Dear Trading Friend, As a reminder, you are getting email from us because
you either once asked to go on this Traders Ezine list, or requested info
on a trading related subject we normally cover via this communications
method, or you are a client of ours. Your email address and other
information will be kept confidential per our online Privacy Pledge. Of
course, you may opt-off this Traders Ezine at any time if you do not find
this trading knowledge useful.
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In this Edition of Traders Ezine we offer you an interesting Fibonacci
Article, and some feedback from an Australian client, and we cover some
recent comments, news and events.
Regarding Real Success 2nd Edition Course, we continue to get some great
feedback on how the RS2 Video Tape Training Course has been helping
traders, both daytraders and longer term position traders. To help even
more we have expanded the Course from four tapes to six (2-Hrs each) Video
Tapes (with no increase in price). That’s approx 12-hrs of learning,
including a number of real-time 100% Internet Based trades made during the
filming.
The 2 additional tapes have also been sent as a FREE bonus to RS2 clients.
They were mailed out last Friday so you should get them soon.
By the way, we have received a few early reports of some blank empty
tapes caused by the duplication processor. If you get these, please let us
know (by email) and we will mail out 2 new tapes next week. No need to
return the blank tapes. This problem is believed to be fairly rare as most
of the shipment was OK.
This week we have added another new Webtrading.com advertiser Orion
Futures Group. Their Webtrading Broker Page Sponsoring link is located
here https://www.webtrading.com/links/brokers.htm We will be exploring the
cost, quality and benefits of their brokerage services shortly and hope to
give you a report on Orion within a few weeks.
We really appreciate our Sponsors as the revenue helps maintain our
websites and keeps our service and product prices low, in addition the
advertiser/sponsor may also offer a service or product to help you trade
better.
Our office will be closed from Wed Nov 22 thru Monday Nov 27 as we take a
short family vacation to Colorado. Please send email
mailto:ctcn@webtrading.com if you wish to contact us or leave a message on
the answering machine. If it’s important, we will try to reply via email
using the portable computer from the Road, if not, upon our return next
week.
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Learn Fibonacci by Rick J. Ratchford
Regardless of whether the markets actually comply to 'natural law', or it
is simply the result of many trading programs acting in unison, markets
tend to react to a certain set of ratios. Before we go into what these
ratios are, we'll first cover where they are derived.
Back in the late 12th century lived a man called Leonardo Fibonacci de
Pisa. It is said that he had returned from a trip to Egypt where he came
across a set of numbers with many remarkable properties. Apparently, it
was his study of the Pyramid of Gizeh that he noticed the "Golden Ratio"
that the ancient Egyptians had integrated into its dimensions. Today we
refer to this sequence of numbers as "Fibonacci Numbers."
The numbering sequence follows: 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144,
233, 377… As you can see, each number is the result of adding together the
previous two numbers in the sequence. This can be done right into infinity.
The interesting properties of these numbers, after getting past the first
4, are as follows: Each number in the sequence is approximately 1.618 the
previous number. The higher the number, the closer to this ratio it will
be. On the reverse, each number is approximately .618 of the next higher
number.
The higher the number, the closer to this ratio it will be. Alternate
numbers will be 2.618 of each other, such as 377 to 144. The inverse is
.382.
These ratios also interrelate to each other as follows:
Square of .618 = .382.
Square of 1.618 = 2.618
2.618 x .382 = 1
2.618 – 1.618 = 1
1.618 x .618 = 1
1.618 - .618 = 1
There are many other interesting facts that we can bring up about the
Fibonacci numbers and ratios, but we'll dispense with it now and discuss
the application of Fibonacci to market analysis and trading.
Fibonacci ratios more often than not manifest itself in the patterns of
market prices. By examining any price chart, you should be able to note
this for yourself. The simple approach to using Fibonacci is in price
support - resistance discovery.
As found in many trading programs today, what is called 'Fibonacci
Retracements' are derived by taking a market range, such as a market
bottom to a top, and dividing that range by these Fibonacci ratios of
.382, .618.
There are also other Fibonacci ratios you can use, such as .786 and .236.
.786 is the square root of .618, and .236 is from multiplying .382 with
.618. Example: Suppose we look on our daily price chart and see an obvious
market bottom at 150. Now suppose that price moved up for some days and
eventually made a top at 200.
We know this to be a top because price has started to move down from that
top. All we would have to do to get our Fibonacci static
support/resistance prices is to take the top price of 200 and subtract
from that the bottom price of 150. Our RANGE would then be 50 points.
Take the RANGE (50 Points) and multiply it by the Fibonacci ratios of
.236, .382, .618 and .786. We would end up with the following results:
(50 x .236) = 11.8
(50 x .382) = 19.1
(50 x .618) = 30.9
(50 x .786) = 39.3
Since price is moving down from the top price of 200, we would subtract
the results of these ratios from 200 to get our SUPPORT prices.
(200 – 11.8) = 188.20
(200 – 19.1) = 180.90
(200 – 30.9) = 169.10
(200 – 39.3) = 160.70
The process is the same for price ranges that go from top to bottom, where
price is starting to move up again. In those cases you would simply add
the results of those ratios to the bottom price to get your RESISTANCE
prices.
