[fibonacci] Anyone Trade FIBONACCI ?

[bigsnack 10]

yeah defnitely! What a rip off of the lows. I could feel the sentiment change down there, but I didn't get a prime setup so I sat and watched most of that face melter. Right into the next short setup at 56 evens. If we start selling off again I'm targeting 34.50's, if we retest and break above 56's, then I'm aiming for 61's

[bigsnack 10]

sometimes you just have to trust ur instinct.. its payback for all those 1000's of screen hours:) yeah,i see 1060 as res if it hits around 3 hours from the low 42 62 would make sense,,we had some nice little fib turns on the small timeframes

 

Hello face melting rally!

[bigsnack 10]

Looks like the rally got squashed in a hurry today

 

One new short target down below us if we continue to sell off, and the 1003.75 still looming. How did today line up time-wise?

 

Edit: Correction to the retracement and target on the 30 min chart.

Edited June 9, 2010 by bigsnack
Chart correction.

[bigsnack 10]

Rally might continue based on these counts...

 

Indeed! I kept my 30 minute chart 50% short up since I didn't quite know what to expect with contract rollover, but even the adjusted short is a goner now after the afternoon. session. Looks like maybe 87 - 88's next?

[Bemac 10]

I do. I trade Fibs but alas, my posting abilities are, as yet, resticted.

Looking forward to aquiring the unrestricted ability to respond.

Kinda tough at the moment as I don't really know what those restrictions actually are.

That's OK, I haven't finished reading the "New Members FAQ" yet

[AmCan1 10]

I often use SIUYA'S ideas myself with my trades. With a strong move, maybe a breakout or reversal, I look for a consolidation of some sort. If it retraces approximately in that area that could be considered a fib retracement, I'll begin to look for a 2nd move that has a good chance of mirroring the first move. Action, reaction, subsequent action which ofter mirrors the first action, in other words. I find it very reliable on many charts but of course, with a tradeplan; entries, targets, stops, etc. The subsequent action is very tradeable and while I do not trade fib numbers per se, I do use the idea in an abstract way. Also, I usually use tick charts set to fib numbers but that's a different subject. Call me superstitious but there's an effective fib number tick chart out there for just about every market I like to trade. Russell emini, 233 or 377, EURJPY; 144 or 233; Soybeans, 55 or 89, etc..

[AmCan1 10]

That's amazing. Maybe my superstitions actually have some merit. lol..

[AmCan1 10]

Interesting chart and observations Mitsu.. I like your 'stepping back' observation of the 'drifting forward and selling off from the high' on fomc days. My trading is darting in and out of smaller moves, either up or down, based on my setups so I never noticed in the way that you described, this kind of price action on fomc day. I'm going to keep my open for that. Of course, inherent to the definition of 'high,' I think you would expect some kind of selloff, or it wouldn't be the high. Still though, I see your point and it's an excellent observation.

[AmCan1 10]

Hmmm.. Nice! 55 points is nothing to sneeze at. Fibonacci must be doing the two step on that one too. 55 is a fib number. lol..

[SunTrader 10]

If you are referencing close amounts to do with fibs, that only works if the fib retracements are drawn from close to close as well - which is what I sometimes do.

 

Apples to apples in other words.

[SunTrader 10]

Whatever works but all I am saying is if you measure ranges than where price closes matters less if the following day the move extends the projected fib levels further out - like today's low.

 

 

Unless of course you exit at the close and move on to next trade, than that is what matters most. :thumbs up:

[AmCan1 10]

Mitsu, I respect your comments and your approach. Oddly, I've kind of gone the opposite was as you. I traded with instinct and feel (discretionary) for a long time and not without success. I have actually since moved to a trade system with very clear rules, but I brought some of my instinct with me. I call it the 10% art side of trading. Anyway, I guess the points I want to make are 1) a good dynamic trade system that has within it a way of self tuning to current market conditions has proven to work for me steadily, over many different market conditions (and markets/timeframes). In other words, a system that self adjusts. The trades will have different profiles depending on the current volatility. If a market dries up or range disappears, you just apply it to another market and voila! It works. It's not easy to find a system like that but they do exist and they are out there for those with their ears to the ground. And 2) Now that I've said that, I would be the first to encourage anyone finding success with what they are doing, to NOT change a thing. The objective is to make money! That's it. If it ain't broke, don't fix it. I find your charts and interpretation of them to be quite refreshing actually. Thanks.. Glad it's working for you and I'm sure there are plenty of traders on this site that could learn something from your outlook.

[Justaguy 10]

I'm a little late in posting to this thread and should have gotten in sooner.

As for fib trading, that is where I cut me teeth, so to speak. It was based on using a confluence of .382 and .618 from different areas to find "stronger" support and resistance areas. It was quite intriguing when many many times those areas were actual turning points. A lower time frame entry then followed using fib levels as well. It wasn't just marketing in wherever but looking for a rollover, a trigger, usually the stochs.

 

I enjoyed trading this way and did pretty decent overall. The problem became when it was becoming more and more subjective for me as time went on. There were so many areas to pull from. Trading this way was not as kneejerk as just using every fib levels as there was only 2 to use. Using extensions for profit targets, while mechanical in nature, also fell into the very subjective category.

 

I still use them from time to time. More of a general interest really. It did make for some interesting "trader talk" conversation from time to time.

