Trading Chaos by Bill Williams

[4xpipcounter]

I have what is, for me, a perfect methodology in place. I would still like to hear your input on why you beleive that Chaos Trading is such a good system. Also, to shed some further light on this system, could you post a live trade or 2 based on what you see on the charts?

Just my 2 cents on an awesome trading system if you study it entirely and combine the various books of B.W. I like to see this thread become active again since this system is simple and can be traded successfully by anybody.
I never used another system but Chaos Trading. Combining the fractals from his latest book with the explanation of the Elliott Wave of some former book gives you the perfect trading approach, no matter what timeframe you like to trade. There is no need to attend his tutorial or buy the homestudycourse if you are eager enough to go through the books (takes months of intense studying and some dedication though).
Don't waste your time on plain TA or FA. This system is all you need to trade any market on any timeframe successfully. Of course, I did some optimization on how I use it: no divergent bars ever, I ignore all of them. The Awesome Oscillator is as awesome as the name suggests. Knowing what wave you are in, where to enter, addup and protect your position really only takes half a minute no matter what chart you look at (just as B.W. proposes.) This system gives you the edge to trade effortlessly and enjoy your spare time :clap:

 

[slight]

It's such a good system because of what I already explained.
The rough idea of what the waves are doing via the AO gives you the basic idea of where the market moves. Defined entries, exits and stops you get via looking at the fractals. Of course, you must have a basic understanding of everything. Just looking at a chart without knowing what the AO tells you, just trading the fractals, is not going to be good enough. It's a system with which you don't analyze in the normal sense of the being. Price Action tells you what is going on and you simply follow. Takes only a very short time and then you close the chart and you're off to whatever you like doing. Attached you see the current gold daily chart with all the stuff I see in it. Hope this helps.

I have what is, for me, a perfect methodology in place. I would still like to hear your input on why you beleive that Chaos Trading is such a good system. Also, to shed some further light on this system, could you post a live trade or 2 based on what you see on the charts?

 

[4xpipcounter]

I know how Bill Williams chaos method works. Seeing you have a good background with it, I was wondering if you could post some live trades, so we can see it in action.

It's such a good system because of what I already explained.
The rough idea of what the waves are doing via the AO gives you the basic idea of where the market moves. Defined entries, exits and stops you get via looking at the fractals. Of course, you must have a basic understanding of everything. Just looking at a chart without knowing what the AO tells you, just trading the fractals, is not going to be good enough. It's a system with which you don't analyze in the normal sense of the being. Price Action tells you what is going on and you simply follow. Takes only a very short time and then you close the chart and you're off to whatever you like doing. Attached you see the current gold daily chart with all the stuff I see in it. Hope this helps.

 

[Hittfeld]

I have what is, for me, a perfect methodology in place.

Would you mind telling us what your perfect methodology looks like? Just an indication or hint?

Thanks
Hittfeld

 

[slight]

Sure. SP500 sell at 1062,5, Stop 1076. Entry via 4h, Stop via 1h / 4h - depending on what is hit first. I am expecting this trade to run for another 2 or 3 days before one of the stop scenarios gets filled.
Other positions I have can always be viewed via the link in my signature.

I know how Bill Williams chaos method works. Seeing you have a good background with it, I was wondering if you could post some live trades, so we can see it in action.

 

[4xpipcounter]

Hittfield, I ask you to please not take that comment out of context. It is perfect for me, but it may be the worse thing around for others.
The best way to answer it is just click on my thread in my signature. I also did what I call a Weekly Review of 28 pairs of currencies and gold. You can also look into even further on my blog at 4xpipcounter.blogspot.com.

Would you mind telling us what your perfect methodology looks like? Just an indication or hint?

Thanks
Hittfeld

 

[Hittfeld]

Thanks to both of you!

Hittfeld

 

[4xpipcounter]

Excellent! You passed the test. I wanted to see if you really believe in what you do.
I like reading about other perspectives on other methodologies, which is why I am subscribing to this one, since you revived it.
A little bit of what I do can also be seen by clicking on my signature. I did a Weekly Report on 28 pairs and gold, along with other things, as 900 posts will atest.

Sure. SP500 sell at 1062,5, Stop 1076. Entry via 4h, Stop via 1h / 4h - depending on what is hit first. I am expecting this trade to run for another 2 or 3 days before one of the stop scenarios gets filled.
Other positions I have can always be viewed via the link in my signature.

