Trading Fibonacci numbers

[beachlife]

Breaking of tops? What tops? The major one... a minor pivot high? And likewise if price breaks a "top" then fails why would you go short". As in what analysis says it will trend lower?

Why not just show a live example with no hindsight? That would be good.

I.M.O trading purely Fibs will result in a $0.00 account balance eventually.

You people are so intent on arguing for the sake of it that you are not reading what I have said.

What Tops/Bottoms/confirmation - see post #46

Live example - See post #67 and CCL trade https://www.aussiestockforums.com/forums/showthread.php?t=27716&page=2 Both commented on before entry, both updated in real time, both still open.



Hindsight - ummm hang on, tech/a's failure example was hindsight, with ridiculous entries, not relevant to anything I have said, just to show a failure. My so called hindsight trades are real.

Purley Fibs - never said that.

Account balance $0 - LOL....Far from it.

 

[beachlife]

Here is the next one I am looking for.

The aud daily after turning around at 50% has just completed 100% of the range and looks like a double bottom.

View attachment 55889


So now check the weekly chart which shows the price may be headed to 50% (0.855). So on the daily chart I am looking for a swing top to form under 0.9146(38%) and will then take a short if I can get 2:1 before 0.855 (50%)

View attachment 55890

The swing chart made a bottom on Fri which means that a swing top is next. That allows me to place a sell on stop order just under the price that will confirm the swing top. 2:1 RR is possible before 50% on the weekly, so the order has just been placed at 0.8850, with if done stops and target. I will continue to adjust it each day until filled or trade invalidated, depending on what the swing chart does. Who knows this just might be the one that costs Tech/a $500, assuming oil behaves itself over Xmas.

 

[Valued]

Which broker is that beachlife?

 

[tech/a]

Beachlife

The point I'm making and others is that with or without
Your idea of " confirmation " fib hasn't a better success rate than random entry.
So better than 50 % win rate
Personally I think your confirmation as a trading tool is poor.
My $500 and I'm sure yours stands ready to go if you can trade 3 of 5 profitably.
Or 6 or 10.

Fib to me after 20 yrs of trading designing and testing T/A is no more than an amusing
Coincidence seen "at times" on lots of charts.
It's benefit as a trading tool in my experience---- next to zero over a number of trades and charts.
There is so much you can calculate on a chart ( just look at GANN ) that you'll find something that fits perfectly on any chart at sometime or other.
Turn it into a profitable trading methodology as it happens ---- vastly different.

But hey watching with interest.

 

[ThingyMajiggy]

Beachlife

The point I'm making and others is that with or without
Your idea of " confirmation " fib hasn't a better success rate than random entry.
So better than 50 % win rate

I would love for someone to start a thread and do some trades that are purely random entries yet managed very well once in the trade, because I think a lot of these "methods" or "strategies" are not much better than random. Would be very interesting to see the difference if any, between random entries and excellent management once in the trade vs some of these methods.

 

[tech/a]

I would love for someone to start a thread and do some trades that are purely random entries yet managed very well once in the trade, because I think a lot of these "methods" or "strategies" are not much better than random. Would be very interesting to see the difference if any, between random entries and excellent management once in the trade vs some of these methods.

Very true Sam.
This has been my experience over many
1000s of Hrs of testing trading and researching.

 

[ThingyMajiggy]

Very true Sam.
This has been my experience over many
1000s of Hrs of testing trading and researching.

Begs the question what actually is an edge? Or better yet how can you prove it's an edge, what makes something an edge vs a random entry with good management? Gann, Fibs, TA, all aren't actually edges as its been discovered via analysis. An edge from what I can tell is something that can best anticipate instead of confirm, by the time you get confirmation you should already be in the trade it seems.

 

[CanOz]

Sort of reminds me of trading with a divergence indicator, works well when it works...which is usually looking back over a chart.

I recorded a session on the 6E with the zigzag indicator with fibb retracements switched on. It works sometimes but as stated where do you enter, the 50, the 61.8? It appears to work well when the fibb coincides with another area of support/resistance.

I think if you use this as a means to help you pull the trigger and its all working well statistically for you then fine...go for it. Whatever works is what works.

 

[Porper]

Sort of reminds me of trading with a divergence indicator, works well when it works...which is usually looking back over a chart.

I recorded a session on the 6E with the zigzag indicator with fibb retracements switched on. It works sometimes but as stated where do you enter, the 50, the 61.8? It appears to work well when the fibb coincides with another area of support/resistance.

I think if you use this as a means to help you pull the trigger and its all working well statistically for you then fine...go for it. Whatever works is what works.

Trading Fibonacci on its own isn't successful in my experience. You need to at least use it with Elliott Wave Theory and ideally some time cycles as well. E.Wave, despite it not being the Holy Grail provides logical entry points/targets. Just saying "once the move has confirmed" means absolutely nothing without reasoning.

 

[Boggo]

Trading Fibonacci on its own isn't successful in my experience. You need to at least use it with Elliott Wave Theory and ideally some time cycles as well. E.Wave, despite it not being the Holy Grail provides logical entry points/targets. Just saying "once the move has confirmed" means absolutely nothing without reasoning.

Agree, a valuable guide when used with pattern analysis imo.

 

[Valued]

What edge is in share trading is an interesting topic. I think the only way to compare it appropriately is to compare it to the zero sum game of poker. In poker you only profit off other people's mistakes. If everyone played perfectly then no one would ever make any money. On the stock market, if everyone invested perfectly then shares would always be at their intrinsic value so you would go for shares that offer the best returns on equity or capital etc. People don't invest perfectly and they trade on emotion. When someone makes a mistake and you take the other side of it, you win. The difficulty is being able to take the right side a good amount of the time.

