DESCRIPTION:
"Fractal — it is price behavior change. It means if fractal has appeared - price will change it direction. Fractal is a five bars sequence, where the central bar has higher maximum or lower minimum. The fractal arrow shows central bar position."
Copyright © Bill Williams. From: "Trading Chaos". Buy “Trading Chaos” on Amazon.com: http://www.amazon.com/Trading-Chaos-Technical-Techniques-Marketplace/dp/0471463086/ref=sr_1_1?ie=UTF8&s=books&qid=1255980582&sr=1-1
HOW TO USE:
"Our first signal entry into any market is always the first fractal outside the Alligator’s mouth. Once this signal is hit, we will take any and all signals that are triggered in that direction.
If the buy signal is above the Red Balance Line (the Alligator’s Teeth), we would place a buy stop one tick above the high of the up fractal. If the sell signal is below the Red Balance Line, we would place a sell stop one tick below the low of the fractal sell signal.
We would not take a fractal sell signal if, at the time it is hit, the price is above the Red Balance Line. This is the best method we have found to filter out non-profitable fractal trades."
Copyright © Bill Williams. From: "Trading Chaos". Buy “Trading Chaos” on Amazon.com: http://www.amazon.com/Trading-Chaos-Technical-Techniques-Marketplace/dp/0471463086/ref=sr_1_1?ie=UTF8&s=books&qid=1255980582&sr=1-1
CALCULATION:
UP exists at i if HIGH(I – 2) < HIGH(i) and HIGH(I – 1) < HIGH(i) and HIGH(I + 1) < HIGH(i) and HIGH(I + 2) < HIGH(i)
DOWN exists at i if LOW(I – 2) > LOW(i) and LOW(I – 1) > LOW(i) and LOW(I + 1) > LOW(i) and LOW(I + 2) > LOW(i)
The indicator was revised and updated
Tags: Fractal, indicator, Marketscope, Trading Station, FXCM, dbFX