 

[slight]

Glad I passed your test 4xpipcounter!
But as you know, if you don't believe in your own trading and the system you apply, you are better off throwing the money out of your window, one might enjoy the way paper flies to the ground more than feeling the frustration of losing all the time

I skimmed through your thread but couldn't find anything on gold unfortunately. Maybe you can link me to the exact post, I sure would be interested!
I see you are trading forex mostly, I did that, too. But the Chaos System doesn't work quite as well on forex than it does on stocks, stocks indices and commodities. So I am sticking with that and can see quite an improvement in my results.

Have a good evening.

Excellent! You passed the test. I wanted to see if you really believe in what you do.
I like reading about other perspectives on other methodologies, which is why I am subscribing to this one, since you revived it.
A little bit of what I do can also be seen by clicking on my signature. I did a Weekly Report on 28 pairs and gold, along with other things, as 900 posts will atest.

 

[4xpipcounter]

You hit the nail on the head about believing in your own system.
This is from post #663. Someone that follows my thread wants the weekly S&R's for gold. My S&R's come from my own proprietary formula:
"1242.46
1229.66
1222.35
1207.51
1200.09
1187.39

3 R's, and then the 3 S's--3,2,1 & 1,2,3, respectively "

This is an excerpt from post #654. It gives my entire Weekly Report for 28 pairs and gold:
"Gold: The bulls have relented the LT control of gold. The peak established 7 weeks ago at 1264.96 should stay in place for quite awhile. At least 1176.98 should be containment on the low end."

I trade almost exclusively forex. I just developed a comfort zone with it.

Glad I passed your test 4xpipcounter!
But as you know, if you don't believe in your own trading and the system you apply, you are better off throwing the money out of your window, one might enjoy the way paper flies to the ground more than feeling the frustration of losing all the time

I skimmed through your thread but couldn't find anything on gold unfortunately. Maybe you can link me to the exact post, I sure would be interested!
I see you are trading forex mostly, I did that, too. But the Chaos System doesn't work quite as well on forex than it does on stocks, stocks indices and commodities. So I am sticking with that and can see quite an improvement in my results.

Have a good evening.

 

[slight]

ok looking at it from the chaos point of view I can't comprehend entirely why these levels exactly (some of them I do get), but as long as you know and trust, it's all good!

 

[4xpipcounter]

Of course you would not comprehend it, entirely. That's because you do not trade according to my methodology, and I do not trade according to the chaos, even though I understand it (heh heh).
A good friend of mine has a thread called "EUR/USD Elliot Wave". WE have often had discussions about how close his numbers are to mine. As an example, LT, he sees the EUR/AUD going to 1.7550, and I see it going to 1.7525. That's a small diffeence. The point is if you take two good trading methods, they will yield the approximate same results, because they are technically enshrouded.
Also, the derivation of my S&R's is purely mathematical and proprietary, therefore, anyone might "get some of them", but not completely, because it has nothing to do with how you stereotypically view a chart.

ok looking at it from the chaos point of view I can't comprehend entirely why these levels exactly (some of them I do get), but as long as you know and trust, it's all good!

 

[slight]

Exactly. And it's good that it is that way. Otherwise no one would sell/buy back my future contracts :cheesy:
However, you are defining exact numbers and price levels. I don't do that at all. I am free of those things. I follow. If it tells me to get out, I get out. If price tells me to hold the position, I hold it. I am the moron following the signals. Making good profits.

 

[4xpipcounter]

The exact numbers and price levels are a guide to help to know when to enter a position. Also, the people who watch my thread tend to be impressed by their exactness.
I would not call myself a moron, because when you consider 90% of all traders bankrupt their accounts, that puts me in the top 10%, so I'm in elite company. I will say similar to you you follow the information as it pertains to the chaos system. I happen to like more pips than that, so I follow my favorite forecaster, Me.
You can be "free of those things", and that is fine. I happen to not want to be free because of the steady production thereof.
Bottom line is, and I don't you or know if you are trading profitably consistently, but as long as you are, then we are doing what brings our success. I do know many traders who are losing, so I know they would not want to be "free of those things" if they knew how to grasp "those tihngs".

Exactly. And it's good that it is that way. Otherwise no one would sell/buy back my future contracts :cheesy:
However, you are defining exact numbers and price levels. I don't do that at all. I am free of those things. I follow. If it tells me to get out, I get out. If price tells me to hold the position, I hold it. I am the moron following the signals. Making good profits.

