FX TECHNICAL ANALYSIS Use of fractals in strategy
Many traders use Bill William’s indicator in cooperation with other Bill William’s indicators. One of the most used indicators in combinations is the Alligator indicator.
Te standard rule
Bill Williams states that all long trade setups are valid if the fractal is above the “alligator’s teeth” (the center average), and all short trade setups are correct
if the
fractal is below the “alligator’s teeth” (the center average).
A fractal i n d i ca t or formula is a great tool in any trader’s Forex tool box. One of the reasons why this is such a great item for any Forex trading system is because the indicator has clearly defined rules. Tere is no doubt about what the fractal level is or should be. No, it creates crystal clear horizontal levels and critical support and resistance levels.
Here are some extra Forex tips and words of caution as well when using the Fractal indicator:
42 FX TRADER MAGAZINE July - September 2018
Te long–term chart can be a great filter for short-term fractals;
• Fractals can be great to use for trail stops. Te trail stops can, in fact, be used on all time frames, but they have more value or strength on higher time frames. Using two fractal levels distance instead of one would give more breathing space to the trade.
Trend lines and Fibs Fractals can also be a very useful tool
formulated by
• Te higher the time frame, the more importance and reliability can be assigned to any fractal;
• Te larger the period, the lower the number of signals generated;
• Plotting and analyzing fractals in multiple time frames is very useful.
for drawing trend lines. If you are having difficulties with placing the correct lines, then fractals can be a great support tool.
Fractals are the very easy method of spotting what the trend is in any time frame. All a trader needs to do is look and see whether the fractals are making higher highs and higher lows or lower lows and lower highs.
Fractals can also be a great Forex tool for placing F ib o n ac ci r e t r a c ement s level. If you are in doubt which swings high or low to Fib, take a look at the fractal and see how your Fib corresponds with the fractal.
Conclusion
Fractals are extremely useful Forex tools. Tey can provide smooth Forex trading and are even suitable for automated Forex trading soſtware. If you are learning Forex trading, then take a look at the Fractal indicator to get an idea of how you can improve your trading.
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