Why Fibonacci time frames on charts???

Hi everyone,

Something that's been on my mind the last several days. This has rattled around in my brain for years, but I always put it to bed and say, "GW knows what he's doing so don't question it". Well GW isn't Jesus or God so now I'm going to question everything. I'm also not trying to "bake GW's cake" using his recipe any longer so that's out.

Why did GW pick Fibonacci time frames for charts??

Is there any REAL method to the madness or was he on some sort of Fibonacci kick at the time and decided "yeah, this is a great idea"? Back in the 80's and early 90's there was a LOT of talk about Fibonacci all over trading circles. So many people latched on to Fibonacci indicators and trading systems as if it were the new holy grail for technical traders back then. However, as we all know there is no "holy grail" or "black box" that would always be right. Soon Fibonacci trading systems fell out of favor, but they're still lingering around to this day.

I mean why would a 233 chart be better than a 4 hour chart? There's only 7 mins difference between the two charts. What makes the 55 better than a 60 min chart?
We all know that there is 390 minutes in the trading day, so why not just chop it in half and use a 195 min chart instead of a 233. The 55 min chart gives 8 candle a day, but the last candle is only 5 mins long. Using 65 mins will give you 6 even candles for the day, so why not use that instead of having a tiny 5 min candle dangling out there in space?
Sadly you can't divide 390 by 7 or 8 candles because it will give a fraction of a candle. Like for 7 candles it would be 55.71 candles and 8 would give 48.75 candles. Since you can't have "fractions" of a candle those two choices are out. Hehehe.....

Yes I know all about "Those Fabulous Fibonacci's", but it still begs the question. Was there any logical reason why he chose to use Fibonacci time frames above all else?

R

If I remember correctly, he said those were God's numbers.

I'm not taking one side or the other. I'm just repeating what he said.

As a successful person told me, "Find what works for you and keep doing that over and over."

djpl8

Hahaha....

Now that sounds just like something he'd say.

Now that you mention it, it seems that I've heard him say something like that many years ago. Back in the WSB 1-5 days.

It's a natural assumption to think that those were "God's numbers". That comes from the fact that Fibonacci sequences keep repeating often in nature. There is a lot of truth to it occurring so often in nature, and there have been many books written on the subject of Fibonacci sequences However, that doesn't mean all the charts should be based on it. The weekly and Daily aren't part of it, so that breaks the mold right there.

This is the part of the journey where I find what works and keep doing it over and over.

There was a time when I would NEVER question anything GW would have said. That didn't get me far, so now I'm going the other way. So far that's been working out a lot better.


R

You just have to keep trying and figure out what works. Nothing is going to work all of the time. I'm finally getting comfortable with losses and that seems to be the key for me. I also don't hold overnight. I like to be in and out the same day. The last trade that I held through the weekend made me money, but I got lucky.

So I'm not really following Gary's recipe to the letter. I do appreciate what I've learned from him and for getting me into this business, but I'm not going to take any more of his classes.

I will admit he's right about a lot of things, But we don't have an environment for swing trading right now.

djpl8

Yes I agree, and I hope no one thinks I'm hating on GW in any way. I'm not and I appreciate the hell out of him.

Without GW I wouldn't be a trader, and would be very lost when it comes to the markets. Like has been said already. I have to find out what works for me, and the way I'm doing it now works so much better than trying to bake his cake.

I don't worry about losses anymore, to me it just part of trading now. I know where my exit point is regardless of which direction it goes, and that gives me a bit of comfort I suppose. I'm either going to make a profit and exit or a very small loss and exit.


R

I most certainly agree and I am still a student of Gary R Williams and am forever grateful because of the teaching and the books that I have been exposed to, the stories are distracting to me but they do have a point. However the last charting webinar explained why most people fail at the 233 recipe and that they want to do the hard stuff and are hunting a trade. 1-5 still works even if he calls it a model T and not the Ferrari. It still a work thing, I do want to plug Darcy with thanks as she is a very good chart reader and is a wonderful, giving,and creative person. Several people have moved me forward and these are just two.

In short "It is a math thing". Fibonacci numbers are used by many big market movers. Since they use these numbers and are market movers, we have one more tool to assist us in trading. India introduced the number 0 and negative numbers back around 1200 BC. As a result, sine and cosine was born. Simply put without getting deep in trig it is a crossing of positive and negative numbers.
Go here and scroll down to where sine (sin) and cosine (cos) has a moving chart and you will see the Bollinger bands. Amazing really how it works. [en.wikipedia.org]
It was a great thing when the market moved away from fractions and into the decimals which only strengthened using Fibonacci and sin and cos. And NO I don't think in any fashion were you trying to "hate" on GW.

Thank you GameOver for the nice complement.

Very late to the discussion but Fib numbers have been used by traders for years due the golden ratio of 1.618. I did a whole research thing back in the day when I first learned GW's system. That ratio appears in nature too many times to be overlooked, hence the term "God" or "Creator" ratio. Traders will do anything for an edge so I guess someone figured out how to leverage in their daily trading. In addition to timeframes, there is a big community that use these for retracements, projections, time cycles, etc. If anyone recalls the original QCharts AutoWave, it came out of the box with quite a few popular fib projections as well as some of the more obscure. As I recall, GW said he started using because it gave him an edge (e.g., at the time he was a short chart 55 minute traders - using 55 minute gave him a few minute head start before the candle completed vs a 60 minute trader). That example doesn't hold if you compare to 34 vs 30 but I do remember the 55 vs 60 discussion. All of that said, I have found that the the fib chart timeframes due tend to give an ever so slightly earlier signal. I do like the larger timeframe fib charts.

As for retracements and projections, I just know the levels and keep those in mind in context of everything else I was doing(just another piece of evidence). I never got caught up in exact numbers. I just knew a bullish move would retrace around a third, up to maybe a half. Reversing on or before 50% retracement was better than making it to 61.8%. As I said, never got caught up in exact levels - just focused other confirming S/R levels along with indicators "around" the 50% retracement mark for swings.