The "golden spiral" is a fascinating curve. But it is just one member of a larger family of curves/spirals collectively known as "logarithmic spirals", and there are still other spirals found in nature, such as the "Archimedian spiral." It's not difficult to find one of these curves that fits a particular pattern found in nature, even if that pattern is only in the eye of the beholder.
But the dirty little secret of all of this is that when such a fit is found, it is seldom exact. The examples from nature that you find in books often have considerable variations from the "golden ideal". Sometimes curves claimed to fit the golden spiral actually are better fit by some other spiral. The fact that a curve "fits" physical data gives no clue to the underlying physical processes that produce such a curve in nature. We must dig deeper to find those processes.
Our conclusion must be that there is no significant difference between the frequencies with which price and time ratios occur in cycles in the Dow Jones Industrial Average, and frequencies which we would expect to occur at random in such a time series.
In our introduction, we noted that empirical evidence from academic studies suggests that not all of technical analysis can be dismissed prima facie. The evidence from this paper suggests that the idea that round fractions and Fibonacci ratios occur in the Dow
can be dismissed.
Just out of interest, I'm wondering what aspects of T/A people think are rubbish?
Topping the list for me is fibonacci numbers. Yes, I know NR who knows more about trading than I will EVER know in my entire lifetime believes in them. But to me it is rubbish. Fibonacci ratios are basically derived from adding the two previous numbers in a sequence. 1,1,2,3,5,8,... To think these really have any magical significance over future price increases/declines is absurd.
It is like the 'more twins are born during a full moon' fallacy. When the midwife sees twins, s/he looks out the window and says 'ah yes, it is a blue moon' or otherwise, doesn't register the lack of a full moon. Only the blue moons are remembered, and so the belief is augmented.
Unfortunately for my rational argument, it doesn't really matter. If you can derive a positive expectancy from believing in fib ratios, who cares?
Watching a show on SBS tonight about 6th sense and and how peoples emotions direct their thinking, if one was handed a hot drink to hold they made a different decision to some one who was told to hold a cold drink.
4% of Pilots during the wars shot down 40% of the enemy because they seem to be able to predict what the enemies next move would be.
So I guess that is why some people have better trades than others we all know a trade can go up, down or do nothing for awhile the ones who win are the ones who can be the most consistent.
do you have a link for this show?
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