Though it is a fact that forex markets can be a bit too random at times, these fluctuations do take place for some reasons. They do follow certain patterns. Traders mainly look to examine such patterns for understanding such random market fluctuations and one common mode which they cater to is using fractals. Here in this post, you will learn about trading forex with fractals properly. So do follow this following section which plummets into fractal depths.
Definition of forex fractals:
Regarding definition, fractals are mainly geometrical patterns which get repeated in ever minor scales to give out irregular shapes and surfaces. These patterns and shapes cannot be carried out through a regular geometrical gauging.
2 modes of interpretation when trading forex with fractals:
Fractals are of 5 or more bars and there are 2 modes of interpreting it:
1st is when a bearish turn point takes place where patterns such highest high right in the middle and a couple of lower highs on either side.
2nd is when a bullish turn point occurs where patterns namely lowest lows in its middle and a couple of higher lows on either side.
When trading forex with fractals, these are mainly the 2 conditions which you need to examine.
Modes of trading the forex fractal:
Similar to most cases, forex fractals function best in conjunction with other popular trading indicators. One of the commons among them is the alligator indicator, namely a tool which is used for creating moving averages.
The basic rule of this rule is that when this trader can buy from a signal appears below the alligator teeth and when the signal is below the alligator teeth then traders who look to sell off their trades.
Also when it comes to trading forex with fractals, experienced traders suggest making use of the slip through and retest. Here is how to use it.
In case of slip through, you will have to wait for the strong most likely a blunt ended candle to stay close to the currency fractal boundary. You have to place your limit order right ahead of the price with the Stop loss after the fractal boundary. Doing so will present you with the exact fractal width. Experts state that this usually a favorable place for your Stop.
On the other hand in case of the retest, you will have to wait for the price to go over the boundary of the fractal and then come back to re-check the boundary of the fractal which recently broke. Again you have to make sure that when you put your stop on the opposite side of the fractal boundary- which means the farthest boundary of the fractal.
However since trading forex with fractals primarily involves trading with the fractal boundaries, you will have to practice with it a lot. Numerous traders have stated that this fractal trading technique has proven to be instrumental in their profit acquisitions. But again being clear with the dynamics of it is pivotal to success. Hopefully, the details conveyed are clear enough. Get started with it, learn from it and prosper from it.