The fractal flow strategy revolves around combining three key concepts: The overall market trend. Fractal pattern. And momentum divergence. When momentum divergence is combined with the fractal candle, there is an opportunity to have more powerful price reversal signals. The meat of the fractal flow strategy is trading in the direction of the predominant trend Trading The Forex Fractal The concept of The Forex Fractal is more than just a strategy idea. It is a way of understanding forex price action and trade ows at their most fundamental level. Fractal Flow Strategy The fractal flow strategy revolves around combining three key concepts: 1. The overall market trend. 2. Fractal pattern. 3. And momentum divergence. When Strategy 1 – Market Sentiment The forex market is heavily driven by market sentiment, and it is market sentiment that influences traders’ decisions by triggering certain emotions and You might have to read through the following steps of the trading plan over again to gain proper understanding of this fractal forex trading strategy. Trading plan for short term and scalping ... read more

This creates a level of resistance in the market, and the expectation is for price to continue lower until the next down fractal forms in the market. On the flipside if you refer to the middle bar within the down fractal, you can see that it has the lowest low of the entire five bar structure, and that each of the two bars immediately before and after it have a higher low.

This creates a level of support in the market and an expectation for price to move higher until the next up fractal forms in the price action. As you can see, the structure and implications of the market fractals are fairly simple to understand. We can build many different trading rules and models around the concept of fractals which can aid us in our decision-making process. These days, most trading applications will include the fractal indicator as described above, as a default study within their indicator library.

As a result, you can simply apply the fractal indicator to your charts. This should automatically print a notation upon each fractal completion. Most fractal indicators will mark the middle bar of the fractal trading pattern upon the completion of the fifth and final bar within the fractal structure.

You should now have a pretty good understanding of the theory behind fractals and the actual fractal formation as seen on the price chart. There are a number of ways that we can utilize the fractal indicator within our overall trading program. We will be diving into a fractal based trading strategy in the later section, however for now, we just want to outline some of the primary ways that the fractal indicator can be applied. The fractal indicator can help gauge the potential direction of a price move.

For example, if a down fractal has recently printed on the price chart and the overall trend is higher, then we can expect with a reasonable amount of confidence that the price is more likely to continue higher. Along the same lines, if an up fractal has recently been breached by a new price leg that is moving higher, that upside breakout can indicate that there may be continued price momentum higher. Another practical application of the fractal indicator is to utilize it for the construction of trendlines and parallel channels.

Most technical analysts do not have any clear rules for the construction of diagonal support and resistance lines. Instead, they typically utilize very loose guidelines when drawing trendlines and channels. This can create a very haphazard process that lacks any clear edge. Fractal indicators are excellent for drawing objective trendlines based on market derived support and resistance levels. The same can be said for drawing channels as well.

For example, you could draw a bullish trend line sloping upwards by connecting the down fractals below the price action. And similarly, you can draw a clear bearish trend line sloping downwards by connecting the up fractals above the price action.

This eliminates most of the discretion surrounding trendline analysis, and more importantly, it allows you to plot the most relevant diagonal support and resistance levels. Fractals can also be used during the trade management process. We know that an up fractal can serve as resistance during a rising market, and that a down fractal can serve as support during a declining market.

As such, we can use these important market derived levels for the placement of stoploss orders or take profit orders. These are just a few applications of the fractal indicator, but they should certainly give you some ideas that you can start thinking about.

The alligator indicator is a complementary study that works well when combined with the fractal indicator. The alligator indicator was also created by Bill Williams. Essentially, it is comprised of three lines, called the jaw, teeth, and lips. It helps in the identification of a trend, and the potential future movement of price. The formula for the alligator indicator:. Below you will find a chart with the alligator indicator overlaid on the price action. There are a few different methods for trading using fractals and the alligator indicator.

However, the primary purpose in utilizing it is to maximize the profits realized in a trade by staying in a winning position for as long as the market is in alignment. It is essentially a trend following indicator based on a triple moving average.

The alligator indicator helps us to decipher between trending and non-trending market conditions, and take advantage of price moves that are on the verge of a potential trend. When the three lines within the alligator indicator began to converge and tighten, that provides a base from which a new trend leg is likely to emerge. When this convergence scenario occurs, the alligator is said to be in a sleeping mode, wherein there is an absence of any clear trend.

