The term «fractal trading» is used to name a system of trading that implies revealing regular patterns underlying beneath a large number of chaotic movements within a definite time. This technique has been introduced quite recently; therefore, mastering it requires a profound understanding of the topic.
Definition of Fractal Trading
Many people still believe that markets are completely random, whereas trading is close to playing darts. However, there is an undeniable price tendency. To identify and follow the tendency, traders make use of fractals. Fractal trading is a trading technique that enables a trader to elicit price reverse points with the help of fractals and candle charts. In simple words, this technique allows a trader to follow the trend.
Implementation of Fractals
Fractal is an indicator of price patterns, which shows the minimum and maximum indexes on a chart. Otherwise stated, fractals FX reflect a certain level, a point on the chart, upon reaching which the price indicator changes its direction to the opposite. They are represented in the form of up and down arrows with the respective inscriptions. The usage of fractals was introduced by Bill Williams, a famous investor and trader. He was the first to demonstrate the power of fractals and prove that it is possible to make decent money in the Forex market.
The Advantages of Fractals
Fractals on Forex allow detecting the slightest price movements immediately. Fractal qualities give a detailed insight into the current situation on the market. They serve to point out the safest periods to start trading and to make a more profitable deal. With the due care of a prudent trader, they also reduce risk, as they proved to be a useful tool. Moreover, every trader is free to invent or choose a strategy on the basis of fractals, which will be convenient to work with.
The Drawbacks of Fractals
Having lots of advantages, trading with fractals may be frustrating. It takes some time to grasp the idea of the system, understand the process, and implement it in trading. There can be confusion with all those lines, candlesticks, and arrows if you are a newbie. Every trader needs to obtain some knowledge and experience to gain profit with fractal trading.
Fractals present a modern and effective trading instrument used by hundreds of people. However, this tool can be even more beneficial when combined with other indicators and graphic patterns. Still, this technique requires special skills, rational thinking, and some experience to work successfully.