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.
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.
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.
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.
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.
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…
I’m also interested in the fractals indicator. I just watched this YouTube video. Wish you well in your trading journey. YouTube
I watched your video since the “fractals” have been mentioned a few times recently and looking at them on the charts - they just seemed to be “tops and bottoms”
Yet I know from reading around “Chaos theory” that they are supposed to be "Small patterns which repeat themselves on “All scales” (READ TIMEFRAMES)
So in this context, They just look like what we used to know as “Swing Highs” and “Swing lows”
Interesting he’s looking to enter at a break of a previous “Swing High” and exit on breach of a previous “Swing low” - ie Breakout trading - similar in many respects to “Turtle trading” and the sort of stuff @tommor might be interested in.
Interesting too that he adds to the position on the break of the next “swing high /low” (depending on which way he is betting)
I quite liked his “Momentum” and “Accellerator” indicators - but he was using them as “click bait” - to tempt veiwers in to the “Paid for stuff”.
He gave several examples of people who had “made fortunes quickly” using his principles and yet here he was “Selling” the system when logic would simply dictate he would make far more money - actually trading it !
The video seems to have been made in or about 1993 and he refers to “Audio tapes”
He then goes on to say that he is not guaranteeing you will make money and it is clear to us all that trend following is great ! - until you hit a sideways choppy market !
Then he goes on to talk of “Elliot waves” !
Thanks for posting it - I now know that these “fractals” are just “Swing highs and lows” - so I’m not missing some esoteric secret pattern ! 
In fractals my settings are on period 2. Does that mean they appear generally every three candles. What period should I set if I wanted fractals to appear after 5 candles…
