Chaos Trading System

Hello There,

I read with great attention and joy this thread :
http://www.forexfactory.com/showthread.php?t=26044

And I was wondering if some people are interested to discuss about Bill William's system ?

I'm trading Forex and trying to wrap my mind around this Trading system.

Hope to be abble to share with all of you !

S.

Hello again,

To tell you a bit more of what I'm doing :

I'm looking at Euro/Usd, cable, Doppy, Usd/Cad, Aud/Usd and Eur/Jpy, On Daily, 4h, 8h and 30m.
So far, I only took signals on 30m charts and only the fractals.

Why only the fractals ? Just because I'm learning and implementing the system, bites by bites . My mind is slow !

So far, entries are fine but I really have problems with stops and taking profit methodology...
I'm trying to clarify this aspect...
I'll try to post charts asap and hope to discuss with you about that.

S.

Hello here's an entry on Eur/Usd 30m

The fractal trigered for a short. Let see how it evolve....
S.

Fractal Short Entry on Eur/Jpy 30m.

Yes, definetely interested. It`s kind of funny that there are many threads here lately with variations of BWs systems, but few posts on the original system.

Thanks for your coming posts.

Forex37

Hello Forex37,

I'll try to stick to the original system as much as possible !

Eur/Usd and Eur/Jpy trades are looking good.
I believe we are in a trend, so according to the system, stop must be a close above red line....

What do you think ?

A potential long trade on CAD.... Let see....

The Cad trigered, let see...

Hi Stars I look forward to your posts.
Can you post a chart of the CAD trade?
How do you calculate your targets and SL?

Hello Lava,

Here's the chart.

For stops and Target, I'm not clear yet.. I'll try to figure out a plan and will let you know.

As far I understood there's no target in this system, but different ways to move your stops according how the market is moving :

For instance, if we are in a clear trend, we exit the position if the bar close above/bellow the red line. I'll write down all the conditions and let you know.



S.

Here's the development of the Eur/Jpy

Trade is closed because bar closed above red line.
Obviously, we can squeeze more profit from this trade !

Entry : 136.06
Max DD : 29 pips
Max move : 125 pips
Exit : 135.97
Profit after closed: 9 pips !!!

Need to reflect about that !

S.

hi well done. can u post your template pls. Nerry.

Hello,

Entering a trade is generally a piece of cake... I personally found the exit much more difficult ! Don't you ?

That's why I decided to talk right away about taking profits. Of course, we will discuss along the road the entries signals, but please, find below a first draft of what I understood so far on how to take profits.


Techniques for taking profits :

- The price bar close above/below the red line (Teeth)

For a short trade, in a trending market, we wait for the bar to CLOSE above the red line. We want the price bar close above the line, not just penetrating the red line.

Imho, this stop is really good for a really trending market and maybe for longuer time frames than 30M, ie, 4H, 8H, 1D... waiting for the close above/below the red line may keep us in the trade, following the trend...
On the 30M, waiting for that situation often just give back a lot of the profit to the market, but I saw some good exits with that. Need to refine and compare with other exits signals.

- 5 consecutive bars of the same color

When AO and AC are both of the same color for 5 consecutive bars, we want to place our stop 1 pip + spread above/below the 5th bar and trail our stop from bar to bar until it get touched.

I saw this signal on 4H, 8H and 1D. But I never saw 5 consecutive AO and AC bars of the same color on 30M... Maybe 3 bars maximum...

- The green line stop

Same as the red line stop. We use it when we do not have the 5 consecutive bars of the same color situation and when the price runaway from the lines. We do not want to give back to much profit, so, we use the close above/below the green line stop.

- Signal in Opposite direction

When a signal appear for going long when we are in a short position, we close our current position. This is the leastdesirable exit, because it gives back a lot of profit...

Any comments ?

S.

Hello Nerry,

I'm using Ninja trader and I do not have any specific template. I just applied the indicators, with default values on the chart.

S.

Thanks for the reply, i thought as much. Nerry.

The bar closed above the red line, so we closed the trade...

Entry : 1.3389
Max DD : 0 pips
Max profit : 100 pips
Exit : 1.3348
Profit : 41 pips

We need to find better exits...
Any comments ?

S.

removed

Hey,

I have taken your image showing your short fractal entry and have added where Bill Williams, according to his most recent book, would have taken his trades and put his exits.

In order to get the most out of the Chaos trading method in the volatile forex market, get his Trading Chaos 2nd Edition. It explains the Bearish & Bullish Divergent Bar entry that gets you into the trade much faster.

Additionally, review the guidelines for fractal entries. You don't have to wait for a fractal to be triggered outside the Alligator's mouth. The first fractal formed above the red line, but was triggered BELOW the red line. That's all that's really necessary. So, even if you didn't enter off the Bearish Divergent Bar at the top of the chart, the first fractal would have gotten you into the trade much faster.

There were, probably, some Awesome Oscillator trades, too, but I couldn't line up the chart well enough to see. (By the way, Williams doesn't actually use the Accelerator Oscillator anymore.)

Hello Tomy,

Thank you for your answer ! It shows me a completely different landscape !

Very very useful !

I'll study your indications carefully and I should receive the book today !

Your exits are based on an oposite signal only, like Div. Bar and fractal ?

I'll continue to post my charts when I see a trade.

S.

Starskovsky,

There is another new element to Williams's style that is not in Trading Chaos 2d edition. I have picked this up from other trading chaos threads and message boards...

Williams now uses an additional moving average on his chart, that he only uses for exits. It is a 5 period Simple Moving Average (SMA) of the close, shifted 3. Routinely, it is colored purple.

If he is in a long trade, once there is a close beneath the purple line, he will exit, if he hasn't already exited the trade and gone short on a bearish divergent bar. The same holds true for a short -- once a close happens above the purple line, he exits. That is, again, if he hadn't already exited on a bullish divergent bar.

I attached a chart to show the purple line. The long trade would have been closed by the purple line. The short trade would, actually, have already been closed and a long position already initiated on the bullish divergent bar.