Now when the lines began to separate or diverge, the alligator is said to be awakening, which is to say that a new trend leg may be in the works. Finally, the feasting phase of the alligator coincides with the continuation of the trend move, as prices are moving sharply higher or lower after the basing activity.

Traders can use a host of different technical studies in concert with the alligator indicator. Combining other non-correlated technical tools will typically help improve the overall strategy and make it more robust as well. Now that we have a solid understanding of both the fractal indicator and the alligator lines, we can now move forward to describe a trading strategy based on these two technical studies.

The primary goal of our trading strategy will be to attempt to capture a price move following a period of relative calm. We will define the period of relative calm using the alligator indicator.

Remember, that when the three lines within the alligator indicator are converging or narrowing, that is an indication of price consolidation. Once volatility begins to pick up, we will begin to prepare to execute on the potential set up. We will also clearly define the volatility expansion with the alligator indicator.

Specifically, we will watch for the alligator to awaken, meaning that the triple moving averages began to diverge from the basing price action. We will want the line referred to as the lips to cross the other two lines. Keep in mind that the line that represents the lips is the shortest smooth moving average. You want to keep a close eye on the last few up fractals in the case of a long signal, and similarly on the last few down fractals in the case of a short signal. The fractal breakout from one of these relevant fractal patterns will serve as the entry signal.

Rules for entering and managing a long trade set up:. Rules for entering and managing a short trade set up:. If you refer to the price chart below you will find the price action for the New Zealand Dollar to Canadian dollar forex pair based on the daily timeframe.

Notice on the chart above you will find the alligator indicator overlaid on the price. The fastest line, which is referred to as the lips of the alligator is shown in green. The slowest line, which is referred to as the jaw of the alligator is shown in blue. And the teeth of the alligator is represented by the red line. Starting from the far left of the price chart, you will notice that the lines begin to converge and overlap, creating a tight congested appearance. This tells us that the market is in a sleeping mode, which could result in a volatility expansion at some point.

We have noted where the upside crossover occurs, and can see that the lines began to diverge from that point onwards. Now, the actual entry signal would occur upon a breakout and close above a relevant nearby up fractal formation.

That specific up fractal that we would want to use as our breakout signal is noted with the maroon dashed line. A close above this level would provide confirmation for the buy signal based on this trade strategy. Shortly after the formation of the up fractal noted, the price began to rise and eventually broke above and closed above the high of that up fractal. A market order to buy would be initiated at the start of the following candle, which is noted on the chart as the entry point.

Based on the rules of this forex fractal trading strategy, the stoploss would be placed below the nearest down fractal preceding the entry signal.

You can see that stoploss noted, and is placed accordingly, under the candle that appears to be a doji candlestick formation. Now that we have protected the position with a stoploss, we will need to monitor the price action closely to execute the exit as the price moves in our favor in the bullish direction. The exit signal here would be the cross of the green line, the lips of the alligator, below either of the other two lines.

The chart below is for Bitcoin based on the daily timeframe. You can find the fractal indicator on mt4 or other popular trading platforms. There is no need to have to run a fractal indicator download because it will already be there for you.

Bill Williams Alligator: How does the Bill Williams alligator indicator work? This indicator consists of 3 specific moving averages. We will go more into this indicator in a bit. Each of these lines has a specific name. This is because we will reference them later on in the strategy. We developed a strategy called the Big Three Trading Strategy that uses three specific moving averages as well if you wanted to check that out later.

As you can see above, those are all 5 of Bill Williams' powerful indicators that come standard on your trading platform. I do like each of these 5 indicators, but after extensive research and testing putting together, the alligator and fractal indicator not only was the easiest way to trade with his indicators but are extremely powerful with the right strategy. As stated above, a fractal formation is built by five consecutive candlesticks where:. To the left and to the right of the middle candlesticks we have two other candlesticks.

The basic fractal trading strategy is very simple. On most trading platforms the fractal arrows that appear above the price action are green and it signals the potential of a swing high being developing. Conversely, fractal arrows that appear below the price action are red.

The red arrow signals the potential of a swing low being developing or an important price level being created. With these trading principles, we have developed a Bill Williams trading system that can signal low risk entry points. The First step you are going to want to do is, of course, throw these important indicators on your charts.

As I have said, they do come standard on every trading platform that I am aware of so this should be very simple for you to do. The fractals indicate a bottom or a top. The basic fractal indicator is composed of a very minimum of 5 bars. So when you see a fractal here is what may have happened for it to appear:.

