Fractals Anyone?

[timsk]

Of the mountains of pony that arrives each day in my inbox, I receive a free newsletter from a chap called Mark McRae. I quite like his newsletters as they often contain something of substance and aren't simply a tease to get one to buy a course, system or whatever. The latest one concerns fractals and has the following link:

http://www.tradingforbeginners.com/p.php/s1t2

Anyway, just wondered if anyone uses fractals or has come across this site or any others regarding fractals etc, etc?
Tim.

 

[Rognvald]

Have a look at
http://www.elitetrader.com/vb/searc...d=309836&sortby=lastpost&sortorder=descending
for a start
it'l keep you occupied for a while and may help - I've spent a while trying to work out whether chaos theory is likely to be useful to traders its a massive subject - no conclusion so far

try putting a google on for chaos theory+trading if you've got a few weeks to spare

 

[esiotrot]

Tim and R
Interesting stuff there - as you say if I can find the time to plough through it all.

Fractal phenomena is the reason that TA and chart patterns work on all time scales. I trade EOD but also look at weekly charts. Sometimes you can see patterns, S/R levels easier on one than the other. In addition all the intra-day traders will see the same on their 1//15/60 minute charts.

However I've never thought about developing a trading system specifically using fractal analysis, but it's an interesting thought.

 

[MCGF]

Lol!

What exactly is a mountain of pony?

 

[timsk]

MCGF,
'Pony' is cockney rhyming slang: pony and trap = ****!

Tim.

 

[wiseambitions]

Have a look at
Forums
for a start
it'l keep you occupied for a while and may help - I've spent a while trying to work out whether chaos theory is likely to be useful to traders its a massive subject - no conclusion so far

try putting a google on for chaos theory+trading if you've got a few weeks to spare

I was interested to see this was talked about 9 years ago because it's still working now...

There's the Bill Williams Chaos system. Still being taught. Fractals, alligators, elliott waves, moving averages, support and resistance, all part of the theory

Simplified somewhat in another system called itradeaims (AIMS Stress Free Forex Trading System - Make Money in the Forex Markets) which has about 900 members.

Worth a look, and like I say, interesting to me that I am able to respond positively to a post 9 years old!

 

[Shakone]

Do these have anything to do with actual fractal or chaos theory in mathematics, or are they just some chart indicators with an adopted name to make them sound clever?

 

[wiseambitions]

Do these have anything to do with actual fractal or chaos theory in mathematics, or are they just some chart indicators with an adopted name to make them sound clever?

Wow. Fancy ressurecting such an old thread!

Fractals. As I understand it they are turning points like swing highs or swing lows, which are usually marked a couple candles after the bar in which the turn around occurred.

They then become seen as possible support (if a swing low) or resistance (if a swing high) points. And if subsequently the price moves past that fractal then it can sometimes break out powerfully and you might get into a wave 3 or wave 5 situation for example.

Go to mt4 indicators, the Bill Williams area and you can add them to your chart

Chaos, I believe they called the system by the name because the market does its own thing which is often unpredictable, due to influx of news etc. On the flip side they would say in spite of that there is a structure to the market, and that is all bound up with elliott waves, support and resistance etc. Leading on from there that patterns are repeated slower in higher time frames, or magnified in lower time frames. And it is fractals that punctuate those movements.

I came across all this stuff about 4 months ago and I have become a firm believer in the theory.

The guy who leads itradeaims is himself a full time trader for about 3 years and it gives him his income. I know others who have bought into the theory by the more comprehensive version of the system through the profitunity group which you may be able to locate for yourself. All of which probably derives from the work of Bill Williams over many years. The application of the theory is profitable in many markets (forex, commodities, shares, gold etc), and unlike many other algorithms still works many years after it was introduced.

I'm not familiar with chaos theory in mathematics. However I am slightly familiar with stochastics (in insurance) which is a bit different from the indicator which bears its name. and that isnt part of the chaos theory.

