Fractal – trade for a breakthrough
Many experienced traders say that making money by trading on the market, easily. It is difficult to keep them afterwards. All markets are characterized by the fact that for most of the time the price is not much change, and only for a short time (15 – 30 percent) account for trend changes in prices. For traders who are not located in the exchange and / or non-specialists, attacking difficult times, when the market is not going anywhere. Most traders tend to put a protective stop (foot) is too close to the market and as a result suffer losses. The most favorable for profit during periods when market prices change according to a certain trend. Therefore, our first task is not to miss any significant trend. Remember – this is the first of our five entry systems in the market, and this is the first signal that we have to consider after the Alligator starts to wake up.
We do not want to participate in the market and "keep your powder dry" as long as the Alligator will not be hungry and will not start your search of food (either higher or lower prices). We do not make any trades until until the first fractal will be in charge of our conditions. Let’s take another look at a typical stock and / or futures market (Fig. 4-1).
A typical situation in the market trading
Fig. 4-1 shows a typical, "characteristic" market behavior. Market from 70 to 85 percent of the time headway. During this period, the market activity of the majority of traders are losing money;
arrived at this time are only traders working in the stock room, which crush the market in a very short period of time. The most critical is the point at which there was at least the last. My trading methods, including the five magic bullets – is the best way to detect the bottom or the top.
Alligator will help us to engage in a real trend and not to conclude the transaction at the time of price fluctuations within a limited range, which is eating up our profits.
fractal model is simple. The market is moving in one direction or another. After some time, buyers who wanted
Fig. 4-1 Typical market
make a purchase, it made (during an uptrend), and the market falls back due to lack of buyers. Then on traders starting to affect some new information (Chaos). There is a new shopping flow, and the market is looking for a place value of non-compliance and agreement on the price moves up. If the driving market force (momentum) and the power of buyers is large enough to overcome the preceding up fractal, we can deliver an order to buy, so that concluded one transaction at a price exceeding one minimum price change (tick) the maximum fractal. Let’s examine some typical fractal model.
Fig. 4-2 you see an idealized diagram of fractal models "A’. The technical definition of a fractal – a series of at least five consecutive bars where the highest high before and behind him are two bars with lower highs. (The opposite configuration corresponds to a fractal for sale). One way to visualize this
Fig. 4-2 Model fractal.
reach out in front of him, splayed with five toes, while your middle finger is pointing upward. Your fingers – it’s five successive bars, and your middle finger is the highest high, forming a fractal. In fractal upstairs, we are interested only in the highest values of the bars, while the fractal down interest are only the lowest bars. It is important to pay attention to the following restrictions:
- If the current bar has the same meaning on top of that and the average, the highest bar, it is not considered
one of the five bars needed to form a fractal. For fractal purchase you must have
maximum, which was preceded by two lower highs, and to be followed by two more
low maximum. For fractal for sale, you should have at least one, which would be preceded by
two higher minimum Isa followed by two higher lows.
- Fractals upward and downward, may include the same beverage. The same bar can be part of both the
up fractal, and fractal down.
Pay attention to how the Model "AT" It meets all the requirements for a fractal. Two previous and two subsequent fractal may have any maximum, whose vertices will be no higher than the average bar (finger). In addition, the model "AT" is a fractal both upward and downward, since both of the preceding bar and the following bars and both are internal bars, if compared with the average bar fractal.
Model "FROM" It shows a different formation, which creates both an up fractal, and fractal down. As shown here, these fractals can "include" a same beverage. Model "D" It requires six bars to form a fractal up, because the fifth bar has a height equal to the previous highest high. To emphasize the above, once again repeat here the working definition:
Fractal must have two previous and two following bars with lower highs (more vysokimiminimumami when the downward trend). For fractal purchase we are interested in only the maximum value of the bars. For fractal for sale we are interested in only the lowest bars.
Fractals tell us a lot about "phase space" market behavior, but we can improve our trade, knowing how to change behavior of the fractal function, when the market will move from high to low and back again. After a fractal is formed, it will always be a fractal, but the role he plays, depends on its position in relation to the Alligator’s mouth. Fig. 4-3 shows the fractal buy and fractal for sale. If the buy signal is above the Red Balance Line (Alligator’s Teeth), we would place a stop order to buy at a minimum price change is one higher than the maximum up fractal. If a sell signal is below the Red Balance Line, we would place a stop order to sell at a minimum price change is one lower than the minimum signal fractal down.
It is important to understand that we do not pay attention to the fractal signal to buy, if, at the time when he is overcome, the price is below the Red Line Balance. This is the best method to filter out non-profit fractal transaction, which is known to us.
Fig. Fractal signals 4-3
After the fractal signal is generated and has power that is determined by its position Alligator’s mouth, it remains a signal as long as no infestation, or until such time as there is no more recent fractal signal.
Fig. 4-4 shows several fractal patterns. Fractal buy is at the top, and fractal for sale -in the bottom. Remember that although the formation of a fractal can be started, it must be filtered using the Alligator. In other words, you should not conclude a deal to buy if a fractal is below the Alligator’s teeth, and you should not conclude a deal to sell if a fractal is above the Alligator’s teeth.
Fig. 4-5 is an overview of a fractal characteristics. The basic structure of the market – it’s Elliott Wave, and the basic structure of the Elliott Wave – a fractal. If a trader is able to correctly identify the place of fractals, it allows him to profit by trading using Elliott Wave, not caring
Fig. 4-4 Various possible shapes of fractals
- What is happening between Fractal Fractal top down, it is always
"Elliott wave of a certain level;
- Fractal always means a change in behavior; He is recognized as a
sequence of five bars, where the central bar (or group) has a
highs of fractals on top and lower lows FRACTALS
One way to trade using fractal is as follows: if the market
overcomes the outer extreme high for up fractal or minimum
for a down fractal, move towards external orientation / Fractal point.
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