Welcome to another video if you are new on exTRADING channel please consider subscribing to the channel
hit the like button and also feel free to leave a comment down below in today's video we will talk
about one of the most popular forex strategies called fractal trading strategy combined with
the alligator after you are done watching this video you will learn step by step how to use
this strategy it was designed by a famous market psychologist and successful trader bill williams
in the 20th century however it remains topical nowadays fractals alligator belongs to trend
strategies which means it does not work in the times of a flat this strategy is multi-currency
however observations show that it works better on instruments with a small spread such as most
basic currency pairs and metals with high volatile instruments it may give false signals you may use
any time frame however on smaller ones signals will be multiple but their quality may worsen
in one hour and longer time frames signals will demonstrate better quality but appear more rarely
a trade will be working off for several days if not weeks the size of stop losses on large
time frames may exceed the size allowed by your risk management however the profit may be huge
compared to the stop loss do you know how to trade with the best fractal trading strategy
this fractal trading strategy will answer all of your questions about fractals and alligator
you'll learn how to use this strategy step by step to hit consistent winning trades
today we will dive into a strategy that trades with the bill williams fractal
indicator and bill williams alligator before we start trading using fractals profitably
i want to give you some background information on bill williams himself
this will help you understand the significance of these special indicators
quick overview of bill williams mr williams developed a unique theory from combining the
chaos theory with trading psychology along with the effects they have on the market movement
bill williams vast knowledge of stocks commodity foreign exchange markets led him to develop many
indicators including fractal trading patterns these include the accelerator decelerator
oscillator alligator awesome oscillator fractals gator oscillator and market facilitation
each indicator has a specific value they are great to trade with if you understand the basic
concepts of each one his market view was in order for you to make money trading you must be able to
understand that basic market structure you must be aware of the market's internal parts which
he called dimensions these dimensions include the following fractal the phase space zones the phase
energy and force combination momentum the phase energy deceleration acceleration the phase force
balance line odd attractors i could go on for quite a while about bill williams
but the important part to note about all of this is that his analysis and perspective of the market
were different these powerful indicators are not outdated as some claim they work
very well when you apply the right strategy his indicators come standard on most trading platforms
these indicators will most likely be under his name bill williams or williams indicators
as you can see those are all six of bill williams powerful indicators that come
standard on your trading platform i do like each of these six indicators but after
extensive research and testing putting together the alligator and fractal indicator not only was
the easiest way to trade with his indicators but are extremely powerful with the right strategy
now let's dive into the strategy this strategy is based on two indicators designed by bill williams
and included in most trading terminals by default one fractals two alligator how does fractal
indicator work well these are simply arrows that are on top or below the candles on the chart
essentially these indicators can be used for various purposes including identifying support
and resistance levels determining trade entry and exit points and determining market trend
these fractals are formed when five repeated bars align in a distinct manner
you need the fifth bar to close to discover the highest high or lowest low
we will go more into detail about this indicator and show you how to use alligator indicator
you can find the fractal indicator on mt4 mt5 or other popular trading platforms there is no
need to have to run a fractal indicator download because it will already be there for you how does
the alligator indicator work this indicator consists of three specific moving averages
the 13 period line is called the alligator's jaw blue color the eight period line is called
the alligator's teeth red color the five period line is called the alligator's lips green color
we will go more into this indicator in a bit each of these lines has a specific name this
is because we will reference them later on in the strategy the indicator is based on three
essential aspects of the alligator's life sleep hunger and satisfaction if the beast is asleep
or satisfied the moving averages will move close to one another suggesting lack of market activity
if the beast wakes up the moving averages will start to move away from one another
suggesting the start of a new trend this is the right time to initiate trades
in a market trending upwards where the jaws are at the bottom while the teeth and lips are
on top it indicates buying opportunities in a market trending downwards where the
jaws are at the top while the teeth and lips are below it indicates selling opportunities
if the alligator indicator is showing an uptrend for by positions to be valid fractals should
appear on candlesticks above the alligator teeth also price action should be above the teeth for a
minimum of five successive candlesticks if the alligator indicator is showing a downtrend for
