What I’ve Learned From Rope Swings And Fibonacci Extensions

2016-10-05 | Henry Gambell

It’s been three weeks in a row now, with the exception of the last week in September when I spent some time with Carolyn, that I’ve made my way out to one of the local extensions of the San Gabriel river. This particular fork offers a man-made dam with a gentle waterfall that keeps things moving and provides that sound that you visit places like this for.

The last visit was easily the most peaceful with the place being all but empty. But every instance prior you can bet you’re going to find someone, or if it’s good day for spectacles several someones, that would like to show their expertise with everyone’s favorite water activity, the rope swing.

Now I don’t get into things like rope swings very often for reasons we’ll discuss in another post, but several of the locals fancy themselves somewhat of a professional. Admittedly, some are better than others, but there’s one trait all of the best shared – the ability to let go at the top. There were several variables to the top depending on weight, height, etc – but they all knew when their momentum was waning and it was time to release the frayed cotton that’d brought them there. This all seems very simple until you see those that don’t quite grasp the concept. They’ll drag themselves back across the water for what seems like forever, hoping to eventually let go or worst case be thrown back into the perch from where they leapt.

It’s funny to sit there on my little piece of the stone wall, a section clearly crafted into a seat for one, and think about how this directly relates to trading. (Won’t you ever get out of my head?!) I can’t even look at people enjoying their time at the lake without thinking about trading! At the end of the day I know the blessing this is, and I do love trading – it’s just a clear signal to remind all of us – “Moves tend to terminate near extensions of prior swings”. Repetition builds retention, right Carolyn? 🙂

When you’ve met the apex of your rope swing’s trajectory it’s a lot like meeting the 127.2% or 161.8% extension on a price chart. I’ve included a few examples with this post to help you recognize them. There will be times the move continues on without you, but this isn’t designed to catch the high. It’s designed to help you sell on the ask, take profits when you have them, and whatever you do – don’t let yourself be tossed back to shore.

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