Fib retracements

[Nick1984 10]

May as well get straight to the point. I've never really used Fib retracements before but I see heaps of people using them on charts. Do you use them in real time trading or only at the EOD to get some ranges for the next day?

 

I'm kind of confused as to the FIB's use and how its applied in real time trading. Anyone who could shed some light on this would be much appreciated.

 

Cheers!

[Soultrader 12]

Couple of levels I like to watch at EOD to prepare for the following day is the 50% fib. Other than that, I use them real time for retracements especially the 50% and 61.8%. The chart below shows a 50% retracement combined with a VAL pivot. I especially like it when the fibs line up with a pivot. Then you got yourself a nice pullback entry.

 

Note: I made a mistake and labeled that chart VAH. It should be VAL.

[torero 10]

You move the Fib levels as prices make new high or low or new pivots. This is one of the more dynamic S/R than your standard S/R levels.

[Nick1984 10]

So when your using your fibs in real time, how often would you use them in a day? I get how they are more dynamic cause they are based off developing price action, but (using the chart James put up) would you then draw another retracement from that high to the bottom of that move, and again from the bottom of that move to the next high?

 

And if so, do the new lines automatically cancel out the old retracement points?

 

Thanks for the quick replys btw

[torero 10]

Fibs are constant moving targets, always. So you have to move when price action create news price levels. This is the beauty of it (and pain to others), gotta work to get the level that may say something meaningful. This is why sometimes markets reverse for no reason to some traders, because fib levels do hide orders on the opposite side. Forex with 78.6% is notorious for reversals. Just read some of the examples in the forex section.

 

Yes, as you move the move old becomes invalid, but remember, if you see levels that are confirmed by other tools, such as pivot points, in a cluster, this makes a stronger areas of hesitation or reversal.

[flatwallet 10]

Off Topic ---

 

Torero,

 

Loove the signature.

 

"My only objective is NOT to eat like a bird and poop like an elephant"

 

I think every newbie should read the Nassim Taleb books.

[torero 10]

I actually heard it from an experienced trader, I thought it was the funniest trading rule ever heard, it stuck with me since. I didn't know it came from this guy. If it's his, then I may just read his book after all. After all, I'm just a newbie hanging in my lounge