I think 78% is the real fibonacci level.
Thanks for the link MT, I did like the paragraph printed below.
In addition to the ratios described above, many traders also like using the 50% and 78.6% levels. The 50% retracement level is not really a Fibonacci ratio, but it is used because of the overwhelming tendency for an asset to continue in a certain direction once it completes a 50% retracement.
Did we mention 50 shades of grey on a Forex for a. ;lmao;
Let me break it down for you then if you still dont understand what im saying.The fact that it has anything to do with Dow or Gann that is a coincidence.I don't know the origin of the 50 level and who invented it but i
m 100% sure that it is as valid as a fibonacci level as the others, and it is also a fibonacci ratio.Donât believe me, let me explain:
Ok so here is the fibonacci sequence:
0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, 233, 377, 610, 987, 1597, 2584, 4181, 6765, 10946, 17711, 28657, 46368, 75025, 121393, 196418, 317811
The universal formula for determining the fibo ratios is picking a number and dividing it with the one that is right to it,so for example: 987 / 1597 = [B]0.6180[/B]3381340012523481527864746399
This will give you the famous 61.8% retracement!
Pick a number and divide it by the one that is two places to the right:
987/2584 = [B]0.3819[/B]6594427244582043343653250774
Here you go the wonderful 38.2% retracement!
Pick a number and divide it by the one that is 3 places to the right:
987/ 4181 = [B]0.2360[/B]6792633341305907677589093518
Here you go the magical 23.6% retracement!
âŚetc
But what if i pick the number 1 and divide it by 2 ? Those are too in the sequence, letâs see what happens:
1/2 = 0.5
Wow this is exactly the 50% retracement, it works!
Also here are the missing ones if you donât see the logic in the calculation algorithm:
1/1 =100% retracement
0/1 = 0% retracement
The 76.4 and 78.6 's calculation formula is in the first post,but they are a little bit different,but just as valid as the others.That is basically an average of the 100 and the 61.8 and the other is a subtraction of the 23.6 from the 100.Thats it, all the misterious secrets of the fibonacci tools.
So this is my explanation, if you still donât get it,then you must be somekind of troll because i think this clearly explains my point!
Yes it will make a difference, for example on the 1 min chart is is 1-2 pip difference but on the 1H or 4H it might be a lot more, so why not research which one is more accurate and grab as many pips as possible, you have to maximalize your profit or atleast take all what the market gives to you.If the market gives you a nice retracement why take only 61.8% of it why not 70+ % thats the point, and since those 7x retracements are the next valid fibo levels, now the question is which is more valid than the other? What if not the closest one is more accurate, maybe the price likes to hit the higher level as much as it hits the lower one, then just throw out those extra pips on the window or grab them all?
Nobody invented the 50%, and yes itâs there.
But itâs not part of any true mathematical expression of the Fibonacci sequence. There are all sorts of numbers that show up. .5, .4, .25, and on and on.
If you are worried about one or two pips because you used 76% instead of 78%, you have missed the point. Neither one of them are more accurate.
Sometimes the 50% only hits 47%. Sometimes the 61% only hits 58%.
As was said earlier, itâs not an exact science with retracements. Itâs hand grenades. You are obsessing over something you might think will gain you a few more pips, but in all honesty, itâs likely to cost you more holding out for those one or two, or five or ten you think you might miss.
Think about it. A whole 2% difference. On a 400 pip trade, youâre talking about 8 pips. Thatâs hardly worth all these mental shenanigans.
Oh, and one other thing. Donât show up in a math club talking about the 50% Fib level.
Theyâll look at you like you have leprosy.
I see and understand where youâre coming from. Iâm on he shorter time frames. So to me it doensât make that much difference. But now that I think about it, Iâll wait til the end of this discussion and see if I need to make a change
So i guess after this long debate i will stick to the 76.4 since its closer to the entry and probably it is more accurate.
I think itâs unfortunate that sometimes we defend are positions with an aggressive zeal. I hope what everyone takes away from the debate, is that the Fibonacci tool is a valuable analysis tool, and traders should spend some time finding out what numbers to use as they apply to your style of trading.
Ok sorry for the agressive debate, but this is not about âstyle of tradingâ.The style doesnt matter here since this method will be used with an EA, thats why i needed so accurate entry levels.Anyways if we would just pretend that both levels are good still they would alternate, some pairs prefer this some prefer that, there are many variables here, but still i`m pretty sure the closest one to the entry levels will limit our exposure by 2%.And on the big picture this will improve the statistics.
So my final vote is for the [B]76.4%[/B].
[QUOTE=âProximus;533240â]
Ok sorry for the agressive debate, but this is not about âstyle of tradingâ.The style doesnt matter here since this method will be used with an EA, thats why i needed so accurate entry levels.Anyways if we would just pretend that both levels are good still they would alternate, some pairs prefer this some prefer that, there are many variables here, but still i`m pretty sure the closest one to the entry levels will limit our exposure by 2%.And on the big picture this will improve the statistics.
So my final vote is for the 76.4%.[/QUOTE]
If its going to be used in an EA than it would be extremely easy to make two versions of the EA with the different fib levels⌠Run them on backrest and youâll have your answer as to which is better.