 

[slight]

I understand.
But I think there are some other implications.
The human mind always wants to be in control and understand what is going on. As a trader, when you have your system and you are able to follow that system, you are the moron (here it comes again) that simply implements the rules everytime you perceive an opportunity. Once you have automatizized this process it does feel like you are the idiot who just follows. There is no skill involved perceiving your own edge, since its automatic. That's why I talk about "moron". It is a very different environment compared to what you have to accomplish and manage in school or univeristy. Even though you do nothing else than reproduce there, you still feel like you are doing "new things" for yourself. However, in the market environment, you do the same thing over and over and over again. It is definitely an accomplishement and a success to be a successful trader, but I often see myself confronted with the question "Why, Why Why?" .. In the environment of trading, this question doesn't matter, at least for the system I am using it doesn't, however, the devil's workshop (the actively operating human mind) it sill does keep on persisting.

It is a skill to be a successful trader, but it has way more to do with "just being" than what the human mind keeps you busy with all day every day, that is asking questions and wanting to know more and more and creating problems where there is none ... if you know what I am getting at.

The exact numbers and price levels are a guide to help to know when to enter a position. Also, the people who watch my thread tend to be impressed by their exactness.
I would not call myself a moron, because when you consider 90% of all traders bankrupt their accounts, that puts me in the top 10%, so I'm in elite company. I will say similar to you you follow the information as it pertains to the chaos system. I happen to like more pips than that, so I follow my favorite forecaster, Me.
You can be "free of those things", and that is fine. I happen to not want to be free because of the steady production thereof.
Bottom line is, and I don't you or know if you are trading profitably consistently, but as long as you are, then we are doing what brings our success. I do know many traders who are losing, so I know they would not want to be "free of those things" if they knew how to grasp "those tihngs".

 

[4xpipcounter]

You do make a lot of sense. But, I think it is wisdom to keep human emotions out of the way, and just make the trades as they come to me. Each day I am challenged to do that, even though I have said it a lot that I have ice in my veins. I am emotionless and totally unreactionary in my executing trades and exiting them.
Also, I may do the same thing over and over again, but it is still a thrill and a challenge to enter the trade and watch the pips grow. For me, it is still a rush to forecast my 28 pairs, and then kick back and watch everything go as forecasted. That is still a wonderful feeling. I also feel empowered by the ability to properly forecast the markets. Therefore, for me, it is settled that I am a pretty smart guy who can do that, and be able to trade unemotionally.

I understand.
But I think there are some other implications.
The human mind always wants to be in control and understand what is going on. As a trader, when you have your system and you are able to follow that system, you are the moron (here it comes again) that simply implements the rules everytime you perceive an opportunity. Once you have automatizized this process it does feel like you are the idiot who just follows. There is no skill involved perceiving your own edge, since its automatic. That's why I talk about "moron". It is a very different environment compared to what you have to accomplish and manage in school or univeristy. Even though you do nothing else than reproduce there, you still feel like you are doing "new things" for yourself. However, in the market environment, you do the same thing over and over and over again. It is definitely an accomplishement and a success to be a successful trader, but I often see myself confronted with the question "Why, Why Why?" .. In the environment of trading, this question doesn't matter, at least for the system I am using it doesn't, however, the devil's workshop (the actively operating human mind) it sill does keep on persisting.

It is a skill to be a successful trader, but it has way more to do with "just being" than what the human mind keeps you busy with all day every day, that is asking questions and wanting to know more and more and creating problems where there is none ... if you know what I am getting at.

 

[slight]

I absolutely agree. No matter what, the thrill of trading and watching it unfold when being in that market and on the right side of it, is nothing that loses its beauty or even gets boring. Not at all. Just sometimes I wish I was able to shut my mind up a little more. I guess I need some more practice

Good day!

You do make a lot of sense. But, I think it is wisdom to keep human emotions out of the way, and just make the trades as they come to me. Each day I am challenged to do that, even though I have said it a lot that I have ice in my veins. I am emotionless and totally unreactionary in my executing trades and exiting them.
Also, I may do the same thing over and over again, but it is still a thrill and a challenge to enter the trade and watch the pips grow. For me, it is still a rush to forecast my 28 pairs, and then kick back and watch everything go as forecasted. That is still a wonderful feeling. I also feel empowered by the ability to properly forecast the markets. Therefore, for me, it is settled that I am a pretty smart guy who can do that, and be able to trade unemotionally.

 

[4xpipcounter]

As far as charts and the related amth of them is concerned, my mind never shuts down. This is because the lover and passion for what I do, and this is not only my job, but my hobby.
If the unemotional attachment to my trades is related to shutting the mind down, then that is the only time my mind is shut down. You have related in trading this chaos theory that you just wait for the trade to come to you and jump in.
You also mentioen about being "free all from all that", with respect to analysis. In many ways, those comments are symptomatic of someone whose mind is shut dowm, or the unemotional attachment with regards to the trades.
If anything, our approaches are diverse, but there is good in what we are deriving from this.

