Chaos Trading System

Hello,
Feelling a bit better today

I took this DB trade on CAD...

Edit : Took 100 pips out of it

...nice trading, Stars.

I'm in off W1 on the EU 30min...perhaps i'm clutching at straws...don't have a good feel yet on which W1's are best to take. Good fun learning though.

ChowClown,

I hope you holded it ! Getting better now.
S.

Hello there !
I took few trades today and was to scared to stay in...
Anyway, took 55 out of that...
S.

2 other fractal breakout this morning, on the 4H this time.

Edit: All position closed at noon EST : +300 pips...
Would have been much more if I've found the courage to hold the trade longer... Work in progress ! Patience....

I wonder if this thing will A,B,C corrective wave its way back to the Balance line or if it will show a 1,2,3,4,5 impulse wave as the initiation of a trend changing wave 1, althought there is no divergence of the AO. Or maybe...... none off the above. Only time will tell. Meanwhile, the Balance line trade is in play as per the book, entry level is breakout of the second bar back from the base bar. So far so good.

The same trade as posted above seen in the 4 hour timeframe as a fractal breakout above the Alligator. There is also a Balance line trade just under the fractal, giving us what Williams calls a "blue light special". It's nice when the charts "nest" like this.

Oooops!.... almost forgot to mention that there was a nice bit of divergence on the AO that is associated with those two beautifull Dbars right at the bottom. A lot of "heads up" leading into the trades.

Early on in any trade, I like to be very agressive with my stop loss. Currently protecting about 70 pips and counting. Will begin to give it some breathing room from here.

The active bar shown just triggered another fractal trade as well with another "Blue light special" Balance trade just below the fractal once again. I guess this is why Williams considers chaos trading to be an aggressive approach. When the market is running, there are no lack of opportunities to trade.

The balance line trade looks very interesting too.
I would like to look at it also, as a potential filter for the DB trades...
What do you think ?
S.

Compare this chart to the previous and we have the reason why I like to be aggressive with my stops early on in a trade, especially on countertrend moves. They can often be more volatile than impulse moves. Still managed to take home some pips though.

Hi Starskovsky,

Balance line trades as described in "New Trading Dimensions" can be a very effective technique especially when used within an impulse wave. They essentially get you into a trade at the pullback areas often at a better price than a fractal breakout. Basically they allow you to take advantage of what is a pivot that initiates the resumption of a trend.

Takes a bit of practice getting used to them especially since Williams has a number of different setup criteria pertaining to where price is in relation to the balance line. Once you start to see them, they do kind of start to jump out at you.

I don't believe that Williams mentions using them as a filter for a dbar but it does seem to have some merit. One of the ways that I like to use them is to begin marking Base bars after a fractal has formed as a way of identifying eventual price turns. I particularly like to do this on a Daily chart, however it works well on the 4 hour and 1 hour too. Make sure that the entry bar is at least at the two bar back rule. Try it on a clean chart and see just how effective that can be at identifying turns. This attached chart shows quite well how a Base bar entry eventually gets triggered after a move away from the latest fractal. As to whether or not it proves to be an initiating point for a good trade is only something that hindsight will reveal to us.

P.S For those who are serious about Chaos trading, I would certainly recommend owning both TC2 and New Dimensions - money well spent.

The following chart gets a bit messy but I hope it illustrates the possible use of Balance line trading as a filter for dbar trading. Please be aware that as far as I know this is not Williams methodology that we are talking about here. It is just something that we are trying to work out on our own.

The filter would have worked quite effectively on the 1st dbar, keeping us out of what would have turned out to be an ugly entry. The same holds true for the 2nd dbar. The filter would have kept us out of a lot of sideways chop and out of that "here we go - here we stay" nail biting. We would then have had a pretty "clean" fractal entry along with a simultanious Balance trade entry on the 3rd dbar. Even our previous Balance trade setup would have proven to be effective. Don't know where angulation fits in all this as that is not one of my strong points.

This is something that I am certainly going to keep an eye on in the future. Any discussion around this topic would be much appreciated. Don't be shy - we are all here to learn from each other.

