Myth Polls series 1: Fibonacci
January 3, 2008 – 8:39 amOk, beginning of the year. FOMC meeting minutes, Non Farm Payroll reports are lining up, and traders are still in some kinda holiday mood. So, I will start trading sometime next week. Let’s have some fun before getting into action.
I am a straight forward and slow trader, look at the charts I’ve posted on this blog, you know how dumb I am. I can’t figure out why do some magic numbers/methods, such as Fibonacci, Gann, astrology or even idiot wave (oops sorry, is it Ell-iot?) etc work for some traders (or do they really work? God knows). So, I decided to run a series of polls to see how many of my readers are actually using these tools or craps (oops, sorry) to trade, and consistently profit from them. Well, you know what I am saying, we are looking for a consistent approach. Oh man,consistent, man, consistent. Let’s collect around 100 votes for each poll before continue to the next one.
So, the first one. Fibonacci. Can somebody tell me why on earth the price shall rebound after retracing to 50% or 62.8% ? Other than ‘The whole world is watching this level’ , I can’t find another answer. Please leave me a comment if you do. No offense to Fibonaccians out there. You should continue have fun in your own world if it brings you profit! 
Here is the first poll
Opinion Polls & Market Research
From the desk of Tradergav.com
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Tags: fun
I’m of the opinion that at some time in the past there actually was something to using fibonacci retracements and extensions. I’m guessing that it’s probably something as simple as the fibonacci ratios coinciding with some basic tolerance level in the average human psyche. But once a few traders picked up on it and published articles/books about it the reason it “works” transitioned to the “everybody in the world watches those levels”. When old-timers talk about how certain chart patterns and breakouts don’t work as well as they used to it’s probably the same phenomenon. That’s my take on it, anyway.
Fibs always seem to work when I draw them. Unfortunately, they’re the last thing I think of when evaluating a trade so I haven’t been able to make them work for me consistently.