Question: How reliable is fibonacci retracement

Discussion in 'Learn how to trade or invest by asking questions' started by chubble123, Mar 18, 2017.

  1. chubble123

    chubble123 New Member

    Dear all,

    I am a student in year 10 and am doing a research project on the reliability of fibonacci retracement. Please could you state your opinion and give some evidence to back it up.

    Thanks
     
  2. Acstudio

    Acstudio Well-Known Member won penny contest 44x won weekly contest 40x won weekly contest 41x simulator winner 20x

    Are you familiar with a very mysterious and cryptic thing called "a bell curve"? It's pretty much that...as with just about everything in life. My evidence= [​IMG]
     
  3. ineedupticks

    ineedupticks Member won penny contest 2x won weekly contest 2x

    This one is a tough question - I always feel like Fibonacci is a mind game similar to those math equations where you take the last 4 digits of your phone number, plug it in, and get your age.

    I never use it.

    One of my best friends who has traded alongside me for the last 13 years uses "exotic" analysis such as Fibonacci, fractals, and Murray math. He has broken down the math, shown me the sequences, etc and given me examples several times during live trading and it seems to work. The exotics are way beyond me so I stick to the whole K.I.S.S. methodology.

    I've seen many times where he makes great money. I remember some time several years ago, he pulled me over to point out RIMM and how it was hitting Fibonacci points on a pullback, he threw everything he had into it (making this his biggest trade ever). My memories a little fuzzy but it was falling and he set his buy price for something like 93.85 price dropped slightly through his buy price and made a huge spike over the next several sessions to where he got out around 138.

    For me, I stayed away from that pullback
     
  4. chubble123

    chubble123 New Member

    Thanks for replying. There is not much information on this on the internet, do you know where I could find this information or some big sources of information on trading in general. Except from the obvious though.
     
  5. Acstudio

    Acstudio Well-Known Member won penny contest 44x won weekly contest 40x won weekly contest 41x simulator winner 20x

    Tastytrade.com
     
  6. rgakalo

    rgakalo New Member

    In my opinion Fibonacci retracements aren't reliable at all. I think they seem to work only because our mind tries to find regularities in everything. You can do the following experiment: open any price chart and put several horizontal lines at it without looking at the screen. Although the lines are completely random, when you look at the chart again, it will seem that price reacts to these levels. I suggest you check Adam Grimes's free trading course on quantitative discretionary trading, he has some good points about Fibonacci and similar trading ideas.

    I personally never found any success with Fibonacci. There are some strategies based on confluence of several Fibonachi retracement/extension levels but in my opinion even they don't work. Also Fibonacci doesn't make sense to me because markets are driven by forces of supply and demand not some mysterious laws.
     
  7. ineedupticks

    ineedupticks Member won penny contest 2x won weekly contest 2x

    A good rule of thumb instead of using fibs is...

    30% retracement = still bullish/bearish
    50% retracement = mildly bullish/bearish
    100% retracement = all bets are off
     

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