Bill William's Fractals
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Thread: Bill William's Fractals

  1. #1
    cjimenez8755 is offline Newbie
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    Default Bill William's Fractals

    Has anyone tried this technique? Applying the Bill William's fractals to the metatrader chart and selling when an up arrow shows and buying when a down arrow shows?

    If placing trades based on this strategy, do you think overall a person would be profitable doing this? Either way, whether you've tried this or not, please tell me what you think about this idea.

  2. #2
    EnPoint's Avatar
    EnPoint is offline Senior Member
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    Fractals should only be used as a point of reference. If you happen to make a newer low after a fractal has appeared at the bottom, the fractal will repaint itself to the new low.

  3. #3
    Clint's Avatar
    Clint is offline FX-Men Honorary Member
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    A valid fractal high or low is established only after the close of the second candle following the formation of a tentative fractal high or low.

    Here's how your entries would look on a one-hour GBP/USD chart.



    Each yellow arrow points to the best possible buy (or sell) entry, based on the fractal which formed 3 candles previously.

    The dashed yellow lines connect the fractal highs (and lows) to the sell (and buy) signals which they triggered.

    You haven't outlined a complete system --- what are your exit rules? what about stop-losses? etc. --- so, it's impossible for anyone to evaluate the potential profitability of this idea.

    Just looking at the buy/sell entry points dictated by this system, I don't think you have a winner here. For one thing, you have 6 buy signals and 4 sell signals in a downward trending price pattern.

    However, until you can put entry and exit prices on all the signals generated here, you can't determine profitability.
    - Risk is the Price we pay for Opportunity -

  4. #4
    CodeMeister's Avatar
    CodeMeister is offline Superior Master Contributor and Member
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    It doesn't work. You get whipsawed into too many trades that go a short distance beyond the fractal and then turn around and hit the other swing high/low. Don't try on anything lower than 1H, but even then it is doubtful. I use them in conjunction with PA to judge when to enter on pullbacks and that is better.

  5. #5
    dpaterso's Avatar
    dpaterso is offline FX-Men Honorary Member
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    Hi,

    cjimenez8755:

    You mention Bill Williams' Fractals. Quite correct: they were his 'invention'. But the way you propose to use them is NOT the way Bill Williams designed them to be used (and as a matter of fact both you and Clint have described the exact OPPOSITE use of Bill Williams' method of using them ALTHOUGH, in Clint's case, that is indeed a valid trading system believe it or not).

    Bill Williams' trading system (dare I say 'systems' as they're all the same thing with the odd 'teak' here and there) trades Fractal BREAKOUTS. In other words: you place a buy stop order just above the previously COMPLETELY formed (that's when the last bar of a five bar Fractal formation has CLOSED) Fractal (and the opposite to go short). In the FIRST 'version' of his Profitunity Trading System or 'Trading Chaos' your STOP AND REVERSE point was the FURTHEREST of the previous two Fractals in the opposite direction. In a later 'version' your STOP AND REVERSE point became ONLY the previous Fractal. In my opinion: the FIRST 'version' was the more effective (and of course I'm discounting all the other 'fluff' that goes with the system(s) here like the Alligator, AO, AC, Gator, etc.).

    In my 'not so humble beginnings' I spent a good year to two 'studying' both Bill Williams and J. Welles Wilder Jnr. Bill Williams' 'stuff' has too much 'fluff' and complications so 'Wilder won' (as is well known about me around these parts). That being said: trading with JUST Fractals using the FIRST 'version' mentioned above (without all of the 'fluff') is indeed a valid trading system although by no means the most profitable of all trading systems. My main trading system (Wilder's 'Swing Index System') uses what I refer to as 'Three Bar Fractals' (as opposed to Bill Williams' Fractals where many variations of bar formations can form a valid Fractal and MetaTrader only shows what Bill Williams refers to as 'Pristine Fractals' but the other formations are too numerous to mention and probably too difficult to code) and the only difference is that Wilder refers to these 'Three Bar Fractals' as 'High Swing Points' and 'Low Swing Points'. Works (well) for me!!!

    One word of warning though (as has already been mentioned): DO NOT EVEN BOTHER trying ANY Fractal method of trading on ANY timeframe shorter than the 4-hour timeframe (and preferably the daily timeframe or longer) or you WILL get your 'a*se' whipsawed' more times that your account will be able to withstand.

    And one other word of warning (this added after the original above): watch money management!!! Sometimes them Fractals can be REAL far apart!!! LOL!!!

    Regards,

    Dale.
    Last edited by dpaterso; 07-08-2011 at 09:57 AM.
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  6. #6
    tradertalent is offline Newbie
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    Hi

    Fractal trading systems are good as are the other system but they are as good as the trader using

    them.

    I have used this bill williams methods described in his books. but if you really read his books and

    reread his books you'll realise that what really he is talking about. All these system trading or

    mechanical trading is level 2 or level 3 trading. The top level trading is trading without indicators

    without any news and just following the market dance.

    regards
    Last edited by tradertalent; 07-22-2011 at 06:38 AM.

  7. #7
    Mukhriz is offline Newbie
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    Quote Originally Posted by tradertalent View Post
    Hi

    Fractal trading systems are good as are the other system but they are as good as the trader using

    them.

    I have used this bill williams methods described in his books. but if you really read his books and

    reread his books you'll realise that what really he is talking about. All these system trading or

    mechanical trading is level 2 or level 3 trading. The top level trading is trading without indicators

    without any news and just following the market dance.

    regards

    I agree with this view. Most importantly trade with price movement by looking at the candlestick pattern. The most easiest way and the most neglected way of trading.

    Keep it basic and you will be surprise how effective the simple basic method of trading.

    Happy trading...

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