Trading Fibonacci numbers

[beachlife]

Oil Trade

The 50% Fib level has finally been broken, so now stop moved to just under that level at $98.87 which is also just past the price at where a swing down would be confirmed, and just under the swing top around 11th Dec. So 3 reasons to put it there.

View attachment 56028

 

[beachlife]

aud/usd trade just triggered.

 

[Valued]

I keep looking into this and the more it sounds like BS.

Firstly, 50% is not a fib level. I don't know if there is anything special about 50% but I suspect if markets have a tendency to retrace back to 50% and reverse then it's because people like stuff for half price:

Secondly, there does not seem to be proof that the golden ratio occurs in nature on a wide and systematic basis. Given how wide nature is, any number/ratio can be made to fit something. The problem with fib ratios is that investigation seems to dictate that it doesn't quite stack up. Sometimes it doesn't fit the golden ratio exactly or other times are just assumptions that have not been tested. Often no one has even measured something and posted the results online.

The fact that the golden ratio is used in anything man made is not very convincing. Man, obviously being aware of the golden ratio, may seek out to create something in line with that ratio. Therefore, we must look to occurances in nature.

I can't seem to find anything online that proves that the golden ratio appears in nature any more then it statistically should (presumably any ratio could occur somewhere if you look hard enough). I even found an article that said a sea shell spiral that is logarithmic may not actually be a golden ratio rectangle, if you actually measure it: https://www.sciencenews.org/article/sea-shell-spirals

 

[beachlife]

I keep looking into this and the more it sounds like BS.

It's probably best that you dont attempt to trade by it then.

For tech/a
Oil turned down just shy of 62% and although it closed at 50%, the next session it went through and hit stops, so out for 0.6x risk profit. Wont look at long again until it gets above 61%. If we get a lower swing top below 50% then I will be looking for a short. Between 50% and 61% I stay out.


AUD/USD
Here is the chart with the trade points shown. Stop is just above 50% of the last down range, and target is at 50% level from the weekly chart. The trade triggered and straight away went in the wrong direction, but has made a bar top at 38% and then went back down to close towards the low. But the day of the trigger also formed a higher swing low, so it will be an interesting few days to come.

 

[Valued]

Well I clearly arn't going to trade by it unless it can be proven/makes sense.

Even the pyramids which are said to be made with the golden ratio arn't. Giza is 756 feet high and 481 feet wide or 1.5717 ratio. I assume things have to actually be 1.618 and not just close to it.

One website claims this:

A DNA molecule measures 34 angstroms by 21 angstroms at each full cycle of the double helix spiral. In the Fibonacci series, 34 and 21 are successive numbers.

So what? It equals a ratio of 1.619...? When talking about the golden ratio appearing in our DNA, one would think you would have to be exact, not just pretty close. If DNA is wrong you end up a vegetable. Clearly it's not supposed to be 1.618 but rather 1.619. People do this with markets all the time. They make up fib levels that don't exist (50%) or are lax about the requirements i.e. "Ah well 1.70 is very close to 1.618, it must be reversing soon". If such inaccuracies are accepted then you can say that anything occurs at a fib level, especially when you make up new fib ratios!

Even if this is the case, it doesn't mean it can apply to human psychology. Perhaps the ratio is something that just works, like pi, but it doesn't mean groups of millions of people can as a herd gravitate towards this ratio in an infinitely complex market. Such a claim requires extraordinary evidence. By making such a claim you are saying that you don't believe markets move by supply/demand or that they only move via supply/demand up to certain points before they reverse. There may be a self-fulfilling prophecy somewhat though.

 

[beachlife]

Well I clearly arn't going to trade by it unless it can be proven/makes sense.

Even the pyramids which are said to be made with the golden ratio arn't. Giza is 756 feet high and 481 feet wide or 1.5717 ratio. I assume things have to actually be 1.618 and not just close to it.

One website claims this:

A DNA molecule measures 34 angstroms by 21 angstroms at each full cycle of the double helix spiral. In the Fibonacci series, 34 and 21 are successive numbers.

