Chaos Trading System

Hello Fxhermit,
Thank you for the advice. Are you out of the trade when the candle close above/below the ema or just when price penetrate it ?
Thx
S.

Early in the trade I will exit on a penetration. If the trade develops in my favour by a good amount then I am happy to back off a little and let a candle close above/below.

Stop loss management is probably one of the most subjective parts of trading. As you well know, even Williams has several approaches. I personally haven't found any single approach to be the ultimate and perfect way. I just try to evaluate each trade on it's own merit at the time and use what feels comfortable to me at that time.

Choppy markets, as we are currently experiencing, are particularly challenging. In the lower timeframes we can be subjected to quite a bit of noise and less than perfect entries, making S/L management even more difficult. That is why I am of a mind to use the "patience" indicator and wait for more trending markets (more hungry Alligator) to develop and then trading aggressively. I am happy to leave the crumbs to those traders who don't mind being glued to their screen trying to catch a few pips here and there. Like the Alligator, I am after the "main meal".

Williams does say that Chaos trading can be applied in most time frames and does mention using the 30 min but he also states (can't remember off hand which book) that he makes the greatest profits trading the Daily. I wholeheartedly agree and actually use both time frames with the lower as complimentary to the Daily in order to improve timing. Besides, I initially learned to trade that way as a beginner and still feel most comfortable using multiple timeframes in that manner. I am getting a bit wordy now (my wife says that I talk almost as much as she does ) so I better sign off for now. All the best.

Hello Fxhermit,

Thank you for your answer. I like you being wordy !

I would like to ask you some questions.

Regarding your entries on daily TF, are you waiting for midnight ? Or are you anticipating the signals before going to bed ?? How are you doing ? Did you switch the open session time to a more easy hour ?

I will definitively trade log time frames, I'm really looking forward to see some entries there !
But, I like the 30m too and I'm catcing some good moves there too. Not today ! It was really choppy....

In term of multi time frame strategy, if I understood well, you are checking the trend direction on the daily TF and taking trades on lower TF, i.e. 30m, in the same direction only ? is it correct ?

Thank you very much for your help !
S.

Hi Starskovsky,
Good questions, let me begin by posting a couple of charts. As you can see from the Daily chart, I have a preference for Zone trades (both AO and AC the same colour). It takes a little patience to wait for them as the markets do not always give us those impulse waves. I prefer the ones that trigger outside of the Alligator. Once a Zone signal appears on the Daily, I then like to drop down to a lower timeframe such as the 30 minute and time the entry. As you can see from the attached 30 minute chart, that helps to minimize the initial stop loss and improve the reward to risk ratio. It can also have the added benefit of adding a few more pips to the trade - always a good thing.

One of my broker's end of day coincides with what is usually accepted as the end of day for Forex, that is 5 pm EST (New York time). That is early afternoon for my time zone (1 pm). My other broker's end of day is at 8 pm my time zone. That gives me lots of time to watch for any possible retracement in the 30 minute and then simply take a Fractal break in the direction that I want to go. Sometimes that keeps me up untill the European session.

If the Daily signal bar is small enough to allow for a reasonable stop loss then being the lazy sort that I am I will just set pending orders and leave it at that (keeping in mind good money management). There are a few advantages to setting pending orders: 1. cuts down on screen watching time. 2. keeps you out of the market if an inside bar or some such should form in the Daily. As an example: look between the two vertical red lines on the 30 minute - see the area of consolidation - now look between the same two red lines (the close together ones) on the Daily - voila - two inside bars in a row. Had I taken a Fractal in the 30 minute, I would have had to ride out the chop for two days and praying when the AO and AC reverted back to green. There are also some disadvantages of course, with larger stop loss settings being one of them. This can be addressed somewhat by adjusting position sizing to keep within acceptable risk.

Anyway, that's how I approach it. Even if I were to decide that the 30 minute timeframe was going to be my predominant timeframe, I would still think that it would be good common sense to use a higher timeframe as a way of identifying what the market is trying to do. It would not necessarily have to be the Daily, the 4 hour can also be very usefull. Unfortunately, Forex trading is not as cut and dry as we would like it to be so please forgive me if I also sound a bit ambiguous at times.

Gosh...did I make sense with all that?

Yes, it makes sens ! Very good explanation.
I'll have to wrap my mind around that..

I'm installing a MT4 platform with a broker providing a new bar on D1 at 5pm my time. I'll try to observe what you discribed above.

I'm not so familiar with MT4 and I tried to use the indies provided there :
http://www.forexfactory.com/showpost...7&postcount=50

But when I'm trying to apply it on the charts, nothing is happening... No wiseman indic. on the chart.
Can you help me please ?
Thx a lot
S.

Ok guys, forget my MT4 problem, it's solved...
S.

Hi all,

I am a bit confused by this thread, as it seems to apply many techniques from TC1 and NTD like Zone trades, balance line etc.... which are not mentioned anymore in TC2.

So, is NTD a valid addition to TC2 ---- OR --- is TC1/NTD a valid alternative ot TC2 --- giving us 2 valid systems?

ANy hint where to find an mq4 painting the balance line or identifying the zones?

Thanks to all

Regards

Forex37

best way to trade this system is using the mechanical method described in Trading Chaos 2nd edition and optimize that by counting waves pretty easily as described in Trading Chaos (1st edition I guess)

Hello,

Here's a trade I took today. A fractal break out entry.
I took 140 pips out of it.

There was same type of trades on many pairs this morning. CAD, NZD, AUD, E/J...

Hello,

I changed the open bar time for the D1 charts. It's now 9am est. It's more easy for me to trade like that....

So, this morning, there was this bullish DB on the cable.
Let see how it evolve....

I've read the entire thread. I see a good consensus on when to enter trades but I am seeing different opinions on when to exit. Knowing when to take profit and not letting emotions get in the way are difficult.

I would really appreciate feedback on this from seasoned traders!

Thanks for all of your posts and teachings thus far!

D

Yes Denver, you are right ! Exits are quite difficult to optimize....

What I'm trying to do now is to trail manually my stops. I'm looking mainly at high/low, sup/res and even numbers and bottom/top of the 3 previous candles.
My weakness is to trail too fast, to put my stops to close from the current price. I'm working on giving enough space to the market, to let it breath.

I'll keep you updated with this cable trade. Stop is currently 1.4628.
A little bit below the signal candle and below 1.4630, an even number...

Just a work in progress...

Any comment appreciated !

Have a good trading day.

Hello,

Get out of cable trade, with 60 pips loss.
For a DB entry, thought it was taking to much time to take off. So, I decided to close the trade.

Yesterday, I took a long CAD, on a fractal break and grab 250 pips on it.

I'll post the chart later.

See you.
S.

I'm still short on that GBP you took also.. can't wait to see how it turns out.

.. now we have 2 BDB on the hourly chart .. looking pretty good in respect to going further south

Hello here's the CAD trade I took.
+250 pips

that was quite a trade you took there.. AO showed that in comparison to the previous high there was almost no momentum left .. meaning divergence develops and then south.. glad you made it out with quite a gain =)

Sorry, on previous chart, AO was wrong set up.
Here's the good one.
S.

I know colors were set incorrectly. Still, same thing.

Oh ! That is interesting ! Can you explain a little bit more please ? I quite don't really know what you really mean...

Thank you very much.

S.