| | | Re: My Fibs
As I have been saying (and will show you below), my fibs are not like the conventional fibs. They are not based on some bar's HLOC. They are a narrow band area where I expect it be inflection point (think of them analogous to support/resistance region). If you follow Q's harmonic trading, then we can say that my fibs are analogous to markers of the center of the harmonic trading reversal zone.
How fast the index/stock approaches the fib will tell you whether or not it will cross it, bounce off it, or lingers to make up its mind. This is not something that you can read on a chart b/c like the harmonics, it is a dynamic pattern.
Once a fib is decisively breached (based on time and/or price), I expect the movement to continue towards the next fib, which surprisingly tends to come very close to Q's HOP and targets. Of course, it can always fail, so you need to remain diligent.
The charts below are from the NQ trades today between 11am - 3pm. The faster chart (left or top) is a 15-second chart. The slower chart is a 2 minute chart. And I have one 15 minute chart there too. The purpose of this illustration is to show that while the longer term charts (5+m) may look the same, under the hoods things are very different. And that is how you can trade better by paying attention to what the algos are really doing.
A colleague of mine (Ph.D. in applied physics) used to be in weapons research developing missile targeting systems. He told me that the algorithmic tradings systems are nearly identical; you try to figure out where the jet is going and what kind of evasive actions it is going to take. You account for the radar, processing, and missile time to target, and you fire. It's really not that different that pinning your futures position.
Above is the 15s chart of NQ. It approached the fib fast enough to leave me comfortable to hold it, but not so fast that it would just zoom through it. And you see it hovering on both sides of the fib for a bit before resuming its descent.
Above is what NQ looked like on a 2m chart. This chart is a screen capture a few minutes later, so it is not perfectly synchronized with the previous one. If you squint, you can see the effect of the fib, but it is not as clear as it was on the 15s chart. On longer time bars you will completely miss the details.
This is about an hour later than above. As expected NQ went towards the next Fib below. BUT, unlike the previous episode you see how it slowed down before it reached the fib. So that minor breach you see there was suspect and the prudent thing to do was to take profits and position for going long. You see some red in the chart, which means I was short when I took this picture. That is because NQ pulled reversed a relatively long bar as it approached a resistance level on 15m, 2m, and 15s charts. The longer trend was still down, so I went with it. But I had my doubts about how low we'd go since the speed just wasn't there.
Finally, this is the charts on the way up. the 2 minute chart on the right shows the whole round trip from breaching the previous Fib to the bounce off the lower one and back.
The 15s chart on the left shows how NQ approached the upper Fib in nearly identical way that it broke through it. It lingered around it and kept testing it before it eventually (not in the chart) broke through it and went up to Q's 15900 4min target :)
Thank you and this concludes our tour of Sun Tzu's daytrading :)
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PS My method is not as precise as Q's, but does have some merits missing from harmonic trading. What I should really be doing is to properly learn harmonic trading so I can combine the two systems. |
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