So what? It equals a ratio of 1.619...? When talking about the golden ratio appearing in our DNA, one would think you would have to be exact, not just pretty close. If DNA is wrong you end up a vegetable. Clearly it's not supposed to be 1.618 but rather 1.619. People do this with markets all the time. They make up fib levels that don't exist (50%) or are lax about the requirements i.e. "Ah well 1.70 is very close to 1.618, it must be reversing soon". If such inaccuracies are accepted then you can say that anything occurs at a fib level, especially when you make up new fib ratios!

Even if this is the case, it doesn't mean it can apply to human psychology. Perhaps the ratio is something that just works, like pi, but it doesn't mean groups of millions of people can as a herd gravitate towards this ratio in an infinitely complex market. Such a claim requires extraordinary evidence. By making such a claim you are saying that you don't believe markets move by supply/demand or that they only move via supply/demand up to certain points before they reverse. There may be a self-fulfilling prophecy somewhat though.

You are correct, it's not 100% accurate 100% of the time - just like trendlines and patterns.
It may be a self fullfilling prophecy, just like trend lines and patterns.
It is drawn with the benefit of hindsight based on old data - just like trend lines and patterns.
The old data is used to project possible points of concern in the future, which sometimes dont pan out - just like trend lines and patterns.
Some people can trade them well, some cant - just like trendlines and patterns.
Most people dont use it and dont belive it works, what's that stat again, around 90% of people fail at trading.

50% is Gann, not Fib, correct again.

It works for me, most likely wont work for anyone that expects it to be an exact science.

 

[beachlife]

WOW just closed above 50% and made a higher swing bottom and higher swing top so orders for short trade have been cancelled.

 

[beachlife]

aud/usd stop above 50% was taken out over the break for 1x risk loss.

 

[beachlife]

Here is the next one - March Coffee

50% has been significant in the past and 2:1 profit target is below it.
38% has been significant in the past and it is above 1:1 risk reward so will be a point to move stops.
Entry @ $122 is above 25% which has been significant in the past - yes it's also Gann.
Stop is below where 1 day swing chart would turn down.
MMA has turned up.
recent swing tops have been broken.
2 day swing chart has higher tops and higher bottoms.

Ticks all the boxes.

Has been filled in elec market so is already live.

 

[Trembling Hand]

Here is the next one - March Coffee

Ticks all the boxes.

Has been filled in elec market so is already live.

I assume this is a CFD? What is the spread on these things?

 

[beachlife]

yes its a cfd, spread is 0.9. I have increased my account for this year so the spread is getting a bit big so am organising a futures account but its not done yet.

Didnt start as I would have liked so now I use last nights bar to check the ranges and see where the stop is. There are 2 ranges to look at. For the small range the stop is right at 61%, and for the bigger one its just above 50%, so I will move it to just under the 50% level to try and avoid being stopped during an intra day spike like happened with aud/usd trade, so new stop is 114.

 

[beachlife]

I got into this at the close yesterday and had to go out, so tech/a gets a hindsight reprieve on this one.

Rio gave a signal on the daily. Check of the weekly showed two almost touches at 61% in the past and a reversal at 50%.



Daily showed 2:1 possible by 38% so I was in short at 65.20.



Stop now at BE. Hindsight by a day, but real.



(the sugar trade is at the end of its run and is well below 61% so there were no Fib numbers worth looking at so it wasnt posted, just a moving av trade.)

 

[beachlife]

Looks like the reprieve was mine. Stopped out when it gapped over the BE stop for 0.5x risk loss.

 

[beachlife]

Watching this potential swing top at 38% on March oil which will also be just under 50% of the last major move up on the weekly spot V.

 

[beachlife]

No entry on oil, an example of how waiting for confirmation helps to avoid losing trades (just like QBE 'hind sight' example), see what happens now that 61% is nearby.


IAG. Another one day late by a day, so now a hindsight trade. Was looking for a possible turn at 50% so entry was placed below recent consolidation low bar. Orders were placed last night, it had closed at the high so I didnt expect it to fill today so went to bed, but it did.