The Fibonacci Trading Myth

It is very typical for trading software sellers or trading systems to claim that their particular piece of technology will allow you to find the top and bottom of every move. The belief is that markets can be traded with scientific accuracy.

The reality is that if markets moved scientifically, there would be no market.

Markets are barometers of human emotions. Millions of variables play a part.

Despite this, traders still flock to scientific theories. A popular theory now is Fibonacci numbers. This numerical sequence founded hundreds of years ago randomly identifies patterns found in nature with these numerical sequences. The reality is, there are as many natural entities that do not follow a Fibonacci sequence.

Fibonacci numbers have nothing to do with the markets. These numerical retracements and extensions, when effective, correlate to areas that are simply support and resistance.

Theories of waves, fans, pitchforks and numerical sequences are just a spin to entice individuals to believe that trading can be an absolute process, which just is not the case. Becoming a successful trader is more an art than a science.

A proven formula for success - keep it simple. Price is the driving force in all markets. So learn to how to interpret price free of any indicators. A time tested indicator is price.

The novice is enamored with trading indicators and trading theories. The experienced trader understands learning to trade is a discipline that requires very specific training. That training must teach an indivdual how to correctly read a price chart.


Source by Steve Rising

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