 

[Vasco da Banana]

I knew someone who claimed (or had convinced himself) that he was using fractals successfully, but it always seemed that his trades were so discretionary that he was really using 1001 other things learned from watching charts for ten years.

 

[wiseambitions]

Have a look at AIMS Stress Free Forex Trading System - Make Money in the Forex Markets where there should be a blog by the author about how he uses fractals.

His system greys out the area between top and bottom fractals, these boxes get redrawn as the fractals are replaced higher or lower, it needs there to be a definite swing high or swing low for a fractal to get replaced and as mentioned earlier this is usually applied to the third candle back.

The concept, whatever timeframe, is that the fractal makes a support or resistance level.

We are then looking for a breach of that fractal to tell us that maybe there is a new impulse up or down and this can be useful to trade, subject to confirmation from other indicators which might also tell us whether there's much momentum or if it is liable to fade out. Also whether we'd be trading with or against the general trend, as that is important as well.

There is still a fair amount of discretion involved, no single indicator including fractals, tells the complete story enough to decide to trade

 

[Splitlink]

Do these have anything to do with actual fractal or chaos theory in mathematics, or are they just some chart indicators with an adopted name to make them sound clever?

Chaos theory, if taken seriously, is going to take more time to learn than most of us are willing to spend. The rest will be mathematical freaks who will get so immersed in the subject that they will forget all about trading. That could be a good thing, in itself.

 

[the hare]

Of the mountains of pony that arrives each day in my inbox, I receive a free newsletter from a chap called $$$$ $$$$$. I quite like his newsletters as they often contain something of substance and aren't simply a tease to get one to buy a course, system or whatever.
Tim.

Why do you think $$$$ $$$$$$ wrote and sent you the newsletter, cos he's a jolly good egg, or perhaps he's one of the most voracious vendors out there peddling the same old crap for over a decade !

Easy for me to say in retrospect knowing how things turned out, but would you still say the same thing today with the benefit of hindsight, and without the rose tainted glasses

 

[wiseambitions]

Chaos theory, if taken seriously, is going to take more time to learn than most of us are willing to spend. The rest will be mathematical freaks who will get so immersed in the subject that they will forget all about trading. That could be a good thing, in itself.

Let me say I didn't read up any of the full version of chaos theory as per profitunity,
However in September I bought into the Aims system via AIMS Stress Free Forex Trading System - Make Money in the Forex Markets and if I remember correctly it might have cost in region of $200, maybe less

There were initially about a couple hours of reading in order to learn the basics. thats without getting into more complex technicalities which are desirable but not essential.

I have given up with robots and feel that manual trading along these lines is the best way forward for me, I have seen some incredible results. But it requires discipline and patience and it doesnt just come easily. It is great for dedicated traders, some are known to make their living entirely by following the system,

 

[Shakone]

Wow. Fancy ressurecting such an old thread!

Fractals. As I understand it they are turning points like swing highs or swing lows, which are usually marked a couple candles after the bar in which the turn around occurred.

They then become seen as possible support (if a swing low) or resistance (if a swing high) points. And if subsequently the price moves past that fractal then it can sometimes break out powerfully and you might get into a wave 3 or wave 5 situation for example.

Go to mt4 indicators, the Bill Williams area and you can add them to your chart

Chaos, I believe they called the system by the name because the market does its own thing which is often unpredictable, due to influx of news etc. On the flip side they would say in spite of that there is a structure to the market, and that is all bound up with elliott waves, support and resistance etc. Leading on from there that patterns are repeated slower in higher time frames, or magnified in lower time frames. And it is fractals that punctuate those movements.

I came across all this stuff about 4 months ago and I have become a firm believer in the theory.

