Forex Fractals Trading Strategy

The Forex Fractals trading strategy is a strategy that is simple and versatile and is designed to point tops and bottoms to highlight where market reverses.

The strategy combines the Fractals_Original.ex4 custom indicator and the FourAverage.ex4 MT4 indicator.

Chart Setup

MetaTrader4 Indicators: FourAverage.ex4 (default setting), Fractals_Original.ex4 (default setting)

Preferred Time Frame(s): 1- Minute, 5-Minutes, 15-Minutes, 30-Minutes, 1-Hour, 4-Hours, Day, Week

Recommended Trading Sessions: Any

Currency Pairs: All pairs

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Buy Trade Example

Fig. 1.0

Strategy

Long Entry Rules

Enter a buy in the market if the following chart or indicator pattern gets displayed:

  1. Upon drawing trendlines that connects the most significant tops and bottom, if price breaks the trendline that holds more up Fractals than down fractals, it is an indication of a bullish price action i.e. a long entry for the asset of interest.
  2. If the FourAverage.ex4 (FA) custom indicator forms lime colored histograms above the 0.00 signal level, it is a trigger to go long on the pair of interest.

Stop Loss for Buy Entry: Place stop loss below support.

Exit Strategy/Take Profit for Buy Entry

Exit or take profit if the following rules or conditions hold sway:

  1. If price breaks below the trendline that connects the most significant bottoms as shown on Fig. 1.0, i.e. the trendline that price broke off for the buy entry. This is a trigger to exit or take profit accordingly.
  2. If the FourAverage (FA) indicator forms red histogram below the 0.00 signal line, it is a trigger to exit or take profit.

Sell Entry Rules

Initiate a sell order if the following holds true:

  1. Upon drawing trendlines that connects the most significant tops and bottom, if price breaks the trendline that holds more down Fractals than up fractals, it is an indication of a bearish sentiment in the market i.e. a short entry for the asset of interest.
  2. If the FourAverage.ex4 (FA) custom indicator forms red colored histograms below the 0.00 signal level, it is a trigger to go short on the pair of interest.

Stop Loss for Sell Entry: Place stop loss above resistance.

Exit Strategy/Take Profit for Sell Entry:

Exit or take profit if the following chart or indicator patterns are on display:

  1. If price breaks above the trendline that connects the most significant tops as shown on Fig. 1.1, i.e. the trendline that price broke off for the sell entry. This implies that investors should be ready to exit or take profit accordingly.
  2. If the FourAverage.ex4 (FA) indicator forms a lime histogram above the 0.00 signal line, it is a trigger to exit or take profit.

Fig. 1.1

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About The Trading Indicators

The FourAverage.ex4 custom indicator by Bill Williams can be deployed as a stand-alone technical study or in combination.

The indicator is essentially a recurring pattern that is able to forecast reversals among more chaotic and lager price actions.

The Fractal_Original.ex4 custom indicator is made up four important moving averages i.e. the SMA 200, SMA 21, SMA 114 and SMA 83.

It combines arrows (that are on the activity chart) and histograms (within the indicator window) to deliver buy and sell alert.

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