Fibonacci ratios can also be useful at times for discovering when a top or
bottom may form. The process is to simply count the days between two tops
or bottoms (or whatever combination you care for) and multiply by .618.
Take the result and add to the second top or bottom in your equation to
forecast out a possible turn.
Another time approach is to take any major top or bottom and then count
forward a Fibonacci number worth of days into the future, such as 34, 55,
89 days and so-forth, that will produce a future date in which to look for
a possible market top or bottom to occur.
As with anything else in trading, price will not always find Fibonacci
support/resistance nor will it always turn at your Fibonacci time day
counts. Other methods and indicators could and should be employed along
with Fibonacci ratio work in market analysis. However, due to the
frequency of ratios affecting market action, it would be worth your time
to further your study in Fibonacci numbers/ratios. Rick Ratchford.
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Dear Dave, I feel I must also express my gratitude to you for your work.
Your latest video series has helped my trading skills and results a lot. I
am currently using Candlestick Charts with a Keltner Channel overlay, plus
an additional 50 or 100 period moving average, in a 1 or 5 minute time
frame.
I also use Market Profile to ascertain additional support and resistance
levels which help a lot. I trade predominately the Nikkei 225, and find
this market is suitable to our time zone and has plenty to offer most days
by way of ranges even in a non-trending market. Unlike Greg, I like to
sleep at nights so I haven’t looked at the American Markets, but if $5000
per week is in the offering for 1 contract I might have to review this!!
The quality of the material on your site is exceptional and I feel we have
a great forum for learning. If more members were to have some input by way
of communication, I think we would all benefit.
In my trading I agree with Dave that it is better not to have too many
indicators as it tended to make me hesitate more than I should, also the
CNN News clouds the vision more than it should.
I am not able to run your software Dave as I don’t have Tradestation or
Supercharts, and I was wondering if any members have a copy they would
like to sell I would love to hear from them (write c/o
mailto:ctcn@webtrading.com ) Our (Australian) Dollar has gone down so
much against your dollar it makes any purchase quite expensive. In fact if
anyone wants to communicate re trading skills I would love to hear from
you. Happy trading. Walter Tweedie
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Editor’s Notes:
We are repeating this information as a number of traders did not read
about our publishing schedule in our last Traders Ezine:
Our schedule is as follows: Approx’ 36 Email Traders Ezines per year, and
2 or 3 printed mailed CTCN’s, we will also be announcing a number of
additional benefits for our paid members starting January.
This reduction in CTCN printed issues was due in part to more and more of
our articles and resources being targeted to Ezines and The Web. Also, we
have received considerable support and requests to do this more
electronically for its speed in delivering content and its great cost
effectiveness.
As mentioned in our last two Traders Ezine’s, we are excited to report
starting this month, Nov 2000, we have increased the e-mailing frequency
of Traders Ezine to 3 issues per month. This way you will get more and
more and rapid trading knowledge to help you get on the road to profitable
trading! This is the third Ezine issue of November. The next Ezine is
scheduled for December 1st, one of three scheduled for December.
P.S. We trust 3 Ezine’s per month (approx every 10-days) is about right
for you. The feedback I hear indicates this is a good schedule. By the
way, aren’t those emails and email newsletters you get from others,
sometimes EVERY day, annoying! That’s far too frequent a schedule. Getting
them Daily makes them seem more like spam than something of value.
The current in-print mailed issue, Issue 53 is now finished. Sorry to say
it again has been delayed somewhat for various reasons, but should be
mailed to our paid members by Early December.
All the best,
Dave Green, Editor
P.S. Here are some suggested trading related links:
Stephen A. Pierce, CTA, who wrote the extensive article in the last
Traders Ezine, is also a Webtrading.com paid website sponsor but not
otherwise affiliated with us. Please look at their services using this
link https://www.webtrading.com/links/commoditytradingcourse.htm
The Money Mastery Course is a webtrading.com paid website sponsor but not
otherwise affiliated with us. Please look at their products using this
link https://www.webtrading.com/links/commoditytradingcourse.htm
More Info and to Order our Gann Commodities Course
https://www.webtrading.com/gann-commodities-course.htm
Commodity Traders Club Free Knowledge Based Primary Website
https://www.webtrading.com
Real Success 2nd Edition Trading Course Information is here
https://www.traders.org/realsuccess2.htm
RS-2 (New and Strong 1-yr) Guarantee of Satisfaction Info
https://www.traders.org/guaranty.htm
To Order RS-2 6-Tape Video Training Course:
https://www.traders.org/rsorder.htm
CTCN Club Paid Membership https://www.webtrading.com/member.htm
Traders Organization Portal Guide for Daytraders https://www.traders.org
Year 2001 London, England RS-2 Trading Seminar (special Discounts for RS2
Trading Course clients and Early Registration discounts also:
https://trading-seminars.com/
Webtrading Knowledge Based Free Traders Search Engine
https://www.webtrading.com/searchengine.htm
W. D. Gann Trading Techniques Gann Methods Trading Course & Gann
Commodities Course https://www.webtrading.com/gann.htm
Low-Cost Options & Spreads Trading Course – The author (Greg Donio) say’s
90% Wins Are Possible with this specific options strategy!
https://www.webtrading.com/options.htm
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