Above are the unique alligator indicator lines on the chart. Now you need to be aware of where the fractals are being placed on the candles for this strategy concerning this special indicator. I drew a yellow circle on this specific up fractal. This up fractal appeared on this candle ABOVE the red line or the alligator teeth This is criteria 1 for the Fractal Blaster strategy.

In a BUY trade, the Fractal must appear on a candle ABOVE the red line alligator teeth. What is happening here is that the fractal forms a new high to the previous fractal and therefore made an up fractal appear on the candles.

In order to go to step 2 for a BUY trade , the fractal must show an up fractal and be appearing above the alligator teeth. More often than not when a fractal appears like the one above, the price action is still "flat".

This means there has not been a real breakout in the recent timeframe. You can also trade with the breakout triangle strategy. The reason this strategy has to wait for at least five consecutive candles is that this is the time where either there is a pullback that is forming, a reversal may be forming, or the price action is still consolidating in a flat market. Any one of those does not sound pleasant if you are looking for a big upward bullish move to form on the chart. As you can see, the price action stayed quiet and did not move up or down drastically these five candles.

That is exactly what you should see when trading this strategy. Before we look any further into this strategy, here is what will make the strategy "reset" and invalidate a future trade BUY entry. Once you see that five consecutive candles did not make a drastic move to the downside and stay in between the high of the fractal candle and the alligator teeth, then we go ahead and make an entry order.

You can make an entry this way, or if you are sitting in front of your charts live with this occurs, then you can make a market order also. Either one is ok to do because the same criteria are needed. As you can see, I marked where our original fractal was discovered.

What happened after was that there were five or more candles that appeared that did not drift down to the alligator teeth, the alligator lines did not cross, and the price action finally broke above the fractal candle thus triggering a trade. This most likely means the alligator is going back to sleep and the price action will either head the other way or consolidate. Check out my other article here that talks about these important areas. This will give you the best opportunity to salvage a trade if the price action would turn on you and turn into a bearish trend.

It may "bounce" off these areas and head back in a bullish direction. These basic fractal trading techniques should lead you in the right direction if you have been searching for a great strategy to use with these indicators. There are many different strategies you can use with these indicators, but in our experience, we like this combination of the Bill Williams indicators.

Many argue that every indicator is "lagging" and rarely show you profitable entries. The Fractal Trading Strategy uses the combination of price action analysis that complements these great indicators. So if you are one of the sceptics, give this strategy a try and let us know your results. We love hearing your guys' feedback! If you aren't a believer in an indicator-based strategy, check out our price action pin bar strategy.

Please leave a comment below if you have any questions about Fractal Trading Strategy! Like this Strategy? Grab the Free PDF Strategy Report that includes other helpful information like more details, more chart images, and many other examples of this strategy in action! Please Share this Strategy Below and keep it for your own personal use! Thanks Traders! We specialize in teaching traders of all skill levels how to trade stocks, options, forex, cryptocurrencies, commodities, and more.

Our mission is to address the lack of good information for market traders and to simplify trading education by giving readers a detailed plan with step-by-step rules to follow.

Hi, if i set up the fractal at 15 period , does it mean it will give signals only after every 15 candles? Everyday we learn new things about how to trade forex and make profit what happen to old technique and does it expire. The new techniques are there for if you want to try something new.

You could try a new technique in a demo account and see if it's something you like then maybe add it to your trading plan. This is very helpful in trading, although I have not tried it and I am also a beginner in trading.. I will try it before going to the paid signal stage. More technical SL via the teeth: After the up fractal formed, price bars must stay above the teeth.

Therefore, the teeth are an important level throughout the trade, and if price breaks below the teeth, you want to be out of the trade. So, as you wait for your entry, simply look for the most recent down fractal and set the SL to the teeth value that corresponds to that down fractal bar. Then you can trail the stop on the teeth either with each new bar, or just with each new down fractal. More conservative exit: After the fractal formed, needed to have bars stay above the teeth.

Therefore, this is an important limit.

by TradingStrategyGuides Last updated Jun 14, All Strategies , Indicator Strategies , Indicators 14 comments. Do you know how to trade with the best Fractal Trading Strategy?

This Fractal Trading Strategy will answer all of your questions about fractals. You'll learn how to use this strategy step-by-step to hit consistent winning trades. Before we start trading using fractals profitably, I want to give you some background information on Bill Williams himself.