The guy who leads itradeaims is himself a full time trader for about 3 years and it gives him his income. I know others who have bought into the theory by the more comprehensive version of the system through the profitunity group which you may be able to locate for yourself. All of which probably derives from the work of Bill Williams over many years. The application of the theory is profitable in many markets (forex, commodities, shares, gold etc), and unlike many other algorithms still works many years after it was introduced.

I'm not familiar with chaos theory in mathematics. However I am slightly familiar with stochastics (in insurance) which is a bit different from the indicator which bears its name. and that isnt part of the chaos theory.

Hey, you resurrected the thread buddy, not me

Had a quick look. These 'fractals' just look a bit like a 3 bar formation representing a local high or low. Perhaps it's more complicated than that.

Not clear that they have anything to do with fractal math though. So someones comment on the thread years back about them being fractal and so they apply to all timeframes seems a bit of a stretch.

 

[wiseambitions]

Hey, you resurrected the thread buddy, not me

Had a quick look. These 'fractals' just look a bit like a 3 bar formation representing a local high or low. Perhaps it's more complicated than that.

Not clear that they have anything to do with fractal math though. So someones comment on the thread years back about them being fractal and so they apply to all timeframes seems a bit of a stretch.

Yes, I started it, but one or two actually replied, and that's interesting.
Yes, one of the ways of I have of understanding fractals is 5 bars. If the middle one has a wick or close which goes further up or down than the 2 to the left and the 2 to the right then that would become a fractal and holds until another swing high or swing low exceeds it - and that can take quite a few new candles sometimes.
In a low time frame eg M1 new fractals will be drawn more frequently than in a higher time frame even m15. That's fine, because of the geometry of the market.

I use them to the extent that I would consider to go long if in my chart, be it m5 or whatever, an old fractal gets broken on the upside. Vice versa on the downside, although whether to even trade also depends on the trend, I am cautious about trading against the trend which is measurable by the moving average of lets say 30 bars.
I would confirm my move with regard to a wave formation measured by such as MACD or the indicator which comes with the Bill Williams or Itradeaims systems, as it is useful to know whether one is in a wave 3 or 5 situation, going against the trend usually means you're trading the direction of a wave 4, and wave 5 usually offers the highest potential for a push towards fib extension targets.

You'd need to subscribe to one of the systems to really understand the setups

In summary, what I'd want to say is the system works now, it worked in backtests 2, 5,10,20 years ago, and it seems to be immune from the changing market conditions which kill off so many other algorithms

 

[scose-no-doubt]

I'm sure elitejets has looked at fractals, Timmy. give her a buzz.

 

[Shakone]

I use topology and knot theory for most of my trades.

 

[DionysusToast]

What is so difficult about understanding the markets that people will go to such lengths to look at anything BUT the markets?

Fractals? A bunch of math to tell you what to do instead of figuring out what to do yourself.

You guys really believe that is a sound approach to becoming a skilled trader?

Serious question.

Why not just learn about trading?

 

[Shakone]

What is so difficult about understanding the markets that people will go to such lengths to look at anything BUT the markets?

Fractals? A bunch of math to tell you what to do instead of figuring out what to do yourself.

You guys really believe that is a sound approach to becoming a skilled trader?

Serious question.

Why not just learn about trading?

Rubbish! Trading is too complicated and difficult to succeed by just studying price and how it moves and drawing conclusions. I'm following Renaissance Technologies and studying natural language processing and recognition.

 

[cablemonster]

What is so difficult about understanding the markets that people will go to such lengths to look at anything BUT the markets?

Fractals? A bunch of math to tell you what to do instead of figuring out what to do yourself.

You guys really believe that is a sound approach to becoming a skilled trader?

Serious question.

Why not just learn about trading?

yeah it's all a bit hocus pocus. fibs are a case in point. I dont know why price reacts at those levels, personally I think it's just there are so many participants looking at these levels that it causes a reaction. For my trading I just want to know what the larger players in my chosen market look at, if they all started looking at tidal patterns I would follow those levels. crowd psychology init.