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Old 12-22-2006, 04:19 AM
Popov Popov is offline
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Be careful with this indicator!!!!

The strategy mentioned above, uses the indicator Fibonacii retracement. This indicator is based on the Zig-zag indicator to calculate the tops and bottoms. And here comes the big problem. The zig-zag indicator moves the signals.
What do I mean?
For example: If there is a rising market and after a pick the price fall down rapidly, the Zig-Zag indicator forms a Top. The Fibonacci places the zero level and starts counting downwards 38.2%, 50% ... together with the price. If we have Logic Continue when the price reach the 38.2% line, we enter into a Short position. If the market continue its fall there is no problem, but if the market turn up and form a new pick in a short time. The Zig-Zag removes the existing signal and places new top higher than the previouse. And, what to do now? We are short on the market, but the history test doesn't calculate this loss.

We can't correct this by changing the logic. The method of calculating the Zig-Zag indicator is wrong.

The solution - DO NOT use Fibonacci or Zig-Zag

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