New Investment Strategy “Fibonacci theory”

[pimpit]

You guys are pretty pathetic with new investment strategies.
No one comes up with anything new so I have come with Fibonacci theory.

This is better than MD’s theory (that he does not tell us) and Yogis Astro theory (which he does not give us a worked example).

This method does not need any research on the business you buy in Share Market. Also this does not need any Warren Buffet style evaluation of the business. (ie: no long nights trying to code Warren Buffet formulae in to xl)

In summary
Leonardo Fibonacci da Pisa was born around 1170 the son of a city official and merchant. He became a prominent mathematician and is credited with the discovery of what we now call the Fibonacci series.
After a trip to Egypt he published his now famous Liber Abacci (Book of Calculation) in which amongst other things he comes up with the sequence of numbers.

1,1,2,3,5,8,13,34,55,89>>On to infinity.
If you add one of the numbers in the sequence to the number before it you get the next number in the sequence e.g. 3+5=8 and so on.

After the first few numbers in the sequence if you measure the ratio of any number to that of the next higher number you get .618 to 1 e.g. 34 divided by 55 equals 0.618. The further along the sequence you go the closer to phi you will get.

If you measure the ratio between alternative number you get .382 e.g. 34 divided by 89 = 0.382 and that's about as far into the explanation as I care to go. All you need to know is if your charting software has Fibonacci capabilities. If it does then that will work everything out for you.

The three Fibonacci ratios we shall use are .382, .500 and .618 and how we can use them in our day to day trading.

In an uptrend measure the distance between point A and point B and in a downtrend measure the distance between point A and point B where point A will always be the lowest recent.

You can read up more on this theory online. Use google.com to search for "Fibonacci theory". You may find lot of hits related to someone trying sell you Fibonacci book or dvd, ignore those.

I will post a worked example of this Fibonacci theory on my favorite stock NZO sometime next week. I came across this theory at a free ASX seminar in Brisbane so I thought I would share.

[Snow Leopard]

quote:Originally posted by pimpit

You guys are pretty pathetic with new investment strategies.
No one comes up with anything new so I have come with Fibonacci theory.

Yeah right.

[duncan macgregor]

quote:Originally posted by pimpit

You guys are pretty pathetic with new investment strategies.
No one comes up with anything new so I have come with Fibonacci theory.

This is better than MD’s theory (that he does not tell us) and Yogis Astro theory (which he does not give us a worked example)

I take it you were referring to my time line. I would suggest that anyone coming up with a new idea or system keep it to themselves. You will have to put up with straight out ignorance to jealous ridicule. Do not include PHAEDRUS, my goodself, or SNOOPY who all come out rightly or wrongly with their systems. I have a go at YOGI but to give credit where credit is due, he sticks to his methods. If you say pathetic prove us wrong come out with what you are up to. MACDUNK

[ratkin]

[u]You guys are pretty pathetic with new investment strategies.
No one comes up with anything new so I have come with Fibonacci theory.</u>

Brilliant, cant believe nobody thought of it before :D:D:D

[kittydashwood]

[:o)]

[yogi-in-oz]

:)

Hi Pimpit,

Respectfully, Fibonacci simply claimed a long-standing
principle as his own work, when further research reveals
that Pythagoras also knew about the same mathematical
sequence, about 400 BC ... !~!

In fact, if you do some more research on the same sequence,
it is found in the NATURAL growth cycles of many animal and
plant species ... ie tree rings, crabs, worms, etc, etc

..... and you can also add the OLDEST evidence in the same
sequence ... the ratio of Venus/Earth planetary movements
arounnd our Sun, expressed in days:

226/365.25 = 6187542

Given that planetary relationship has been in existence
since creation, there's nothing new under the Sun ..... :)

For more information, research Pythagoras' Music of the Spheres ... :)

happy days

yogi

:)

=====

[peat]

pimpit
I think you will find fibonacci as a basic tenet of many systems people use eg Gann Theory, Elliot Wave Theory, so saying you've come up with Fibonacci theory is bound to attract a few sniggers, as has happened. BUT , dont let that stop us from maybe using the thread to discuss the different ways Fib ratios are applied and maybe we could attract some of the experts to critique what we say. Although having done a lot of research over the last couple of years since I started forex trading , amazingly, I only recently started using Fibs on my graphs.
My first independent success on this was predicting the Kiwi would hit 67.20 and reverse recently. This is a perfect and very simple example. see my picture here at the bottom of that page

http://www.sharetrader.co.nz/topic.asp?TOPIC_ID=19721&whichpage=31

The 61.8 Fib was 67.2 and if you now look at updated graphs you will see there was a tradeable reversal at precisely that point

In that pic I also included a misguided attempt at Fib time as well. I had never seen anyone use it so I just threw it in :D

I have recently got access to an interesting EWI document giving some examples of using Fibs which I am finding useful.

Basically , I like the idea of using Fib analysis and am hoping we can actually get a useful discussion going on this forum. I know I can learn from others input.

[kittydashwood]

http://www.dummies.com/WileyCDA/DummiesTitle/productCd-0470049278.html?cid=RSS_DUMMIES_ALLNEW

Good reading for new balanced investment strategies.

[pimpit]

PT: thanks for pointing out the obvious.

here is the Fibonacci Theory applied to my favorite stock NZO. I don’t have fancy graph tools like you kids I have used MS paint to draw some lines up. Those lines represents Fibonacci ratios.

Max = 1.12C
Fib ratio 0.618 = 0.99C
Fib ratio 0.500 = 0.96C
Fib ratio 0.382 = 0.92C
Min = 0.80C

I have taken the maximum and minimum in the last 12 months as the limits. So as per my understanding of the theory when sp hits the marked lines rapid decent or rapid rally.

http://img300.imageshack.us/img300/9357/chartfindataconzqy9.gif


144 is a very significant number in this theory. As example take the minimum, add 144 trading days or 144 trading weeks, if the sp reach one of the lines after 144 days or weeks it is a strong indication. See the example illustrated in the plot.

Blame Fibonacci if you think this is full of #*&$. I am trying to get a more understanding of this theory.

[kittydashwood]

144 is the measurement, in cubits, of the wall of New Jerusalem shown by the seventh angel (Holy Bible, Revelation 21:17).