Fractal Trading is based on the holistic Trading Approach by Bill Williams and Justine Lara-Williams. Visit profitunity.com for more information or scroll down a bit.
I have studied and traded Profitunity’s approach with all available materials and personal contact to Justine Williams-Lara for 10 years. I devoted all my time and energy to understanding the markets from a trend-trading perspective and have come to endorse the trendfollowing philosophy which is mainly circulated by Michael Covel, but has its origins with Jesse Livermore in the 1920’s and lateron with the Turtles during the 1980’s. Today there remain many trendfollowers such as David Harding, Larry Hite, Salem Abraham, Bill Dunn etc. Many of them manage the most successful Hedge Funds using the trendfollowing approach to financial markets. Having learned from these elite traders, I am trading the major world markets successfully combining Profitunity’s system and philosophy with the fundamental perspectives of trendfollowing. I am currently engaged in trading 45 markets ranging from indices and currencies to metals, softs, energy and bonds. Wherever a trendfollowing signal appears according to the methodology traded, I will put a buy/sell stop order in. Most positions are taken on a weekly timeframe due to this being the most profitable timeframe regarding trends. Any trade is always measured by appropriate risk management to ensure that no devastating surprises occur.
I modified Profitunity’s usage of the indicators to my liking to end up with a purely trend-based strategy and backtested it thoroughly. Therefore in my trading there is no counting of Elliott Waves, interpretation of signals or picking tops or bottoms. In my personal approach I merely use the Fractals for breakout entry signals and part of the Alligator to find decent trend exits. The AO (Oscillator) supplies me with information about buying or selling pressure in the market. It does not give any entry, stop or exit signals.
The blog provides a trendfollowing-perspective on the major world markets and looks at where the next big trend could be.
Altogether, it’s just all about the trend, risk management and emotions, get rid of all the noise!
Comments are welcome!
Short explanation of the methodology:
On the chart apply the following tools:
Alligator – Three SMAs (13/8/5) with a future offset of 8/5/3 respectively.
Fractals – 5 bar sequence where middle one has highest high / lowest low and its preceeded and followed by two bars that have lower highs / higher lows
Awesome Oscillator (AO) – difference between the 34-period and 5-period simple moving averages of the bar’s midpoints (H+L)/2
To apply them in MetaTrader 4 platform use these menus:
Alligator: Insert -> Indicators -> Bill Williams –> Alligator
Fractals: Insert -> Indicators -> Bill Williams –> Fractals
Awesome Oscillator: Insert -> Indicators -> Bill Williams –> Awesome Oscillator
When (Alligator) lines are opening we put a buy stop one point above the most recent fractal outside of the lines in trend direction.
Exit at close of price above/below the Green SMA Line. A Simple Moving Average has been added to exit a trending market more efficiently on a weekly timeframe. Exits differ for initial entries to cut losses short.
After the first fractal is taken, we take any and every signal in that direction.
The actual parameters of the methodology as applied by the author of this blog are more defined and concrete compared to the rules that have been laid out here.
For other charting programs such as TradeStation, Metastock or Esignal these Indicators are buildt into the platform. If you chart with Prorealtime, I have the indicator codes available. For others, contact me or do a google search. You should be able to apply the indicators, too, with different settings: If you can’t find the Alligator, use the following EMA (exponential moving average) settings: blue line: 26, red line: 16, green line: 10, future offset as usual (8,5,3). The fractals you can see without them being marked, too. I do not know how to get the Awesome Oscillator going when no indicators are available. Only for brokers using the Prorealtime platform for their clients’ trading, do I have the code. The easiest way for smaller traders though, is to just get Metatrader 4.
Image Sources: Charts created with Metatrader 4 and Prorealtime. All images are the property of their respective owners.
Trading Futures, Options, Stocks, Indexes, Forex etc. involves substantial risk of loss. Please be advised that all information published on this blog is intended for informational purposes only. Do not consider any post, chart, signal etc. as trade advice. Only trade with capital you can afford to lose. The author of this blog is not in any way responsible for negative outcomes resulting from action taken due to information on this blog. Furthermore, all Coaching Sessions are intended to provide structured material and an organized approach to trading for clients. There is no guarantee the Coaching Sessions will deliver the expected results. It depends on each trader him/herself to improve their trading skills. I do not take any responsibility for any negative outcomes due to the information provided in Coaching Sessions. Clients signing up for Coaching understand this and agree to this policy.