Compute Fibonacci Extensions Using R?

To compute Fibonacci Extensions using R, you can create a function that takes the Fibonacci Retracement levels as input and calculates the extension levels. You can use the following formula to calculate the Fibonacci Extension levels:

Fibonacci Extension Level = H + (Fibonacci Retracement Level * (H - L))

where H is the high point, L is the low point, and Fibonacci Retracement Level is the percentage level (e.g. 0.382, 0.618).

You can then use this function to plot the Fibonacci Extension levels on a chart to help identify potential support and resistance levels for trading decisions.

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How to backtest Fibonacci extensions strategies in R?

To backtest Fibonacci extensions strategies in R, you can follow these steps:

1. Install the necessary packages: First, you need to install the quantstrat package in R, which is a package for developing and testing trading strategies. You can do this by running the following command:

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install.packages("quantstrat")

1. Load the necessary libraries: After installing the quantstrat package, load it along with other required libraries using the following commands:

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library(quantstrat)
library(PerformanceAnalytics)
library(TTR)

1. Define the strategy: Write a function to define your Fibonacci extensions strategy. This function should include the logic for entering and exiting trades based on Fibonacci extension levels. Below is an example of a simple Fibonacci extensions strategy in R:

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fibonacci_strategy <- function(price_data) {
  # Calculate the Fibonacci levels
  fib_levels <- fibLevels(price_data$Close)

  # Enter long position if the price crosses above the 161.8% Fibonacci extension level
  if (price_data$Close > fib_levels[5]) {
    addTxn("fibonacci_strategy", Symbol = "XYZ", TxnDate = index(price_data), TxnPrice = price_data$Close, TxnQty = 1, TxnFees = 0)
  }

  # Exit long position if the price crosses below the 100% Fibonacci extension level
  if (price_data$Close < fib_levels[3]) {
    addTxn("fibonacci_strategy", Symbol = "XYZ", TxnDate = index(price_data), TxnPrice = price_data$Close, TxnQty = -1, TxnFees = 0)
  }
}

1. Backtest the strategy: Use the applyStrategy function from the quantstrat package to backtest your Fibonacci extensions strategy on historical price data. Below is an example of how to backtest the Fibonacci strategy using the applyStrategy function:

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# Load historical price data
data <- get.hist.quote(instrument = "XYZ", start = "2010-01-01", end = "2020-12-31", quote = "AdjClose", provider = "yahoo", origin = "1970-01-01")

# Create an account and portfolio using the initPortf and initAcct functions
initPortf(name = "fibonacci_portfolio", symbols = "XYZ")
initAcct(name = "fibonacci_account", portfolios = "fibonacci_portfolio", init.assets = 10000)

# Apply the Fibonacci strategy to the historical price data
applyStrategy(strategy = fibonacci_strategy, portfolios = "fibonacci_portfolio")

# Generate and view the performance report
updatePortf(Portfolio = "fibonacci_portfolio")
updateAcct(name = "fibonacci_account")
updateEndEq(Account = "fibonacci_account")
chart.Posn(Portfolio = "fibonacci_portfolio", Symbol = "XYZ")

By following these steps, you can backtest Fibonacci extensions strategies in R using the quantstrat package. Make sure to customize the strategy and parameters according to your specific trading preferences and risk tolerance.

How to use Fibonacci extensions in trend following strategies?

Fibonacci extensions can be a useful tool in trend following strategies to help traders identify potential profit targets and areas of price resistance or support. Here is how you can use Fibonacci extensions in your trend following strategies:

1. Identify the trend: The first step in using Fibonacci extensions in trend following strategies is to identify the trend of the market. This can be done by analyzing historical price data, moving averages, or other technical indicators.
2. Draw Fibonacci retracement levels: Once you have identified the trend, you can draw Fibonacci retracement levels on your chart to identify potential areas of price support or resistance. These levels are typically drawn from the recent swing high to the swing low in an uptrend, or from the swing low to the swing high in a downtrend.
3. Identify potential extension levels: Fibonacci extension levels are then drawn using the same principles as Fibonacci retracement levels. These extension levels are typically drawn from the swing high to the swing low in an uptrend, or from the swing low to the swing high in a downtrend.
4. Set profit targets: Fibonacci extension levels can be used to set profit targets for your trades. Traders can take profit at or near these extension levels as potential areas of price resistance or support, depending on the direction of the trend.
5. Use Fibonacci extensions with other technical indicators: Fibonacci extensions can be used in conjunction with other technical indicators, such as moving averages or trend lines, to confirm signals and increase the probability of a successful trade.