Interestingly enough, if you apply poker math to the stock market, you can easily reason you don't have to win as many trades as you think you do. A 2:1 ratio means that minus brokerage fees you only have to be right 33% of the time to break even. If you are right 40% of the time you profit. You are just trying to be wrong less than other people are wrong. If you chose random entry points but worked with stocks with high volatility in that any potential pay off is going to be within a high range but your stop loss stays as a constant %, then you might be able to profit no matter when you enter since some of the time you will buy at support, sometimes at resistance, sometimes in the middle somewhere. The difficulty is that there will be a tonne of variance which is why you want to consider always trying to buy at the support level.

I think edge comes from risk analysis. I am very surprised no one has taken the g bucks principle from poker and applied it to risk analysis in stock trades. I googled and it has never been done from what I can see. I suspect it's because anyone good enough at poker to be using g bucks would likely be playing poker and not trading stocks. Poker players are miles ahead of retail traders when it comes to risk analysis. It may be also difficult to adapt. You need to understand what sklansky dollars are first. This is simply the average you would win on that particular trade if you could repeat it an infinite amount of times. G bucks is comparing the equity of your hand in poker to your opponents hand range. In the stock market you would compare your stop loss to the range of prices in which a stock might be expected to rise using some kind of measurement that would capture almost all trades such as bollinger bands e.g. a stock that might give you up to a 4:1 risk/reward ratio but most of the time only give 2:1 is better than a stock that will give you only up to 2:1 and no higher (a fake situation but toy games are how you analyse game theory in poker and I don't see why it won't work for the stock market too).

 

[Trembling Hand]

Valued you are talking about using the tendency of a financial instrument to display "trending-ness" to skew your numbers in your favour.

I'm pretty sure an "edge" can be found and once it is you will have a win rate above 50% AND an R:R above 1:1.

 

[beachlife]

Valued - broker is Cityindex

Edge - I am not looking for an edge or to beat the market, I am looking for positive expectancy by following the market.

Here's the next one - short WOW - stop entry order, if done stop and target have been placed.

Pretty simple. If a swing top is confirmed under 50% and 61% is broken my order will trigger. 2:1 target before 100% is possible. So entry below 61% and stop above 50%. Prior consolidation at 38% and 2 bounces of 61% add weight to the significance of Fib on this stock. If the stock rallies up through 50% order will be cancelled.

CCL stopped out today, small profit of 0.4xRisk, that's 1 of 5.

 

[beachlife]

Valued, I use 2:1 because I have found that going for bigger moves with a trailing stop used to get me stoppped out at less than 2:1 and as you say you only need 33% for BE (I am at 67% for the year - not 67% for full profit, 67% for some profit, so not all at 2:1). Here are some real examples of trades I did.

AMP - could have got a bit more, stop above consolidation would have been out about the same.



WBC - Nice, no more in it and target hit intra day.



NCM - oh well you get those sometimes.



And you can see CCL didnt get there at all.

And of course around 4 out of 10 make a loss.

 

[tech/a]

Beachlife

Haha.
Your not getting it that easy.
CCL was already in Profit when the challenge was launched.

(And seriously .4% of R---your saving face!! Didn't even reach your stop.)

Actually just checked I'll accept CCL. All be it a bit sus!

Would you mind expanding the chart and showing me the trade and Fib settings from where to where?

WOW is exactly the type of set up I am talking about.
If you have 4 others then we have a Comp!

Clear concise and un ambiguous.

 

[tech/a]

WOW

Only to show there are many ways to interpret the SAME chart.
Weekly to Daily






If we look at THIS Fib analysis its telling us its in a strong up trend.

 

[Valued]

Interesting that you chose to short wow. I wouldn't have traded wow at that entry but rather would have gone long the day after that pivot point (the day the stock went down). I was thinking about buying then too but decided not to. I probably wouldn't have traded this stock at all on the day you did but If I had to choose for a short term trade to Jan 1st I would have gone long.

It will be interesting to see how it works out for you

 

[beachlife]

Beachlife

Haha.
Your not getting it that easy.
CCL was already in Profit when the challenge was launched.

(And seriously .4% of R---your saving face!! Didn't even reach your stop.)

Actually just checked I'll accept CCL. All be it a bit sus!

Would you mind expanding the chart and showing me the trade and Fib settings from where to where?

WOW is exactly the type of set up I am talking about.
If you have 4 others then we have a Comp!

Clear concise and un ambiguous.

Your complaint was about hindsight, and ccl was clearly documented from before entry, nothing sus about it, and even more valid as no fudging because of your challenge. Here's the charts with the clutter removed.

CCL big range - top at 38%


CCL most recent up range - turn at 61%


CCL range projection used because there was nothing left in the range to base targets on.

 

[beachlife]

WOW

Only to show there are many ways to interpret the SAME chart.
Weekly to Daily

View attachment 55967


View attachment 55966

If we look at THIS Fib analysis its telling us its in a strong up trend.

I cant see any sign of a strong up trend, I see weekly sideways and daily down, but if that's what you think trade it then.

 

[beachlife]

Interesting that you chose to short wow. I wouldn't have traded wow at that entry but rather would have gone long the day after that pivot point (the day the stock went down). I was thinking about buying then too but decided not to. I probably wouldn't have traded this stock at all on the day you did but If I had to choose for a short term trade to Jan 1st I would have gone long.

It will be interesting to see how it works out for you

It's not a live trade yet. The orders are live stop orders so they wont trigger until the swing top confirms.