SMN - Chart, page-3489

EW works excellently after the move.


Firstly, your wave counts don't hold up because they're only calculated after the fact, so what's the point?

Subjectivity:
One of the most significant issues is the subjectivity in wave counts. Different traders may interpret the same price movement differently, leading to varying wave counts and predictions. This lack of consistency makes relying on EW as a viable trading method inconsistent. Markets don't always follow EW's "ideal" wave structure, resulting in false signals and poor results.

Overfitting and Confirmation Bias:
This is you, Justbob

Traders who are highly committed to EW analysis "force" wave patterns onto charts where they don't necessarily exist, leading to confirmation bias. This can result in overfitting patterns to support a predetermined narrative, leading to poor trading decisions and losses. These limitations mean it is not suitable or reliable as a primary strategy.

Fibonacci.

A minor difference of 0.05 on a Fibonacci retracement isn't an issue—most people understand the context. Except you. But a 5-cent deviation? That's significant and changes the setup entirely. You should never draw a Fibonacci retracement below a gap; that's a rookie mistake and only shows your lack of knowledge of Fibonacci. I'm not concerned with where you draw your lines. I aim to demonstrate the correct approach to other traders, which is not what you do. I don't believe it's intentional; it's just a lack of knowledge on the proper application of Fibonacci.

Fibonacci retracement should not be drawn below a gap in a stock chart.

Here's why:

A gap in a stock price chart represents a discontinuity, often due to sudden shifts in market sentiment, news, earnings, or other factors. Because Fibonacci levels rely on smooth, continuous price movements, including a gap, distorts the retracement levels.

Drawing a Fibonacci retracement across a gap makes it less accurate because the gap indicates a sudden price adjustment rather than part of the trend's natural progression. This misrepresents the proper support or resistance levels for the retracement.

To maintain the integrity of Fibonacci levels, it's best to draw the retracement from the nearest key high and low points that don't include a gap, capturing the continuous price action.

Avoid gaps when drawing Fibonacci retracements will yield more reliable levels for trading decisions.

People can spend a lifetime picking up bad habits that, over time, become deeply ingrained in their mindset, making them hard to break. When these habits become part of our psychology, all that time and effort invested in learning is wasted.