Overall, Fibonacci extensions can be a valuable tool in trend following strategies to help traders identify potential profit targets and areas of price resistance or support. By incorporating Fibonacci extensions into your analysis, you can improve your trading decisions and increase the likelihood of success in the markets.

What is the Fibonacci time series extension?

The Fibonacci time series extension is a technical analysis tool used by traders to predict future price movements in financial markets. It is based on the Fibonacci sequence, a series of numbers where each number is the sum of the two preceding numbers (e.g. 0, 1, 1, 2, 3, 5, 8, 13, etc.).

In the context of trading, Fibonacci time series extensions are used to identify potential support and resistance levels based on key Fibonacci ratios like 0.618, 1.618, 2.618, etc. These ratios are used to project future price levels and determine potential reversal points in the market.

Traders typically use Fibonacci time series extensions in conjunction with other technical analysis tools to confirm signals and make trading decisions. It is important to note that Fibonacci time series extensions are not foolproof and should be used in conjunction with other tools and analysis techniques to make informed trading decisions.

How to create a Fibonacci function in R?

Here is an example of how you can create a Fibonacci function in R:

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fibonacci <- function(n) {
  if(n == 1) {
    return(0)
  } else if(n == 2) {
    return(1)
  } else {
    return(fibonacci(n-1) + fibonacci(n-2))
  }
}

# Testing the Fibonacci function
n <- 10
for(i in 1:n) {
  print(fibonacci(i))
}

This function calculates the nth Fibonacci number recursively by adding the previous two Fibonacci numbers. You can test this function by calling it with different values of n to see the Fibonacci sequence printed out.

What is the Fibonacci spiral and its relationship to extensions?

The Fibonacci spiral is a geometric shape derived from the Fibonacci sequence, a mathematical series in which each number is the sum of the two preceding numbers (0, 1, 1, 2, 3, 5, 8, 13, etc.). When you draw quarter circles with radii equal to each number in the Fibonacci sequence, the resulting spiral closely approximates the golden spiral, a special logarithmic spiral that grows in size by a factor of the golden ratio (approximately 1.618) with each quarter turn.

Extensions can be related to the Fibonacci spiral in that they can be used to create harmonious proportions and compositions in design and architecture. For example, the Fibonacci sequence and spiral are often used to determine relative proportions and spacing in structures, such as the Parthenon in Greece or the spiral shells of snails. The spiral is also used in art and design to create visually pleasing and balanced compositions.

In terms of personal extensions, one could see the Fibonacci spiral as representing growth and expansion, with each new "loop" representing a new phase or level of development. By aligning oneself with the principles of the Fibonacci sequence and spiral, one may be able to achieve a sense of balance and harmony in their personal growth and evolution.

How to calculate Fibonacci extensions manually without using R?

To calculate Fibonacci extensions manually, follow these steps:

1. Identify the starting point of the Fibonacci sequence. Typically, this is done by looking at a recent low or high point on a chart.
2. Calculate the Fibonacci retracement levels by taking the difference between the high and low points and multiplying the result by various Fibonacci ratios: 0.236, 0.382, 0.500, 0.618, and 0.786. These levels act as potential areas of support or resistance.
3. To calculate the Fibonacci extensions, calculate the difference between the high and low points again. Then, multiply this result by various Fibonacci ratios: 1.000, 1.272, 1.618, 2.000, 2.618, and so on.
4. Add the calculated Fibonacci extension levels to the low or high point (depending on whether you are calculating extensions from a low or high point) to determine potential future price targets.
5. Use these Fibonacci extension levels as additional potential areas of support or resistance to inform your trading decisions.

By following these steps, you can manually calculate Fibonacci extensions without the need for R or any other statistical software.