Fractal Trading is trading the fractal of the Elliott Wave – a holistic Trading Approach by Bill Williams and Justine Lara-Williams. Visit profitunity.com for more information. I have been trading this method for a couple of years on mostly daily charts and I hope that what I learned can be of help for some people to improve their own trading. Hopefully, you will find my posts useful – feel free to leave a comment or contact me.
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.
When (Alligator) lines are closing we are closing, too. Exit at close of price below the Green SMA Line. Stop policy varies depending on the situation.
We stay out of the market when and while lines are intertwining.
After the first fractal is taken, we take any and every signal in that direction.
We add on as soon as 3 consecutive AO bars of the same color appear. This is not an initiating signal.
View what all these settings look like in any of my charts posted on the blog page.
Find a more detailed explanation on how to use the indicators 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.
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.