That's it for me for today, profitable trading to all of you Chaoticians.

Today trade 3 lot & made 110 pips profit based on fractal breakout (Wiseman 3)

Looks like we could be seeing that ABC correction in the Daily timeframe. Also has the potential of being a valid trend change althought the Alligator and AO indicate that the downtrend is still intact. There is also no divergence in the AO as may happen at the end of a trend.

Meanwhile, hope that you Chaoticians out there have been scooping up those pips in the lower timeframes - there have been a good bunch of them as KLKOO has been kind enough to point out.

P.S This thread has gotten rather quiet as of late, lets hope it doesn't die out like the other chaos threads in the past, that would be a shame as this methodology really can bring home truck loads of pips for those who apply it diligently.

Yes, you are right, hope this thread will continue !
Sorry for not posting anything, I was sick, but will come back and post asap !
Starskovsky

Today made 2 trades (1 Win & 1 Loss). Net gain 15 pips.

Trade 1 Analysis:
The trade didn't move accordingly & had been stopped out. The mistake which was made is the initial stop loss didn't move to the next down fractal to minimise the downsize loss

Trade 2 Analysis:
Didn't let the profit to run & close out the trade early & miss a big move as shown in the last candle

How is managing the winning position effectively & maximise the profit gain? What is the best method?

Hello here's a trade I took this morning.
I close it too soon... Just took 50 pips out of it.
Need to learn to stay in longer...
I checked my past trades and I noticed I'm staying in about 30% to 50% of the whole move... Better than nothing but I can definitively improve there....
Any suggestions ?
S.

Hi Starskovsky,
Nice to see you back. Hope you are getting well fast.

If you are getting a part of the move then you are obviously doing well with your entries and initial stop loss. Have you tried adding a 5ema of the close offset into the future by 3 as a stop loss guideline? Might help you to grab a few more pips as the move progresses. Seeing as how you are trading down in the 30 minute timeframe you may have to be a bit more nimble in your trades. You may find yourself getting in and out a bit more often than us guys who work mostly the longer timeframes.

I usually only use lower timeframes (let's say 30 min) for timing my way into trades that favour what I see in the daily timeframe. This helps to reduce the initial stop loss and sometimes adds a few more pips to the overall move - always a good thing . Seldom do I trade using the 30 min timeframe as the primary one. I would rather use it as complimentary to the further out Daily. This may cut down on the number of trades that I take but often gives me the higher probability ones and keeps me out of the weaker ones in ranging markets. In running markets it allows for a very nice way to add on trades.

I have attached two charts to show how this might work in the currently ranging market that we are in. The Daily has been marked up with support and resistance lines (yes, I still use them) and the AO, although green is below the zero line so I am only interested in shorts. The AC is red telling me there is acceleration to the downside. Even though in the Daily we are officially in the gray no trade zone, if I were to look for trades in the 30 min I would only want to take downside signals.

So lets look at the 30 min chart. The possible downside trades (Fractal breaks) are marked. Most of them were not triggered. Number one at first may look like a valid fractal break but I would prefer that entry complies with a red zone signal which it does not (AC is green). Number 2 (which happens to also be very current as I write this) has all of the valid entry criteria. It is in line with the Daily, Fractal break is outside the Alligator and both AO and AC are in the red zone on the trigger bar. Let's see what happens from here.

P.S. Starkovsky, The dotted line is the 5ema that I mentioned in the previous post and as you can see is already protecting profit very early on in the trade. It can sometimes take you out a bit prematurely especially in ranging markets. In a running market I may only use it to get me past the breakeven point very quickly and I will then look to using the Alligator lips (green line) or Alligator teeth (red line) as a guide. But hey, one can always re-enter off the next Fractal or other signal if everything still looks good. A profit is a profit and I figure that must then be in keeping with "wanting what the market wants". Anyway, that's my rant for the moment - see you later Alligator

As I was saying, it's easy enough to get stopped out in a ranging market (especially on a retest of a fractal break) but it was still good for 25 pips . A break of the next Fractal would still be a valid entry (at least as things stand now).