TRADERS DAILY

There is a lot of disagreement among traders as to (A) whether fibonacci even exists in the stockmarket and (B) if it does exist whether it is of any use,ie can you make money from it? Then there are yet more traders who are trying to answer these questions, but are having great difficulty in identifying exactly where these ratios should be calculated from.

In fact,i had this problem myself and the more i researched, the more confused i became.The general concensus seemed to be select a recent high or low and project your ratios from there. Sorry? please define 'recent'. Are we talking about a 1 minute chart, a 5 minute chart, swing trading a few days/weeks? Oh, i see maybe all of the above. You see one mans high maybe another mans low.Then there was the issue of how some people prefer to actually calculate these ratios- divide the high by the low subtract the number you first thought of, then add the ratio. What for? Call me simple if you like, but simple is what i prefer. 2+2=4 in my book and therefore it follows that 1500+0.382%=1505.7 So if 1500 is the low then if we are going higher i'm looking for 1505.7. Of course now we are back to arguing about what constitutes a low,but dont worry, i have a simple answer (you probably, by now thought as much).

So back to the original problem;define low, define high.The answer,for me anyway,was to say are there any fixed price points on the chart that nobody can argue with? How about open high low close (OHLC). There you go 4 fixed points every day. Put simply, there ended the problem regarding fixed points.And the biggest laugh would be that if i found ratios connected those points within any given day and/or across several days, then proof that fibonacci exists in the market had been staring everyone in the face for years.And guess what...yep you guessed it, ratios right left and centre.Check the historical data yourself,Yahoo finance type ^gspc, select historical.Just add and subtract the ratios from each fixed point and see how many connections you find,it may suprise you.Then you might want to look at a few charts on this site and read my daily diary and market replay sections.That will give you ideas about how you can incorporate the ratios into the rest of your strategy.Its always a good idea to have more than one reason to put a trade on.There's no such thing as a holy grail indicator ,more a case of probabilities in your favour.(knightrader) see:CHARTS