I have no control over where they fire or where they don't. My trade plan and it's setups are based on my own observations, experience and testing as should be the case with every trader.
This is correct, imo. They use them not because they are looking for a secret sauce, but because they are in the family of "dynamic" measurements that are based on the way price is developing, as it happens. They do not trade with a single ticket mindset, cira 1960. They are one of MANY such types of measurements. The Algos monitor many of then and make decisions AFTER evaluating them. A trade with a single ticket mindset, makes one evaluation (e.g. Fib level), and then decides to trade and hence it works or not. It looks like "magic" to the caveman.
institutions don't use fibs. sales people on a desk will use fibs to describe a move but no one on a desk is using fibs as a trading signal lol.
Imo there is some mathematical validity to a 50% retracement from a previous move. It may just be a psychological thing that buyers tend to come back in on a 50% retracement of a previous bull move. Or sellers come back in on a 50% retracement of a previous bear move. If that happens I tend to lean towards a continuation of the previous moves’s direction. While 50% is not technically a fib number many traders consider it to be one. As a scalper I don’t incorporate fibs in my trading but will consider 50% and if 70% to 75% retracement of a previous move takes place then I am strongly considering reversal of the previous move whether it was bear or bull however even that must fit in the PA context for me to trade it as a reversal. For instance, if PA is in a trading range of say 20 or so bars and there was a bear move to the bottom then a 75% retracement to the top I am probably not going to trade that as a bull reversal but will instead begin shorting simply because price as been in a TR and since the market has inertia it tends to keep doing what it has been doing. However, if after a longer protracted TR say of 40 to 60 bars and the same scenario happens I will the consider it perhaps being the beginning of a bull reversal out of the top of the TR but even then I want to see it trade out of the top of the TR and hold out of the top for 2 or 3 bars then resume bullish. At that point I will likely take a bull scalp. In this latter example the 75% fits the context for a bullish reversal. In the former it doesn’t because price has only been in the TR for 20 bars or so.