I�d like to share a basic scalping system with you.
There are no particular prerequisites, but the more you know, the better.
Now, let�s setup our charts.
Open up a fresh H1 chart, and then add the following indicator to it:
[I]Bill Williams’[/I] [B]Fractals
Fractals are like turning points in the market. I use to call them pivotal points (reverse/continuation), until i found out they had a name and a lot of professional research dedicated to them by the person who popularized them Bill Williams.
[I] By Investopedia’s definition:
[/I] F[/B]ractals are composed of five or more bars. The rules for identifying fractals are as follows:[ul]
[li]A bearish turning point occurs when there is a pattern with the highest high in the middle and two lower highs on each side.[/li][li]A bullish turning point occurs when there is a pattern with the lowest low in the middle and two higher lows on each side.[/ul]The fractals shown below in Figure 1 and 2 are examples of perfect patterns. However as with everything in the Forex market many less perfect patterns can occur, but the basic pattern should remain intact for the fractal to be valid. They are easy to pick out visually.[/li]
We are going to try and look for 1 trade a day.
Since this is a scalping system you are going to have to choose what your SL is. None is defined here.
At the daily open, look for a fractal around the end of the prior session, don’t go back any further than 2 fractals in the past.
If a fractal forms in the current session before a fractal from the previous session is triggered, you must consider the newer fractal.
Invalid Fractals are those that occur at the open. These are disregarded.
I’m bumping this up because I think the system has potential. Been following it the past week (no live trades yet) and it shows promising results. Will start demo trading next week.
I like this because you can set your trades in and just let the market do its thang.
this is a very powerful tool… whether on its own or used in conjunction with another system… price patterns rule the markets and provide up to the second indications of future performance.
Some useful jinks in and out of several pairs this morning so far, based on fibbing between the most recent fractal top and fractal bottom and using the 38.2 extension as an initial target.
AU was a loser. The rest did fine and GU has just reached initial target, so took half off there, moved stop to b/e on the rest to see if it can make target 2 (61.8 extension).
Some useful action again this morning across several pairs/crosses. The chart shows how i’m forward testing the pattern. It would be interesting to compare notes with PipSurfer’s forward testing
A key observation from the testing so far, is that the trades that hit T1 (38.2 extension) and T2 (61.8 extension) penetrate the fractal high/low entry level with momentum and rarely turn back above that (hrly) candle’s high/low, so initial stoplosses just above the hrly high/low of the entry candle seems reasonable. The R:R to T1 & T2 is usually OK.
you are using the 2 point selection Fibonacci Retracement or 3 point selection Fibonacci Expansion tool in Metatrader?
is there an easy way to get your custom level settings ‘copied’ from one chart to another or do I set them manually each time I want to use them?
Thanks again.
Edit: Sorry I should have checked 2 for myself - as Metatrader now uses the custom levels each time I insert a Fib. I would still like to know which type of Fib you are using in 1.
I was wondering if any fractals actually disappear once its printed on the chart?
I was running this strategy for cable and though the overall trend was down today around the 8 GMT candle I saw a BULLISH fractal on my chart. Seeing this I thought maybe the trend is reversing so I went long… later after 2 candles i.e. 10 am GMT candle I noticed again the BEARISH fractal which turned out to correct… and the trend was down…
Later on I lost connection on my platform & had to restart. Upon restart, the rogus fractal from 8am disappeared…
is that possible? or would that be because I lost connection to the server that it should some sort incorrect fractal?
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