[marker]

Anyone willing to comment on these statements that I have hearing more and more often these days:?

-You can make an argument that there is a fib trading level at every single bar on the chart. Take any chart, and draw any fib extensions or retracements, (pick a bar, any bar, pick a swing high/low , any swing high/low) and you will see some bar at any given fib level. Fibs will work after the move has been made. The fib trading method does not work during real time trading. On any given chart at any given time frame, there are a million fib levels...If you trade the fibs, you will over trade and chop your account up...

Is there some truth behind this statement? I wish there wasn't, but the more I think about....

[SIUYA]

substitute support and resistance for fib and you could probably get the same sort of idea.
If markets are fractal then yes you will always beable to chop everything down further and further. However I am not interested in scalping, short time frame trades, I am more interested in identifying possible swings and entry and exit zones, prior to (not after) the movement.

I use fib retracements, or extensions of obvious swings to offer EXTRA visual cues that may offer areas of interesting trade triggers.
eg; a 50-61% retracement of an obvious swing, a 100% extension of what might be a ABC or 123 pattern.

Is this used in a hard and fast way? - No
Is this scientific, backtested, 100% reliable? - No
Is this an extra visual cue that alerts me to a possible interesting trading area? - yes
Does this seem to work as a way of offering good risk to reward levels to either enter trades or take profits? - yes

[jashanno]

Draw a couple of random horizontal lines on a chart and watch price magically bounce around them like they are important. This sounds to me like what you are running into.

With that being said I do think they can be used in a profitable system. The key to it would be to have a huge risk reward ratio and I would use it as confluence for support and resistance. That way you have two things confirming that your entry might be good. I would imagine the accuracy would be terrible though so if you a guy that needs 50%+ then this wouldn't work.

I have attached two charts from a trade that I did tonight as an example of what I am talking about. I did not use fib levels in this trade and were drawn after the fact but are there just to illustrate what I am thinking. In fact I don't even know if I drew it correctly because I know nothing about fibs. The blue line was what I determined to be support that turned into resistance and I wanted to take a short on the test of the new resistance. It is at the 38.2% fib level so I feel confident in this area holding. On chart 2 you see where my entry was at and my small stop. On chart 1 you see where I am shooting for the new support level as my exit.

One thing that might be frustrating with this is if you try to short 38.2% and then 50% then 61.8%... etc. So you need to find the most important S/R levels and the most important fib levels and only trade those if they both match up.

To me the most important level would be 50% (again I know nothing about it). But I think about it like this... lets say you go look at a car and the seller wants $10k. You offer him $9k. He counters w/ $9500.... 50% fib. That may be too simplistic though.

I also think what you will find is after awhile the fibs are just getting in your way and all you need is the support and resistance levels.

[jashanno]

LOL. SIUYA beat me to it. We basically said the same thing.

There's your "confluence"

[marker]

Seems like there are more traders that agree that fib level are on every single bar on the chart. Take the days chart and just randomly chart fibs, and then you can see you could had made a million entries and exits. The question is, are you willing to put your chips on the line in real time? for me, no way.

[SIUYA]

you cant build a house with just a hammer.

it can be a useful a tool that can be combined with other tools. I just would not get too caught up with trying to perfect it and use it in a simplistic manner that suits your philosophy of how the market moves and it can be useful.

[SIUYA]

you cant build a house with just a hammer.

it can be a useful a tool that can be combined with other tools. I just would not get too caught up with trying to perfect it but rather look to use it in a simplistic manner that suits your philosophy of how the market moves and it can be useful.

eg; if you like to enter on pullbacks, a 50% or 61% retracement is a good level, or if you like to fade ABC breaks, do it at the 100% level.

As soon as anyone thinks they have the answer and can see what no one else can see then it can become a problem. (there are exceptions to this of course )

[mitsubishi]

Long time since i posted here but something i been working on again recently is fib time zones.I think traders are so obsessed with PRICE that they forget about TIME.
The biggest reason its so difficult to pick tops/bottoms,good reversal areas is because those price points are often fleeting,particularly on an intraday chart.The perfect entry is there for a few minutes..often only seconds.This is not a problem in itself as many traders prefer to wait for confirmation before entering/closing out.
I think it may have a lot to do with resting orders at certain price levels,and it must be big money there as it takes big money to stop a trend in its track.
However,often,these turns occur at fib time zones which can be anticipated in advance..not predicted..anticipated.
Using Time as well as Price could give your trading an extra dimension and give more confidence of pulling the trigger and capturing the biggest part of the move.If the move then goes as you anticipated,instead of entering at your normal confirmation point,you could pyramid at that point and this is the way a small initial position with a sensible stop can give better returns than you're currently getting.At least that is what i'm finding..fewer trades bigger results,less is more etc.
I will post some examples if there is any interest here