The three unchanging laws of market movement

[FloFri]

The problem with this is the timing. Like in this case, this line could function as a resistance. When will you decide that price is bouncing? At this moment, price is moving beneath the level. My problem is that I would be biased and too eager to take a side. I have a feeling that in this case I would have done the same, but I wouldn't be happy having followed this lead. The next hour or so could prove me wrong. One could also have waited for e.g. hourly RSI. In short, when do we decide (on a break or a bounce)? This must be a clear one. A clear break is easier to spot, but often it's too late, a bounce could take longer. I don't know...
Or is it the earlier bounce yesterday that gives you confidence?

[James]

I am only looking for a reversal candle. Nothing else. I have that and am now long. I only expect to be right 60-70% of the time, and I like to keep stops tight. In this case only 30 pips.

[bobnat]

James,

I enjoy reading your posts, keep 'em coming.

For those interested in Fibs, Joe DiNapoli has a pretty decent book for about $150 which gives lots of info about confluences and agreements. It answers the question asked above about where to draw the Fibs.

I trade Fibs also and I use a confirmation for the bounce. It consists of a close above/below the open of last two candles going in the opposite direction. If the confirming close moves too far I won't take the trade as the R-R gets skewed. I've tested this thoroughly and have been trading it for almost 6 months now. It tends to get me in later than others (DiNapoli gets in a lot sooner but will get out just as fast if price doesn't continue in his direction) but it raises my probability rate tremendously.

Nat

[James]

Thanks 'Nat. And good stuff from you too. I am short Swiss and Yen now as per previous posts on my thread. I am still long EUR/JPY, having moved my stop 5 pips lower. My clients were stopped out, but will probably re-enter again on the next 4hr close, as we have a reversal in the making. Often the price will break out beyond the fib and SR level in a false move, as EUR/JPy has probably done today.

[James]

PS, your 2 candle thing is on an hour chart I guess? Probably ends up very similar to my 4 hour single candle entry.

[Tekunda]

James if you use Fb levels as extensively as you do, you must have heard of Joe Dinapoli. He can be regarded as the pope of Fibonacci levels. Have you incorporated his findings in your Fib style trading, especially the so called DiNapoli levels and Fibnodes?
There is even a software out called Fibnodes, which calculates the DiNapoli Fibnodes.
Oh, and what has become of your experiments with the Phi spiral?
And last but not least, have you also tried to incorporate Fib timing (the tool Esignal offers) and for possible price targets have you tried your hands on Fib projections into the future?

Oh and before I foregt it, there is a software, which has developed really nicely over the years for the fib trader. Its called
T-3 Fibs pro trader by Nexgen http://www.nss-t3.com/
Have you ever tried out this piece of software. It seems to work with confluence levels. The screen shots look very interesting.
A lot of questions I know, but Fib trading might be the future! Forget TA with indicators you Forex traders out there. There are more than 2000, yes, in words, two thousand different indicators out there. Why so many, if they work? They do not work, that's why every week another "Holy Grail" indicator is thrown at the feet of naive traders.

[James]

Originally posted by Tekunda
James if you use Fb levels as extensively as you do, you must have heard of Joe Dinapoli. He can be regarded as the pope of Fibonacci levels. Have you incorporated his findings in your Fib style trading, especially the so called DiNapoli levels and Fibnodes?
There is even a software out called Fibnodes, which calculates the DiNapoli Fibnodes.
Oh, and what has become of your experiments with the Phi spiral?
And last but not least, have you also tried to incorporate Fib timing (the tool Esignal offers) and for possible price targets have you tried your hands on Fib projections into the future?

Oh and before I foregt it, there is a software, which has developed really nicely over the years for the fib trader. Its called
T-3 Fibs pro trader by Nexgen http://www.nss-t3.com/
Have you ever tried out this piece of software. It seems to work with confluence levels. The screen shots look very interesting.
A lot of questions I know, but Fib trading might be the future! Forget TA with indicators you Forex traders out there. There are more than 2000, yes, in words, two thousand different indicators out there. Why so many, if they work? They do not work, that's why every week another "Holy Grail" indicator is thrown at the feet of naive traders.

Funny thing is that, when I started trading, Fibonacci analysis made immediate sense to me and I pursued the thinking when most traders had never even heard of it. I have heard of DiNapoli, and scanned through one of his books, but I prefer to go for more obscure books. Something that every man and his dog have read does not appeal to me much.

To briefly answer the rest...

I have not stopped looking at phi spirals, and will continue to update my thoughts on it as and when I can. Fib timing is also something I observe and when significant time goal days arrive I take note. I have not tried Nexgen but will take a look thanks.

I agree with your thoughts on TA. I have never found them to be any good, although others will disagree. Each to his own.

[bobnat]

James,

Yea, I trade mainly off the 1 hour and daily. I'm going to start looking at the 4,6, and 8 hour charts soon.

Tekunda,

I read DiNapoli's book and was intrigued by the FibNode software. He explicitly states that it isn't worth the time to create your own, so that's exactly what I did, lol.

Nat