I absolutely agree. No matter what, the thrill of trading and watching it unfold when being in that market and on the right side of it, is nothing that loses its beauty or even gets boring. Not at all. Just sometimes I wish I was able to shut my mind up a little more. I guess I need some more practice

Good day!

 

[slight]

4xpipcounter, may I ask how old you are and if you are a successful fulltimetrader?

I think you are right with what you said. The mindset is more or less the same with every successful trader no matter what the methodology. Being free of trading one's expectations is an important factor. Listening to your methodology, trusting in it and always always always following it, is what makes the difference.

Another question to you, you said you know the Chaos system, how come you went through the work to make your own system? I am guessing that's quite an effort and consumes a lot of time ...

As far as charts and the related amth of them is concerned, my mind never shuts down. This is because the lover and passion for what I do, and this is not only my job, but my hobby.
If the unemotional attachment to my trades is related to shutting the mind down, then that is the only time my mind is shut down. You have related in trading this chaos theory that you just wait for the trade to come to you and jump in.
You also mentioen about being "free all from all that", with respect to analysis. In many ways, those comments are symptomatic of someone whose mind is shut dowm, or the unemotional attachment with regards to the trades.
If anything, our approaches are diverse, but there is good in what we are deriving from this.

 

[4xpipcounter]

I don't mind telling you I am 54 years old.
I developed my own system, because I think it is the best. This week my system has yielded me over 800 pips which is perfectly verifiable through the transparency of my thread.
I take time to study other indicators and systems, because it is what I like to do. I take my job seriously and passionately. I don't view it as find my trades, enter and exit, then go to the lake all day, even though I have nothing against taking my laptop on the boat all day and "working" that way. Tucker likes the lake to you know (as long as he is in the boat).
I'm always open minded. If someone has something to offer me that helps me be a better trader, then I am listening. That is how 3 years ago I got introduced to the ichimoku cloud, and thus, its full implementation into my methodology.
I've been trading for 6 years, and it still takes work to refine myself and all aspects of my trading. After all, I don't make 3,000 pips per week, so I know there is still work to do. So, the work is not just the developmental process of my methodology. My methodology was developed before I studied how the chaos system worked, even though I had a cursory knowledge before I studied the chaos system.
The one thing I don't like is its name. There is nothing chaotic about the markets. They all follow a beautiful ebb and flow that is predictable. This is why I consult with my favorite forecaster (Me), and then base my trades on his forecasts. The reason is I see the ebb and flow of the cetain markets I am considering to trade, and execute accordingly.
BTW, it is me personally, that does not like chaos. I love order. I do not find fault with anyone who is "free" from that order, and likes to trade based on chaos. My foundational thought there is if someone is trading profitably, consistently. If that is the case, then you are to be saluted, because you are in the top 10% of all traders.
I do always hope my err is taken as confidence and not as a smug conceit. I have to guard against over-confidence, because I have "ice in my veins" and I know the markets are there to humble me if I'm not careful. I got humbled about 4 weeks ago. I had a losing week. Even though it was only -50 pips for the week, it is those weeks that serve as a reminder of where I started, and how much work I still have to do.
Developing your system does take a lot of time. Winning traders do not go get a "job", and then they are trading profitably from day one. I had to work for free for about a year. Results were up and down for another year. And then, it took another year after that before my methodology was fully developed.
I can tell you beyond any shadow of a doubt that the time and frustration I went through was worth it. I now have a "job" where it is me and Tucker in the cave (home office). I have a wonderful wife who is here with me at all times. We also have 14 grandchildren that come and go as they please, and I am here to take it all in, even while at work while enjoying great conversations with people like you.
This is another reason I tell newbies to take your time while developing your system. Demo trade, and more demo trade. If it takes 5 years to have a fully developed methodology that you have unwavering confidence in, it's worth it. Then you have the rest of your life to reap its rewards.
Having a love for mathematics and learning also helps. A good portion of my day is crunching numbers. They are like a forex roadmap.

4xpipcounter, may I ask how old you are and if you are a successful fulltimetrader?

I think you are right with what you said. The mindset is more or less the same with every successful trader no matter what the methodology. Being free of trading one's expectations is an important factor. Listening to your methodology, trusting in it and always always always following it, is what makes the difference.

Another question to you, you said you know the Chaos system, how come you went through the work to make your own system? I am guessing that's quite an effort and consumes a lot of time ...