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No offense intended because I believe people are free and deserve to trade the way they want. All that matters in the end is making money at it.
But,
Do you really believe that the trillions of dollars, and the countless number of people behind those dollars in the market represented by that chart are governed by some numerical ratios that occur in nature because they are the lowest energy way to grow organic structures?
Do you believe that back in 2007 on that chart market players big enough to move the market said to themselves "I am going to sell when price reaches the 161.8 extension"?
Indeed @Seahn! Could you see George Soros staring at a chart of the British Pound in 1992 as he was getting ready to short the market and "break the bank of england"? (sarcastically) sure, i can see him saying, "stan, i want you to short the fuck out of the pound, but not until you have a fib to sell it against!" the irony of this entire discourse, is it would never be found on a forum that consisted of professional traders. it would be like a bunch of rich guys getting together, and discussing what it would be like to be poor. it just doesn't happen. you'll see a bunch of poor cats fantasizing about what it's like to be rich, but not the other way around. i remember victor once writing, One finds it very dysfunctional to lose my temper on all occasions, but especially when trading or with the children. It could even lead to tilt. So forgive me if I don't mount the high horse in my disapproval of talk about Fibonacci and Elliott wave and Gann waves on the spec list as our raison d'etre is almost as antithetical to such things as it is to politics, religion, and honeys (may they never meet).
all these charts are meaningless and only serve to highlight the the difference between prior and and posterior probability. to quote wikipedia...
In Bayesian statistical inference, a prior probability distribution, often simply called the prior, of an uncertain quantity is the probability distribution that would express one's beliefs about this quantity before some evidence is taken into account
the posterior probability of a random event or an uncertain proposition is the conditional probability that is assigned after the relevant evidence or background is taken into account.
yes, it's true that the market does go from a to b and then pulls back to c and goes on to move back to b and beyond. and sometimes c even turns out to be a fib. the question is not if this phenomena occurs, but with what probability does it occur, and what is the probability of having an extreme and sustained change in the market-trend, given you have this pull-back.
there is no theoretical basis to believe that fibonacci support and resistance levels hold any validity for traders. so the only possible rationale might be that one finds that they work empirically. to date no such credible evidence has ever been seen.
single signals and other linear, uni-variate input leave the trader with a simple binary bet, with no opportunity to act on new information. it does not provide quick feedback in order to alert one if the trade is valid or not, nor does it assist the trader in generating asymmetric payoffs or a high expectancy.
if one was to ask himself, does the source of this edge make sense, or is there a structural, behavioral, or fundamental reason why the source of this signal should persist, i think the answer would be "i don't know".
What is the title of this thread ???? Are Fibonacci retracement and projections useful...
The none believer say, did the market follow this number... did the fed follow... the answer is no
but they don't answer the question...
To be useful don't mean to be the holy grail..., Vix is useful, divergence are useful, VWAP are useful but none of them are the holy grail indicator. It the way you use it they are useful...
For me fib extension are USEFUL but it the way I use them that I like them.
For me they do what I want to see and give me the info I want...
When you want to succeed as bad as you want to breathe, then you will be successful
-Eric Thomas