The New Fibonacci Trader: Tools and Strategies for Trading Success
With his bestselling Fibonacci Applications and Strategies for Traders, Robert Fischer established himself as the leader in the Fibonacci approach to trading. Moving beyond the old Fibonacci trader, who had the ideas, rules, and tools on paper, Fischer, with son Jens Fischer, now use computer graphics and calculation technology along with new Fibonacci tools to successfully trade the markets in The New Fibonacci Trader.
In trading the markets it?s important to know what to buy, but it?s even more important to know when to buy. Accurately measuring price and time signals are one of the best ways you can do this. Now, this groundbreaking book and CD-ROM provide a powerful new arsenal of Fibonacci trading tools and software?WINPHI?to recognize patterns, predict swings, and buck the trend?so you can achieve the highest rate of profitable trades.
A quick recap of the core principles of Elliott Wave Theory and Fibonacci Ratio are discussed to present an overall framework for The New Fibonacci Trader. From here, Fibonacci expert Robert Fischer gets to the heart of the concept by examining six geometrical Fibonacci trading tools: *Fibonacci Summation Series: to capture the rhythm of annual market swings *Corrections and extensions: trading with and against the main trend *PHI-channels: as indicators for market trend changes *PHI-ellipses: to identify underlying structures of price moves *PHI-spirals: to identify trend reversals in the market *Fibonacci time goal analysis: that use the ratios 0.618, 1.000, and 1.618 to anticipate the exact day, in time and price, a trend will change direction.
Along with helpful charts and graphs, The New Fibonacci Trader shows you how to effectively apply Fibonacci trading tools by using state-of-the-art WINPHI software, which is included in the companion CD-ROM.
Used individually or in concert, Fibonacci trading/analysis tools can provide the foundation for sophisticated trading strategies. These concepts are valid for volatile and marketable individual stocks worldwide, and are not just limited to the trading environment of the United States. In both bull and bear market conditions, these concepts work equally well. Many of the tools outlined can be applied to monthly, weekly, daily, or even intraday charts.
Whether you?re dealing in stocks, futures, or cash currencies, The New Fibonacci Trader will help you calculate key turning points in the markets, analyze market cycles, and make disciplined trading possible and profitable.
Table of Contents
Basic Fibonacci Principles.
Applying the Fibonacci Summation Series.
Applying the Fibonacci Ratio to Corrections and Extensions.
Fibonacci Time-Goal Analysis.
Combining Fibonacci Tools.
Afterword: The New Fibonacci Traders: Who Are They?
List of Abbreviations.
Appendix: User Manual WINPHI (CD-ROM): Getting Started.
In 1993, Robert Fischer published a book with Wiley and Sons under the working title Fibonacci Applications and Strategies for Traders. The book described basic findings and inventions of Fibonacci applied to sophisticated strategies for successful trading. The book became, and still is, an overwhelming success.
Almost eight years have passed, and the more popular the book becomes, the more evident it is that an integral part is missing from the first approach in order to make the all-fascinating Fibonacci principles tradable. The calculation power, graphics, and drawing power of state-of-the-art computer technology over the past half-decade have opened up horizons that are waiting to be explored. These opportunities must not be wasted. Computer technology has progressed markedly, and so has the power to successfully trade the markets using Fibonacci tools.
Making Fibonacci strategies profitable for traders is the authors' objective. The first book had the ideas, the rules, the principles, and all the Fibonacci tools on paper, but was not able to convert promising trading ideas into valid trading systems to be applied real-time to market data.
This new book focuses on the new Fibonacci trader. He or she still has the ideas and the skill, but, for the very first time, computer technology can be used to put ideas and skill together in powerful trading strategies.
We do not offer fully automated trading systems; rather, we write about the missing link that would graphically set up trading strategies and test them in a computerized environment.
In addition to academically describing our findings, we share our knowledge by delivering to readers the WINPHI software package that we use to graphically apply the Fibonacci tools to charts.
