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Fractal trading????

  #3 (permalink)

North Carolina
Trading Experience: Beginner
Platform: NinjaTrader, Tradestation
Favorite Futures: es
Posts: 644 since Nov 2011

The examples of fractal trading I seen referenced here earlier were super ridiculous. It was basically just a serial correlation method. I did not see much value. A fractal is a type of pattern that repeats at different scales. So, the example I seen is they claimed to have measured/found the fractal ratio-- in order to make that ratio work out they look for basically a type of pattern. This sort of analysis is going to be very subject to serial correlations, i.e. probably not going to add value beyond that.

Fractals are interesting but I'm not sure this method is as interesting. You can look up Bill William's fractals for more information. Below is a link to an explanation:

Note he says this because he's looking for a certain type of ratio, similar to Fib.

Williams said that a fractal pattern on a bar chart was made up of a minimum of five consecutive bars. An initiating fractal must have a middle bar that has a higher high or lower low than the two preceding bars and the two following bars.

Here is the key, you only take the trade if it goes beyond the fractal signal. So, the profits/losses with this method will very similar to any breakout method and work in highly serially correlated markets but less likely to work in other types of markets. This is true of most chart pattern trading methods.

Last edited by tpredictor; April 21st, 2018 at 03:07 PM.
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