cell positions to be valid fractals should appear on candlesticks below the alligator
teeth also price action should be below the teeth for a minimum of five successive candlesticks
how to trade with fractal and alligator strategy step number one apply both fractals and bill
williams alligator indicator on your chart the first step you are going to want to do
is of course throw these important indicators on your charts as i have said they do come standard
on every trading platform that i am aware of so this should be very simple for you to do
once you do this your chart will look like this perfect step number two identify where the fractal
has formed above or below alligator teeth note in this video we are using a by trade entry so
all of these rules will be for a by entry okay so let's get into what the fractals are all about
the fractals indicate a bottom or a top the basic fractal indicator is composed of a very
minimum of five bars so when you see a fractal here is what may have happened for it to appear
there were a series of at least five successive bars with the highest high in the middle and then
the two lower highs are on both sides there was a reversing series of at least five successive
bars when the lowest low is in the middle and the two higher lows were on both sides which
forms a cell fractal fractals can appear with only one candle to the right of it but be aware
that this is an unconfirmed fractal because the price action may pierce through the level
the fractals have what's called a high and a low value this is indicated by the up or down arrows
for example here are the unique alligator indicator lines on the chart
now you need to be aware of where the fractals are being placed on the candles for this strategy
concerning this special indicator here is the fractal that we want to take special note of
i drew a circle on this specific up fractal this up fractal appeared on this candle above
the red line or the alligator teeth this is criteria number two for the fractal strategy
in a by trade the fractal must appear on a candle above the red line alligator teeth
what is happening here is that the fractal forms a new height of the previous fractal and therefore
made an up fractal appear on the candles in order to go to step number three for a bite
trade the fractal must show an up fractal and be appearing above the alligator teeth
step number three the price action must stay above the alligator teeth
for at least five consecutive candles in by trade this is where all the magic happens
more often than not when a fractal appears like the one above the price action is still flat
this means there has not been a real breakout in the recent time frame the reason this strategy has
to wait for at least five consecutive candles is that this is the time where either there is
pullback that is forming a reversal may be forming or the price action is still consolidating in a
flat market any one of those does not sound pleasant if you are looking for a big upward
bullish move to form on the chart step number four price action need to break above fractal
candle that was distinguished in step number two once you see that five consecutive candles did not
make a drastic move to the downside and stay in between the high of the fractal candle and
the alligator teeth then we go ahead and make an entry order you can make an entry this way or if
you are sitting in front of your charts live with this occurs then you can make a market order also
either one is okay to do because the same criteria is needed here is what it will look like as you
can see i marked where our original fractal was discovered what happened after was that there were
five or more candles that appeared that did not drift down to the alligator teeth the alligator
lines did not cross and the price action finally broke above the fractal candle thus triggering a
trade
step number five take profit targets and stop loss
you can try variations to this strategy as far as the take profit and stop loss is concerned
exit the trade when two of the alligator lines cross over each other
this most likely means the alligator is going back to sleep and the price action will either
head the other way or consolidate place your stop loss below prior support resistance areas
this will give you the best opportunity to salvage a trade if the price action would to turn on you
and turn into a bearish trend it may bounce off these areas and head back in a bullish direction
in this video we've seen the by entry criteria
a cell entry criteria would be the exact same rules only the opposite
sell trade steps step number one apply both fractals and bill williams alligator indicator
on your chart step number two a down fractal must appear below alligator teeth and the price action
must stay below the alligator teeth for at least five consecutive candles step number three price
action need to break below fractal candle that was distinguished in step number two and then sell
step number four exit the trade when two of the alligator lines cross over each other these basic
fractal trading techniques should lead you in the right direction if you have been searching for a
great strategy to use with these indicators there are many different strategies you can use with
these indicators but in our experience we like this combination of the bill williams indicators
many argue that every indicator is lagging and rarely show you profitable entries the fractal
trading strategy uses the combination of price action analysis that complements these great
indicators so if you are one of the skeptics give this strategy a try and let us know your results
thanks for watching hope you guys have enjoyed the video and please
don't forget to like and subscribe to the channel i'll see you in the next video