Question: Do Fibonaccis work?
Corona Del Mar, CA
Howdy Friend,
Good 'ol Fibonacci support/resistance levels. Do they work?
Check out this chart below I randomly pulled from Twitter: |
It seemingly brings certainty to an uncertain world.
Listen up because I'm going to describe a strategy that WORKS and is fully tested. I designed it back in 2011 for trading the ES E-mini. If yesterday was a 50% bigger than average down day, then put a sell limit at XX% retracement of yesterday's range. Take a profit or loss at 14 ticks. Whichever comes first.
Do the opposite for a big up day. Can you guess where the XX% retracement level was?
50%? or 61.8%? or 38.2%?
How about none of the above...the retracement level was precisely 33%.
66% often pops up too.
Those are not Fib numbers, so once again, the masses are WRONG. They don't even get the numbers right BECAUSE THEY DON'T PUT IN THE WORK! |
Let me tell you a story...
Josh Jarrett is one of our original Founding Members of The Boss. He built well over 200 trading strategies which he used to place in the top 5 at Fundseeder. (out of 18,000 traders according to their press release).
He used up 410,000 compute hours of The Boss creating these strategies with AI. That's like a normal computer running for 46 years straight. He cost my company well into 5-figures in cloud computing fees (which I'm fine with). But I'll tell you this: Exactly ZERO of these strategies use Fibonacci retracement levels in the trading rules.
Let that sink in.
I can bet Danny Bell's strategies don't have any Fibonacci numbers, wave counts, or trend lines either. Yet he was up nicely in May. Take a look:
Peter had a great May. Here's his brokerage statement. You guessed it. No Fib numbers.
Here's a simple question that'll keep you out of some trouble when looking for trade ideas:
Where's the backtest? If they don't have one, they're full of hot air. You can literally do the opposite in many cases.
Since you made it down here, here's a free gift for you. Pretty sure it'll keep you out of trouble. May you use it wisely.
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Disclaimer: The results listed herein are based on hypothetical trades. Plainly speaking, these trades were not actually executed. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not actually been executed, the results may have under (or over) compensated for the impact, if any, of certain market factors such as lack of liquidity. You may have done better or worse than the results portrayed.
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