Why 61.8%?
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Thread: Why 61.8%?

  1. #1
    I've recently actually taken an interest in the Fibonacci retracement tool. . .but something's been bugging me, and that is that the 61.8% ratio. What's it about this amount that makes it the most important of all the ratios? I've heard it be called the golden ratio, but do not understand why.

    Is there a motive? Or is it merely something that's been ingrained into the minds of most traders, that the motives do not matter.

    I've been trading the EUR/USD since the onset of the downward trend in December and saw it pretty much discount the rest of the Fib retracement levels and just in 61.8% did it find real support, (which I'm glad we have finally broken through).

    I'm just confused in this ratio. Don't understand why it's the most crucial one of the bunch.

    Any ideas?

  2. #2
    Quote Originally Posted by ;
    But because I have spent a substantial number of hours studying charts and testing systems since 2007, along with the fact that what I am doing makes comfy sense for me, leads me to believe - as long as I maintain discipline - I have a real edge.
    Wow. I see how wrong I was back in 2010!! A couple of weeks of riding a profitable trend, and that I thought that I had turned the corner. As to how unkind and difficult the journey could be, which will confirm my perception.

  3. #3
    Quote Originally Posted by ;
    quote Wow. Looking back today, I see how wrong I had been back in 2010!! A few weeks of riding a profitable trend, and I thought that I had turned the corner. Which tends to confirm my perception.
    That's why they say that they only constant in the world is the CHANGE

  4. #4
    Quote Originally Posted by ;
    I do not believe anybody can prove or disprove God's existence. It is merely an issue of belief.
    FWIW I tend to agree, one looks in the world and unconsciously perceives ultimate causation as being design or chance.

    However, unlike the poster before you (shanewatson), I don't feel that religious or philosophical idea -- or perhaps character -- has some bearing on how predictive (or differently ) Fibo levels are. IMHO markets will be different belief systems' product: they represent the collective outcome of the way that traders think that price will behave henceforth. This produces orderflow which in turn drives price, potentially creating a round'self-fulfilling prophecy'. Much like all support/resistance, price reacts in Fibo levels as a direct consequence of the entire quantity of orders which were placed at these levels.

    If a trader could somehow detect where the greatest volumes of orders have been placed, and devise a system of entries and exits to exploit this, he will be profitable. Of course this is not the only road to success.

  5. #5
    61.8 is the phi the alter ego of the Golden Ratio.... Multiply 61.8 from 61.8 and what do you get.... Divide and what exactly do you get? Like with 1.618 the Golden Ratio, multiply by split and itself alone and what exactly do you get? Response: the very same proportions which are multiples and divisions of itself....self similarity is important if it comes to fractals....in fact its the very definition of fractals.... Fibonacci's fractals, i.e The Golden Ratio fractal could be shaped with just 2 points. Its the only way in the universe. Its the only proportion that does this. That is why it's called the Divine Proportion. There is just 1 way which does it perfectly each time. Just one. Period.



    That's not the like 1,1, 2, 5, 3, 8, 13 etc. since that's merely that's the fibonacci sequence and doesn't equal the Golden Ratio. It simulates the golden ratio and permits for approximations, but it isn't the GR.

    Http://vashti.net:44131/mceinc/RGPHIGRA.htm

    consider this sequencegt;gt;gt;gt; it computes to PHI/phi with multipliion branch inclusion! That is all I'm saying. Http://vashti.net:44131/mceinc/DERIVPHI.htm

    only my comprehension of it's all I might be off a bit. . .but no issue. . .only one opinion here

  6. #6
    For every single fibo level, those makes, you discover the right girl for each level

  7. #7
    This small site from Haven University may interest those who like Fibonacci: https://www.lhup.edu/~dsimanek/pseudo/fibonacc.htm

  8. #8
    Quote Originally Posted by ;
    quote FWIW I often agree, one looks in the entire world and unconsciously perceives ultimate causation as being design or chance. However, unlike the poster before you (shanewatson), I don't feel that spiritual or philosophical idea -- or perhaps character -- has some bearing on how predictive (or differently ) Fibo levels are. IMHO markets will be belief systems' product: they represent the collective outcome of traders think that price will act henceforth. This produces orderflow which in turn drives price, potentially...
    applying fibo ratio to markets in order to predict the turning points is plain untrue notion. Golden ratio exists in character because of the laws of natural selection. This particular pattern has evolved of the most effective for reproduction, growth and survival. Except not all in nature respects the golden ratio. Unfortunately the fibo ratio has turned into among the hottest marketing tools as some has gone past sanity attempting to use it to irrelevant things. For them anything with spiral shape is golden ratio. This insanity has found its place in markets too and fibo levels are among the tools. But it is an issue of belief. I think in the rule of thirds.

  9. #9
    Quote Originally Posted by ;
    quote When a trader can somehow discover where the greatest volumes of orders have been put, and devise a system of entrances and exits to exploit this, he'll be profitable. Of course this is not the path to success.
    The 1st step is to understand what we're searching for. That is a breakthrough in our journey because after we understand what we're currently looking for, can it be oranges or s or clouds or anything then only can we start our'travel' to discover or find? We can't go searching. That's why if we understand what we're searching for it's a discovery in itself, there's a start, everything before that is plain or hogwash guesswork, to put it more politely. Not hard to comprehend that?

    Yup, invest 10,000hrs staring in the charts until your eyes bleed then magically you will'discover' what you ought to be searching for. It's a pattern, a channel, a Fib, SR or SD level or bigfoot, lochness or martians, UFO....are traders so gullible? In the absence of anything better, traders don't have any option but to be gullible and superstitious?

  10. #10
    Respect to anyone who claims to trade these levels successfully and has done over the years.

    I'm yet to find any evidence that demonstrates these levels work better than 50:50. I agree it's up to each individual trader to prove to himself if presented with this kind of signs but a first step will be arrangement or a definition on what swing points are valid to apply the fib retracement levels too. I stand to be corrected but so far what I have seen for that definition is very subjective. If someone could provide a clear followable definition on what constitutes a swing then it ought to be quite simple to recognize and create an indior to indicate those on a chart and extract the information for objective analysis.

    Regards



    PS. I cannot code myself if anyone can post a definition I will be happy to utilize the information in Excel when there is a coder that is willing to extract the information according to it.

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