Hello, my name is Eduardo and I’m a normal guy, but a great scholar of fibonacci, which is one of the first techniques I learned in the financial market. First, I will make a brief overview describing my[B] fibonacci methodology[/B] and [B]how I use each level[/B], after which I will present some important [B]historical events[/B] in certain financial assets in the fibonacci levels acted in a meaningful way. After that I will show entries made in forex and DAX going forward today (16/07) using fibonacci on the daily time frame.
First I will describe the fibonacci levels that I use in my trades:
[B]23.6%[/B] - It is the entry level serving as a trigger for all my orders, I’ll just buy / sell when there is a close above / below that level. I do not think the fibonacci levels as magical or unexplained; the levels mean only a percentage where the market has retracted a certain movement. When the market closes above / below 23.6 is only an indication that the asset retreated 23.6% from its last movement, could be 20, 21, 22,25, though it is only a significant percentage area for a possible early reversal of movement .
[B]38.2%[/B]
[B]50.00%[/B] - There is not a level of fibonacci, however it is a significant percentage because it is half the drop in price.
[B]61.8%[/B] - One of the possible points of market reversal, although very usefu, not consider the most important level.
[B]76.4%[/B] - The Holy Grail of fibonacci levels. the 76.4 is possible the last level where the price movement can reverse before a reversal in the trend.
[B]100% [/B]- important level because it is the last top / bottom.
112.8% - As the 76.4% is one of the most important and least known levels of fibonacci. If there is a close above / below the 112.8 the trend is confirmed, however as the market does not break this level the trend is not confirmed. This explain why so many breakout traders are caught by surprise in their trades, as they enter in the break of 100% (last top / bottom) often saw the market shrink against its trade.
[B]127.2%[/B]
[B]141.4%[/B] - Important level of support / resistance for the price, often the price does not reach the level of 161.8 because the 141.4 acts as support / resistance before the market collapse.
[B]161.8%[/B]
[B]Why do I insist on putting percentages? [/B]Because is this just what fibonacci is, think of the market in terms of percentage of retraction / extension of price movement. As Victor Niederhoffer studied the retraction percentages of DOW JONES throughout the 20th century and found certain percentages in which a bull / bear market is able to develop, fibonacci only applies percentages of extension / retraction in the price.
Producing anecdotal instances of its success doesn’t actually “prove” anything at all. That can easily be done for any kind of indicator. Including purely fictional ones.
To show that Fibonacci works, you’d need to do a statistically significant trial comparing and calculating the proportion of occasions on which it outperforms/underperforms [I]randomly-drawn[/I] lines. And that’s been done, many times, though not with the outcome the Fibonacci-enthusiasts expect. The reality is that “randomly drawn line theory” can be demonstrated to work really successfully, too.
Many traders look at indicators as “holy grails”, assigning properties to them they don’t actually possess.
I strongly recommend this book, whose author is a hugely successful trader, to people who “believe in Fibonacci as a trading indicator”.
This page from Lock Haven University - though not directly trading-related - is also interesting.
First, I do not want to be proven, because in the moment i was proved i know I’ll lose my hedge in relation to other market participants, so I really do not want to be proved. Another factor is that my fibonacci retracements are not plotted in discretionary way, I use an indicator unrelated to the fibonacci (fractals of Bill Williams) that demonstrating the important market levels. Another factor, which fibonacci levels are you referring to? by chance ever heard of statistical tests using levels of 76.4, 112.8, 141.4? I think not, because it is a little-known approach by participants in general and for those trying to use fibonacci. What about the trading method? entrys, exits? This all changes the outcome of the trade system as a whole. Just what I’m trying to show here is that the trade method that i use is succeeding, while working I do not care if something is random or not, after all I just want to follow the price and have a positive expected value along my trades.In my viewpoint this is only a heuristic, I try not understand the market movement, I just try to benefit from the move. As I said I’m just a simple guy trying to participate in a process called price movement, and if through random events of price movement I am benefited, then my trading method is antifragile, and then it’s ok, call this whathever you want.
heyyy
i want to have some knowledge regarding fibonacci vortex, can you guys help me with this
yeah, sure i can help you, but what you refers as “fibonacci vortex?” Would be the interaction of fibonacci levels with the price?
Hi there, i trade mainly using fibo retracement,fractal,snr and candlestick primarily. I am interested to know how you would enter a trade , maybe with a diagram… That would be great. Thanks
Hi i am interested to know more on this system, do u have a diagramnto show how you would enter a trade? That would be great…
heyy,
thanx for the reply. actually i want to know how to apply the spiral patterns to the charts and how to make adjustments so that we can dial in accurate price levels for the next swing. any images would be f great help. 