say that if you find a job doing what you love to do then you'll never have to work a day in your life. Have you also heard people who love what they're doing say: I can't believe I get paid to do this -- I would do it for free.
I don't think you can get that from a line, an indicator, a chart even. It lives much closer to the bone than that. Those things are tools. Does the pen make the writer? Does the raquet make the tennis player? The club, the golfer? Darvas made his millions in the market using a week old copy of Barrons and not a single chart. Zanger holds the world recods for biggest gains in a single year. His magic tool? Breakouts.
Nope, there is no magic indicator that will bring a trader the courage to close their 6th losing trade in a row, the strength to keep open than winning trade that's still going up, the balance to take a position that's in line with their equity, and the belief necessary to trade through a 4 month drawdown -- that type of knowledge can only come from hard won experience.
There's a story I heard somewhere about a world renowned pianist who was approached by an adoring fan after a concert. As this fan raved about the performance they'd just seen they told the pianist that they would give their life to play like he that.
To that the pianist replied: that's exactly what I did.
Being good at anything requires sacrafice. Sadly (for some) and gladly (for others), that type of commitment does not come in a charting package.
Good luck all!
Great discussion.
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Gold Customer
Joined: 11/11/2006
Posts: 359
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Well put, David. Well put.
Some years ago, I shot competiton pistol. Not an easy sport, it took a lot of time in practice and study. Nothing was without importance, though some things were mor obvious than others, all parts were important.
I would have conversations with folks, say Golfers that would go something like: "Man, I just love GOLF! I'd do anything to be a better golfer, I just love that game, I want to get better, theresjustnothingiwould........" Then I would ask them."Do you hit a thousand balls a week?" Normally, then, you get a blank stare...."Weeelllllll, No!"
"Then don't come crying around about how much you want to improve"
If you want to be good at ANYTHING it takes:
1. Sacrifice in time and money. ( I think I had the only marriage that survived more than 10-15 matches a year)
2. Some level of natural ability, although Ed McGivern always claimed he had none whatsoever.
3. Attention to the details. There is no such thing as one that is not important.
4. You MUST study everything available on the subject and do a little innovative thinking on your own.
5. It does not hurt to be somewhat of a skeptic. Conventional wisdom is not always a fact and should at least be examined, if not outright tested.
6. Determination. Stick with the thing and keep plugging on .
7. Get emotion out of the picture. No matter what your string is, the next shot is the only one that counts.
8. You gotta BURN to do it. It is a passion and not a hobby and it must consume you for you to excell.
Mammon
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Registered User
Joined: 6/15/2008
Posts: 1,356
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if these fib numbers repeat itself in so many aspects of nature and science, then why not in stock charts?
vimeo.com/9953368
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Registered User
Joined: 11/1/2005
Posts: 240
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How about the psychology of trading, when traders used gann(and others) a lot he taught were numbers, 10, 20, 25 2&1/2 50% etc were important turning points. in a strong up trend expect the price could exceed the objective, and in a weak down trend the price could fall below. if the price has an objective of 50, some traders will start dumping from 47 up to 50. (if holding large amt of shares) distribution? when computer trading comes along with program trading this distorts the numbers some what. too many traders, what was the volume in his time, less than 50 million a day? any one read Lindseys thoughts on bio rhythms, he or gann claimed they could predict their death using bio rhythms. my mind hasn't been contaminated with the computer age, its too much effort to relearn. any way good topic.
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Registered User
Joined: 1/28/2005
Posts: 6,049
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Remember, once you draw a line on a chart, it cant be wrong.
Thanks
diceman
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Registered User
Joined: 7/1/2008
Posts: 889
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QUOTE (diceman) Remember, once you draw a line on a chart, it cant be wrong.
Thanks
diceman
Diceman, anyone ever tell you you're a poet?
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Registered User
Joined: 1/28/2005
Posts: 6,049
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QUOTE (ben2k9) QUOTE (diceman) Remember, once you draw a line on a chart, it cant be wrong.
Thanks
diceman
Diceman, anyone ever tell you you're a poet?
If I am, I dont know it.
Thanks
diceman
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Registered User
Joined: 6/15/2008
Posts: 1,356
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From the stocks that have shown in the past to work with whatever method(s) you use, the probability that it will adhere to these methods in the future, are (should be) high enough in order to trade profitable.