[pricetrader99 10]

I use fibonacci retracements in my trading but only when they are confirmed via price action setups. I personally have learned how to do this from Nial Fuller, he does a good job at showing how you can incorporate price action at fibonacci levels.

[SRspider 10]

I use fibonacci in addition to other methods for finding support and resistance, like moving averages or congestion areas. The more things come together at one spot I think the better the zone.

[SunTrader 10]

just remembered- FOMC at 2pm...

Not that I am aware of??

 

Nothing for July - August 10th is the next meeting.

[Mark Lonow 10]

Anyone willing to comment on these statements that I have hearing more and more often these days:?

 

-You can make an argument that there is a fib trading level at every single bar on the chart. Take any chart, and draw any fib extensions or retracements, (pick a bar, any bar, pick a swing high/low , any swing high/low) and you will see some bar at any given fib level. Fibs will work after the move has been made. The fib trading method does not work during real time trading. On any given chart at any given time frame, there are a million fib levels...If you trade the fibs, you will over trade and chop your account up...

 

Is there some truth behind this statement? I wish there wasn't, but the more I think about....

 

Yes, there is truth behind the above statement BUT I believe you are not thinking correctly in reference to using Fibs. Since Fibs are used by many, many people there will be Price reactions at any given Fib level. However, look at the areas on your chart that have consolidations. When they coinside with Fib levels you can have more confidence that there are a number of people trading that Fib and so it is probably a more reliable trading level than others. You should also look at two or three higher charts and check to see how large the consolidations are in the same area on those charts. Check which Fibs are playing on those also. If you then enter on your lower chart in the direction of the larger trend, as shown on the higher charts, you will give yourself a greater probablity of trading success.

[SunTrader 10]

Take a chart from say the 1920's, 30's or 40's (see example attached) and see how well fib did work even before they were "discovered".

 

38% retracement

127.2% extended retracement

cluster of: 50% retracment

161.8% extended retracement

100% projection of 1st swing up

 

When they work (which of course is not 100% of the time), they work. Not simply because "x" number of traders are watching.

[SunTrader 10]

As for Gann what I seem to have gotten out of his ideas are the squaring of time and price. When it happens, which is not too often, it can be strong signal and very profitable.

 

On the main subject here are some other cycles that lined up on my 5min SPX chart this afternoon.

[natedredd10 10]

When they coinside with Fib levels you can have more confidence that there are a number of people trading that Fib and so it is probably a more reliable trading level than others.

 

There is no way that even 1% of volume at any moment in time is looking at "Fib levels".

Just not reality.

[Kiwi 16]

There is no way that even 1% of volume at any moment in time is looking at "Fib levels".

Just not reality.

 

Just guessing aren't you nate.

 

Don't forget that good traders don't have to have a level on a chart to be aware that there is risk of reversal at certain areas and be sensitive to that. They don't necessarily "believe in fibs" but they are not dogmatic about current movement.

 

Also remember that you don't have to be looking at an hourly fib level if you're trading momentum on a 5m chart ... you might exit because momentum stopped with no fib thought in your head. I've always been amazed at how good my S&R/Fib blind systems are at being fib sensitive. If enough pressure (power in the markets comes from size but also motivation) occurs at a fib point than fib free people will still respond to it.

[macrylinda1 10]

substitute support and resistance for fib and you could probably get the same sort of idea.

If markets are fractal then yes you will always beable to chop everything down further and further. However I am not interested in scalping, short time frame trades, I am more interested in identifying possible swings and entry and exit zones, prior to (not after) the movement.

 

I use fib retracements, or extensions of obvious swings to offer EXTRA visual cues that may offer areas of interesting trade triggers.

eg; a 50-61% retracement of an obvious swing, a 100% extension of what might be a ABC or 123 pattern.

 

Is this used in a hard and fast way? - No

Is this scientific, backtested, 100% reliable? - No

Is this an extra visual cue that alerts me to a possible interesting trading area? - yes

Does this seem to work as a way of offering good risk to reward levels to either enter trades or take profits? - yes

I have attached two charts from a trade that I did tonight as an example of what I am talking about. I did not use fib levels in this trade and were drawn after the fact but are there just to illustrate what I am thinking. In fact I don't even know if I drew it correctly because I know nothing about fibs. The blue line was what I determined to be support that turned into resistance and I wanted to take a short on the test of the new resistance. It is at the 38.2% fib level so I feel confident in this area holding. On chart 2 you see where my entry was at and my small stop. On chart 1 you see where I am shooting for the new support level as my exit.

[zdo 20]

Re:

 

I've been trading a few years now,and 2 things i've always been interested in is 1) repeatable market behaviour and 2) for want of a better phrase-'hidden order'

 

 

Have you studied the Market Matrix dvd's? ... possible 'gems' for you. Incorporates the same kind of low fib number 'time' work that you are doing... hth

[TheNegotiator 13]

My ideas on fibs are:

 

1- large moves especially after a big nfp move etc for targets and possible reaction as levels.

 

2- a method to develop a daily framework which is not set unless other levels and indicators align.

 

I don't personally have a specific method for trading fibs though. They are a geometric gauge for me.

[thalestrader 14]

Seems like there are more traders that agree that fib level are on every single bar on the chart.

 

Most traders lose most of the time ... why align your thinking with the majority?

 

Fibonacci tools are meant to be aplied to swings, not bars. That is, fib's need to be struck from swing lows and swing highs, not from random levels defined by a discreet unit of time, range, number of tick, etc.

 

Best Wishes,

 

Thales