Fractal Geometry | Foreign Exchange EA Download - MT4/MT5 Resources - MetaTrader 5 Resources
Now that I have some free time, I've restarted this thread. Making videos is an easier way to communicate your strategy, so feel free to check out my YouTube channel. As time permits, I'll be making more and more videos showing examples of what works and what doesn't. I will also be doing a live broadcast on Sunday night soon to look at some potential trade setups for next week.
Also watch a video explaining the basic strategy:
Also watch a video explaining the basic strategy:
Insert video
Hello traders, welcome to this topic.
For lack of a better term, this strategy is based on fractal geometry. It may sound complicated, but its application is really simple and elegant. (At least I think so). My system provides a stress-free, mechanical way to observe price action. We use manual drawing in conjunction with a modified fractal indicator. I prefer clean diagrams and a clean heart.
The sole purpose of this post is to build a community of hardworking and efficient fruit harvesters. period.
rule:
#1) Political/ideological arguments will not be tolerated here.
#2) Rude, racist or vulgar behavior will not be tolerated here either.
Disclaimer: I assume that individuals are responsible for their own actions. My live trades are not advice, they are just to illustrate the system. Trading involves risks and should be taken seriously. It is recommended that you test this strategy on a demo account.
Strategy
We use the " first contact" principle. This means that we buy/sell based on the first contact of the fractal line.
1) The fractal line is derived by using the midpoint of the pulse wave.
***** The modified fractal indicator is the basis for these derivation *****
Before discussing some of the rules, I thought it would be a good idea to post a few examples for visual reference. Of course, these have been carefully chosen to illustrate the strategy and make these simple derivations easier to understand.
CAD/JPY 1 hour chart illustrating fractal diagonal derivation.
USD/CAD 4H – Another example
Rules/Observations
#1) Fractals A, B, C and D must be alternating highs and lows and vice versa.
#2) Major fractals are better than minor fractals, but both are valid. Fractal D is the completion of our structure and can only appear after the close of the seventh candle (small fractal). The main fractal appears after the close of the 12th candle.
#3) There can be no other fractals between AB, BC or CD
#4) We are looking for a "uniform" pulse wave. We don’t want to see chaotic, jagged price action between fractal points.
#5) When fractal D appears, we can draw our structure. At this point, we would like to see a "price separation" from the fractal line (FL).
#6) Be extremely accurate when drawing, making sure the fractal line passes perfectly through the midpoint of each pulse wave. Entries are everything and if the drawing is not accurate, the entry may look very different.
#7) Please note that some brokers use New York candle closing times and some do not. Also, different spreads can affect when or if the fractal actually prints, so you can get different structures or no structure at all for the same pair. As long as you are consistent with your drawings, this theory still holds.
#8) You don’t have to buy/sell on first contact. If you feel that there is too much fundamental momentum when price approaches a fractal line, then you can wait and see if price breaks out of the fractal line and closes above it with a convincing candle. You can then buy/sell the other side of the line on the first retracement to the line. Essentially, this is like trend continuation trading.
#9) We are not trying to predict some big trend change. We use higher time frames to scalp fractal lines.
#10) Don’t hesitate to enter FOMO trades early. Maybe one entry is a few points earlier on the line, one is a touch entry and then takes profits early and lets the other one in if things go in your favor. Be creative with micromanagement.
Indicators/templates:
This is an indicator of the generosity of "arby1108". Simply click on a fractal point to draw a fractal structure.
NOTE: If you click on an invalid fractal, it will draw an invalid structure. For example, you should click "A" on a fractal you know to start a valid setup and it will draw the structure for you. Then click "C" to clear the drawing or "F" to lock the drawing in place. However, even when locked in place, you can still double-click any row to edit or move it.
An EA that can trade on fractal lines is located here, with a link to the rules:
https://www.forexfactory.com/thread/...at-trend-lines
What timeframes and pairings does this apply to?
This strategy can be used on any pair. I find it works best for me in the 30M, 1H and 4H timeframes. For currency pairs with a large average daily range, I sometimes consider a 15M time frame.
What is a good underlying structure?
I have found that the most important quality of good construction is that the pulse waves are fairly uniform and not too close together, not too short, and not too long. No other fractals can exist within any shock wave. The structure consists of 4 fractals. Fractals can be secondary or primary. The period of the small fractal is 7 candles. The main fractal has a period of 12 candles.
I'd suggest checking the diagram carefully and looking for some nice uniform pulse waves, then plotting the structure to see what's going on. After a while, finding these simple structures becomes very easy.
How to set stop loss/take profit?
It's a personal choice, but that's what I do. I use the 20-day average daily range as a percentage (ADR indicator).
For example, let's say our currency pair has a 20-day ADR of 100 pips.
M30 chart:
Stop Loss = 10-15% of 100 pips = 10-15 pips
TP = 20% of 100 points = 20 points
First half chart:
Stop Loss = 15-20% of 100 pips = 15-20 pips
TP = 30% of 100 points = 30 points
H4 chart:
Stop Loss = 20-25% of 100 pips = 20-25 pips
TP = 40% of 100 points = 40 points
This way I can calculate my risk management parameters in advance and have them fixed before the trade is activated. This is just a general guideline. Every trader and every trade is unique, so be creative and tailor your risk management in a way that works for you.
What if my trade is stopped?
Assuming you use prudent risk management, there's no problem. If my trade is stopped out, it's a sign that price momentum is strong. If my trade is to sell on the first hit and get stopped out, I simply wait for the retracement to the fractal line and buy on the modification of the same line. vice versa.
******************************************************************************************************************
Attachment to original post (8)
📦 Summary of post attachments (23)
Below are all the files shared in the reply (23).
💡 Featured Recommendations
✍️ Latest by the author
- •
- •
- •
- •
- •
- •
📌 Popular topics
- •
- •
- •
- •
- •
- •
- •
- •
🔗 You May Be Interested In
- •
- •
- •
- •
- •
- •