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Registered User
Joined: 12/31/2005
Posts: 2,499
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QUOTE (diceman) QUOTE (ben2k9) QUOTE (diceman) Remember, once you draw a line on a chart, it cant be wrong.
Thanks
diceman
Diceman, anyone ever tell you you're a poet?
If I am, I dont know it.
Thanks
diceman
Don't try another response, you might blow it!
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Registered User
Joined: 12/31/2005
Posts: 2,499
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Firstly I don't think they offer any value....
As to fib #'s working or not, if you think of price as a ATR wide plot instead of an average line or a skinny candle the area covered by price is pretty significant. If you the consider the footprint of a "positioned" fat fib line placed by 100 belivers the area covered by these lines it also pretty significant. Lastly one can eailsy delude oneself by seeing confirmation of a premise alot, i.e around 50% of the time.
Does the overlap of the fat fib with the atr price channel produce profitable trades more than x% of the time, where X% is the delusion coefficient? For those that have faith, hell yes!
The venn diagram of the atr channel of price and the fat fib line landing can easily exceed the delusion threshold.
If it permits a trader to act, an act with confidence, that trader is ahead in the game, especially if money management is used, risk is managed and one learns to "love small losses". The "I couldn't trade without them." statement can be heart felt.
Whatever floats your boat..
Just not mine....
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Registered User
Joined: 1/28/2005
Posts: 6,049
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QUOTE (jas0501) QUOTE (diceman) QUOTE (ben2k9) QUOTE (diceman) Remember, once you draw a line on a chart, it cant be wrong.
Thanks
diceman
Diceman, anyone ever tell you you're a poet?
If I am, I dont know it.
Thanks
diceman
Don't try another response, you might blow it!
Whoa bro, dont be a foe.
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Registered User
Joined: 12/21/2004
Posts: 902
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My fib numbers for the Oct 07 high - Mar 09 low show the 61.8% retrace level to be S&P 1229. That area has already held twice - in April and in Oct./Nov. Peaked over it intra-day but couldn't close above it - which to me a hugely bearish sign considering that was the big reaction to the tax cuts.
If it was just another run-of-the-mill support/resistance line I might take it as just another grain of salt - but the fact that its an extremely significant fib line - which has held twice - gives me pause to give this just a bit more respect. To me, that's the value of fib-type lines. Like everything else, they aren't a sure thing, and shouldn't be treated as such. However, the fact that they're there could be looked as adding extra significance to the events that happen in their area.
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Registered User
Joined: 1/28/2005
Posts: 6,049
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I just saw a guy use fib on CNBC, its gotta be real!
Thanks
diceman
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Registered User
Joined: 12/21/2004
Posts: 902
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c'mon Dice - you gotta make it rhyme
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Registered User
Joined: 7/1/2008
Posts: 889
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or at least use haiku form
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Registered User
Joined: 1/28/2005
Posts: 6,049
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QUOTE (hohandy) c'mon Dice - you gotta make it rhyme
No fib in this crib.
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Registered User
Joined: 6/15/2008
Posts: 1,356
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Lol.. Dice.. You have square windows in your crib? Architects use fib numbers. 
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Registered User
Joined: 6/15/2008
Posts: 1,356
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http://www.maths.surrey.ac.uk/hosted-sites/R.Knott/Fibonacci/fibInArt.htmleven in poetry!!
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Registered User
Joined: 6/15/2008
Posts: 1,356
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http://www.maths.surrey.ac.uk/hosted-sites/R.Knott/Fibonacci/fibInArt.html
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Registered User
Joined: 1/28/2005
Posts: 6,049
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QUOTE (pthegreat) Lol.. Dice.. You have square windows in your crib? Architects use fib numbers.
My windows have extensions, so that there's no dissensions.
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Registered User
Joined: 12/21/2004
Posts: 902
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Headline on Yahoo Business page:
What Happened to the Rally?
S&P hit 1228.93 this morning - that's what happened to the rally...
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Registered User
Joined: 1/28/2005
Posts: 6,049
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The market couldnt go, cause the fib said so.
Hope no one lost dough.
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