This will help you understand the significance of these special indicators. Also, read about Scaling in and Scaling out in Forex. Mr Williams developed a unique theory by combining the Chaos Theory with trading psychology.

Along with the effects they have on the market movement. Bill William's vast knowledge of stocks, commodities, foreign exchange markets, led him to develop many indicators, including fractal trading patterns.

Each indicator has a specific value. They are great to trade with if you understand the basic concepts of each one. His market view was: in order for you to make money trading, you must be able to understand that basic market structure. You must be aware of the market's internal parts, which he called dimensions. I could go on for quite a while about Bill Williams. But the important part to note about all of this is that his analysis and perspective of the market were different.

These powerful indicators are not outdated, as some claim. They work very well when you apply the right strategy. His indicators come standard on most trading platforms. These indicators will most likely be under his name, "Bill Williams," or "Williams" indicators. Well, These are simply arrows that are on top or below the candles on the chart. These fractals are formed when five repeated bars align in a distinct manner.

You need the fifth bar to close to discover the highest high or lowest low. We will go more into detail about this indicator and show you how to use the alligator indicator. You can find the fractal indicator on mt4 or other popular trading platforms. There is no need to have to run a fractal indicator download because it will already be there for you.

Bill Williams Alligator: How does the Bill Williams alligator indicator work? This indicator consists of 3 specific moving averages. We will go more into this indicator in a bit. Each of these lines has a specific name. This is because we will reference them later on in the strategy. We developed a strategy called the Big Three Trading Strategy that uses three specific moving averages as well if you wanted to check that out later. As you can see above, those are all 5 of Bill Williams' powerful indicators that come standard on your trading platform.

I do like each of these 5 indicators, but after extensive research and testing putting together, the alligator and fractal indicator not only was the easiest way to trade with his indicators but are extremely powerful with the right strategy.

As stated above, a fractal formation is built by five consecutive candlesticks where:. To the left and to the right of the middle candlesticks we have two other candlesticks. The basic fractal trading strategy is very simple. On most trading platforms the fractal arrows that appear above the price action are green and it signals the potential of a swing high being developing.

Conversely, fractal arrows that appear below the price action are red. The red arrow signals the potential of a swing low being developing or an important price level being created. With these trading principles, we have developed a Bill Williams trading system that can signal low risk entry points. The First step you are going to want to do is, of course, throw these important indicators on your charts. As I have said, they do come standard on every trading platform that I am aware of so this should be very simple for you to do.

The fractals indicate a bottom or a top. The basic fractal indicator is composed of a very minimum of 5 bars. So when you see a fractal here is what may have happened for it to appear:. Above are the unique alligator indicator lines on the chart. Now you need to be aware of where the fractals are being placed on the candles for this strategy concerning this special indicator.

I drew a yellow circle on this specific up fractal. This up fractal appeared on this candle ABOVE the red line or the alligator teeth This is criteria 1 for the Fractal Blaster strategy.

In a BUY trade, the Fractal must appear on a candle ABOVE the red line alligator teeth. What is happening here is that the fractal forms a new high to the previous fractal and therefore made an up fractal appear on the candles.

In order to go to step 2 for a BUY trade , the fractal must show an up fractal and be appearing above the alligator teeth. More often than not when a fractal appears like the one above, the price action is still "flat". This means there has not been a real breakout in the recent timeframe. You can also trade with the breakout triangle strategy.

The reason this strategy has to wait for at least five consecutive candles is that this is the time where either there is a pullback that is forming, a reversal may be forming, or the price action is still consolidating in a flat market.

Any one of those does not sound pleasant if you are looking for a big upward bullish move to form on the chart. As you can see, the price action stayed quiet and did not move up or down drastically these five candles. That is exactly what you should see when trading this strategy. Before we look any further into this strategy, here is what will make the strategy "reset" and invalidate a future trade BUY entry.

Once you see that five consecutive candles did not make a drastic move to the downside and stay in between the high of the fractal candle and the alligator teeth, then we go ahead and make an entry order. You can make an entry this way, or if you are sitting in front of your charts live with this occurs, then you can make a market order also. Either one is ok to do because the same criteria are needed. As you can see, I marked where our original fractal was discovered.

What happened after was that there were five or more candles that appeared that did not drift down to the alligator teeth, the alligator lines did not cross, and the price action finally broke above the fractal candle thus triggering a trade. This most likely means the alligator is going back to sleep and the price action will either head the other way or consolidate. Check out my other article here that talks about these important areas. This will give you the best opportunity to salvage a trade if the price action would turn on you and turn into a bearish trend.