Some of the core principles of Elliott and Fibonacci have to be discussed again, even though they were explained in the original Fibonacci Applications and Strategies for Traders. The same holds true for some of the fundamental explanations of price and time targets in corrections, extensions, and Fibonacci time analysis. These subjects will be described again to adequately present the overall framework, but not in the same detail as in the first book. For newcomers as well as apprentices to Fibonacci and Elliott, we highly recommend rereading the 1993 predecessor.
Our purpose in this book is to introduce new tools not yet offered and never analyzed for the markets. The PHI-channel, the PHI-ellipse, the PHI-spiral, and the PHI-ellipse and the PHI-spiral combined with Fibonacci price and time goals, cover new territory and offer almost unlimited trading potential, if handled correctly.
The biggest difficulty when working with sophisticated Fibonacci concepts is that every trading tool has to be calculated with utmost precision. This problem can be addressed by hand when calculating price targets in extensions or corrections, but it is almost impossible to solve without the accuracy of a computer when it comes to PHI-spirals, PHI-ellipses, and similar concepts.
Our main challenge was to make the graphical use of PHI-spirals, PHI-ellipses, PHI-channels, corrections, and extensions just as simple as drawing a trend line on a chart--and, even more importantly, to have the ability to overlay and to combine different tools. As a reminder: The most powerful signals can be generated if different tools identify the same turning points in price and time.
Chapter 8 is dedicated to combinations of six geometrical Fibonacci devices that are allied in an integrated trading concept that proves reliable within the limits of the time spans traded on cash currencies and futures weekly, daily, and intraday. Our concept is also valid for volatile and marketable individual stocks worldwide. The latter factor is especially important because Fibonacci's and Elliott's principles and proposals claim global relevance and are not limited to the trading environment in the United States.
The first computerization of many Fibonacci tools was done in 1985 on a Microsoft DOS platform, but the true breakthrough came when the advantages of the Microsoft Windows operating system and its graphical surface and user interface became available to the mass market. Together with the vast power of today's personal computers and the huge storing capacity of hard files and removable media, the Fibonacci trading tools have almost unlimited potential.
And here lies our obligation vis-?-vis the investor. No matter how powerful the trading tools described in this book are, if interested investors cannot work with the tools, they are of very little use. Most of the tools described in The New Fibonacci Trader are not available elsewhere, not even with the most comprehensive and expensive trading software packages. Because we think that every investor should have the chance to work with the trading tools presented in this book, we decided to include the entire software package on a CD-ROM. The software is designed to work with ASCII O-H-L-C data on a daily basis, so that investors do not need to bother with multiple datafeeds, as long as they subscribe to a data vendor that includes a conversion utility for ASCII data with its data package.
Investors who do not feel comfortable with the need to convert data from their data vendors into an ASCII D-O-H-L-C format in order to be able to chart their data on the WINPHI program can rely on an online version of the WINPHI software package that is set up on a registered membership basis at www.fibotrader.com.
The Internet platform has the great advantage of supplying a much larger universe of trading vehicles to chart from various liquid international markets, and of allowing intraday trading on 60-minute and 15-minute bases. The Internet platform also closes the data gap from the time this book was written to any time in the future.
Again: The application of the Fibonacci trading tools takes knowledge and skill. Given the overwhelming response to the first attempt in Fibonacci Applications and Strategies for Traders, we know that serious believers in this kind of analysis can use the knowledge provided in this book to their benefit, as long as they have the ability to test and the discipline to follow these principles and then to execute their trading strategies.
All examples and strategies described in the book have been developed to the best of our knowledge. We do not offer fully automated trading approaches, but we introduce readers to some little known possibilities of beating the markets.
The fascination and beauty of graphic trading tools can be seen from day one. On the other hand, it is very difficult to have the discipline to wait until Fibonacci price or time goals are reached. The temptation of taking profits a little earlier, or placing protective stops a little wider, might dilute the overall performance profile.
This book is intended to be educational. Concepts are thoroughly presented with detailed examples.
We hope that readers find our ideas inspiring and enlightening, useful and exciting.
New York, New York, 2001