The Fractal Guru Strategy

Trading Systems Free Forex Trading Systems
1

[B]Time Frame[/B] : 15mins and above
[B]Indicators [/B]: Average Directional Movement Index - ADX (Settings : 14) and Fractals
[B]Strategy by[/B] : Navin Prithyani

[B]Long (Buy) Positions Using The Fractal Guru Strategy [/B]

  • On the ADX, the dotted green should be above dotted red and the solid blue line should be steadily rising
  • Look for a Candlestick with a tail pointing to a Down Arrow Fractal
  • When you see this Down Arrow Fractal, enter Long.
  • Place stops 5 pips below the low of the Fractal Candle.
  • Exit using proper money management or upon the cross of the dotted green and red lines in the ADX.

[B]Short (Sell) Positions Using The Fractal Guru Strategy [/B]

  • On the ADX, the dotted red line should be above dotted green line and the solid blue line should be steadily rising
  • Look for a Candlestick with a tail pointing to a Up Arrow Fractal
  • When you see this Up Arrow Fractal, enter Short.
  • Place stops 5 pips above the high of the Fractal Candle.
  • Exit using proper money management or upon the cross of the dotted green and red lines in the ADX.

Please share your ideas about this strategy. It will be nice to make new forex friends also. :slight_smile:

  • Navin
2

I don’t know if you have back-tested or forward-tested this strategy, but it looks to me as one strategy that looks good on a static chart only.

Here’s the weak point as I see it: referring to your Long Example 1, the arrows of the Fractals indicator are shown when the low of a candle is lower than the low of 2 candles to the left and 2 candles to the right. This means that the entry is not on the candle that you marked, but 2 candles to the right: in the best case you enter at around 96.75, because you do not see the fractal arrow before, and your stop loss is at around 96.40 (low of the candle with the fractal minus 5 pips).

It’s the same in your Short Example 1, as the entry is on the open of the first green candle after your arrow, you have a stop loss of about 40 pips and then price reverses.

I don’t know what your win ratio is with this strategy, but in order for it to be profitable it looks to me that it has to be very high. Can you expand on this?

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Please note: I’m in NO WAY trying to ‘trash’ your system i.e. I’m just trying to help.

I’ve done a LOT of work with Fractals and there are one or two things you need to be WELL aware of.

First: a Fractal is ONLY a VALID Fractal once the fifth (in this case) bar has CLOSED. If you do not wait for the close, and a Fractal has been drawn on the chart, that Fractal CAN dissapear (depending on the price action of the last bar).

Second: as has already been asked, have you tested this out BEFORE putting real money ‘on the table’??? I’d proceed with caution. Fractals DO INDEED indicate support and resistance BUT most ALL systems that use Fractals woul have you place an order to BUY on an UP Fractal and SELL on a DOWN Fractal and not the other way around. In other words: you’d place and order to buy or sell and only if price then ‘swings’ PAST the Fractal will you order be executed.

Just some thoughts. As I said: I’ve done a LOT of work with Fractals. They do work. Just not as in your example.

Regards,

Dale.