It may "bounce" off these areas and head back in a bullish direction. These basic fractal trading techniques should lead you in the right direction if you have been searching for a great strategy to use with these indicators. There are many different strategies you can use with these indicators, but in our experience, we like this combination of the Bill Williams indicators.

Many argue that every indicator is "lagging" and rarely show you profitable entries. The Fractal Trading Strategy uses the combination of price action analysis that complements these great indicators. So if you are one of the sceptics, give this strategy a try and let us know your results. We love hearing your guys' feedback! If you aren't a believer in an indicator-based strategy, check out our price action pin bar strategy.

Please leave a comment below if you have any questions about Fractal Trading Strategy! Like this Strategy? Grab the Free PDF Strategy Report that includes other helpful information like more details, more chart images, and many other examples of this strategy in action!

Please Share this Strategy Below and keep it for your own personal use! Thanks Traders! We specialize in teaching traders of all skill levels how to trade stocks, options, forex, cryptocurrencies, commodities, and more. Our mission is to address the lack of good information for market traders and to simplify trading education by giving readers a detailed plan with step-by-step rules to follow.

Hi, if i set up the fractal at 15 period , does it mean it will give signals only after every 15 candles? Everyday we learn new things about how to trade forex and make profit what happen to old technique and does it expire. The new techniques are there for if you want to try something new. You could try a new technique in a demo account and see if it's something you like then maybe add it to your trading plan.

This is very helpful in trading, although I have not tried it and I am also a beginner in trading.. I will try it before going to the paid signal stage. More technical SL via the teeth: After the up fractal formed, price bars must stay above the teeth.

Therefore, the teeth are an important level throughout the trade, and if price breaks below the teeth, you want to be out of the trade. So, as you wait for your entry, simply look for the most recent down fractal and set the SL to the teeth value that corresponds to that down fractal bar.

Then you can trail the stop on the teeth either with each new bar, or just with each new down fractal. More conservative exit: After the fractal formed, needed to have bars stay above the teeth. Therefore, this is an important limit. So, rather than waiting for any of the lines to cross, exit when prices breaks below the teeth. A sell fractal was below the alligator teeth before the entry point. Why was the buy signal not reset and invalidated?

You might have to read through the following steps of the trading plan over again to gain proper understanding of this fractal forex trading strategy. Trading plan for short term and scalping 11/11/ · Home / Without Label / Forex Fractal Trading Strategy Pdf. Senin, 11 November Forex Fractal Trading Strategy Pdf Williams Fractal Strategy Or The Entire Trend In The fractal flow strategy revolves around combining three key concepts: The overall market trend. Fractal pattern. And momentum divergence. When momentum divergence is combined with the fractal candle, there is an opportunity to have more powerful price reversal signals. The meat of the fractal flow strategy is trading in the direction of the predominant trend 25/10/ · Trading Strategy: Fractal Corridors on the Futures, CFD and Forex Markets, Four Basic ST Patterns, % or More in Two Month usbook Follow this publisher - current follower Trading The Forex Fractal The concept of The Forex Fractal is more than just a strategy idea. It is a way of understanding forex price action and trade ows at their most fundamental level. At the very core, a market fractal is the basic building block of price movements up and down within the market. Let’s take a look at the up and down fractal formations. A fractal is ... read more

By contrast, with the stock and futures markets, one would need access to electronic communication networks ECN for pre-market trading, or would have to wait till the markets open — and open sometimes with a gap if there has been news while the markets are closed. Fractal trading techniques can be incorporated within various components of a strategy. I strongly believe that once a trader has honed his or her trading skills, the ultimate factor that will affect his or her overall profitability is money management skills. Forex traders carry out their activities by dealing directly with one another or through brokers via telephone and internet connections. Their positions are usually closed before the trend runs out of power. Large overall trade flows can have a significant impact on the forex market, as they play a role in the supply and demand of currencies. This, of course, also depends on the geopolitical or economic risks of that particular currency.

If you have sold short the currency with a higher overnight interest rate, then you will be charged the difference. These are discussed in further detail below. To me, the forex market is nothing more than the compressed display of emotions at any one time emanating from currency speculators around the world. Once you place less emphasis on being correct on a current trade, your fear of making wrong decisions should abate, thus enabling you to make better trading decisions without feeling burdened by the overwhelming pressure to be correct in that trade,