Fractal with moving average filter

**** IT'S ALL IN THE TITLE ****

What's new is old and what's old is new. I'm sure I'm not the first person to post a system like this, I learned this set up from a guy who use to trade the GOLD pits in Chicago. In the Year 2000 he retired and started trading electronically, says he hasn't traded any other way since, I took his word for it and as of now have been testing it on Demo.

The system consists of a 3 Bar Fractal as the entry criteria and a moving average as a filter, nothing more and nothing less.

The rules of this system were taken from great a thread which was started almost a decade ago here is that link >>>>> Buy sell line trading | Forex Factory All credit goes to 60minuteman. All I did was change the system to a fractal entry since it resonated more with my personality and risk tolorance.

RULE 1 TREND

IF PRICE IS ABOVE THE 50SMA WE WILL ONLY LONG.

IF PRICE IS BELOW THE 50 SMA WE WILL ONLY SHORT

IF THE 50SMA IS FLAT OR PRICE IS CHOPPING ABOVE AND BELOW THEN THE TRADE IS HIGH RISK AND YOUR WIN RATE WILL BE AFFECTED.

ideally we are looking for a nice slope on the 50sma showing a sustained trend in one direction...

RULE 2 PRICE ACTION

3 BAR FRACTAL LOW FOR LONG (BLUE)

3 BAR FRACTAL HIGH FOR SHORT (RED)

WE CALL THIS A SIGNAL

RULE 3 ENTRY

LONGS- price must break the high of the fractal by 1 pip to confirm signal.

SHORTS - price must break the low of the fractal by 1 pip to confirm the signal

(don't wait for this bar to close, once you exceed the high or low of fractal enter the trade)


****IMPORTANT*****

ENTRY MUST BE TRIGGERED ON THE VERY NEXT CANDLE

WE ARE LOOKING FOR MOMENTUM BACK IN THE DIRECTION OF THE TREND.

***** If bar after fractal doesn't break high (Longs) or Low (Sells) we skip the trade and wait for the next set up, which won't be long.******



RULE 4 STOP LOSS

STOPS ARE PLACED 1 PIP ABOVE THE HIGH OF THE FRACTAL FOR SHORTS. AND
1PIP BELOW THE LOW OF THE FRACTAL FOR LONGS.

RULE 5 POSITION SIZING

ALL TRADES SHOULD HAVE A RISK OF 2%, REGARDLESS OF PIP SIZE YOU MUST ADJUST YOUR LOT SIZE SO YOUR RISK IS EQUAL ON EVERY TRADE..... VERY IMPORTANT !!!!!!!!

RULE 6 TRADE MANAGEMENT

YOUR TARGET SHOULD BE 1/1

AT 1/1 R/R MOVE YOUR STOPS TO BREAK EVEN
if your risk is 50 pips you would move your stops at +50 pips.

AT 2/1 R/R TAKE SOME PROFITS OFF THE TABLE. THE AMOUNT IS ENTIRELY DOWN TO YOUR RISK TOLERANCE, I WILL USUALLY CLOSE 1/2 OR ALL OF MY POSITION.

***** If bar after fractal doesn't break high (Longs) or Low (Sells) we skip the trade and wait for the next set up, which won't be long.

Thanks you for sharing this! On which pairs/TF do you advise this strategy?

Since the entry method is a fractal set up it will work on any pair and any tf. Test it out and post some charts here!

You might consider waiting for a fractal to appear on a higher time frame, and then dropping down to a lower time frame for entry on a pullback.

Absolutely, anything to give you the highest probability of being on the right side of trend. I’ll definitely give it a shot.

First trade of the day, for a quick 2R gain. It’s not all great though, you will absolutely have a loser here and there and even a string of losers. But if you let your trades run and can have your break even stop hit more often then your initial stop then you stand a great chance at having a positive skew.

I guess you are using asymmetric fractals, I've added true fractals band indicator to it, looks good on chart, gonna leave it for few days to see actual chart, since both indicators are repaint, green/red line MA seems to be ok, 5 min chart.
thx for idea !

changed sma to 50 as recommended, will leave both charts on few days.

Yup Asymmetric fractal is the indicator! Love the input, let’s see where this goes, post any result and charts. I was playing around on a higher Tf (15m) although it can be tough to trade because your stops will be much larger, but one idea I was looking at was using an 8 ema with the 50 sma. And trade the fractal after a pull back to the 8 ema in the direction of the trend. Also I think for this method to be really successful you should set a daily profit target and when your done your done, just because a 3 bar fractal will produce so many signals, personally if I can make 2-500 a day profit and call it, that adds ups quick each month.

Fractals are kind of late in game, I did try to trade following above rules, didn't loose, but didn't get rich either.
Just placed 2 different fractals on 1 hour chart, will place on few more charts, to see how it behaves, that would be true test.
Basically when 2 indicators meet at the edge, to take position and close on opposite fractal. Just an idea.

well USDCHF looks like reached top, this theory could work. GBPUSD, EURUSD are both bouncing from bottom, they both touched bottom line.

" ENTRY :LONGS- price must break the high of the fractal by 1 pip to confirm signal. SHORTS - price must break the low of the fractal by 1 pip to confirm the signal (don't wait for this bar to close, once you exceed the high or low of fractal enter the trade) .."
Could you please explain to me, and some more pictures would be nice also If you can post here: You mean if price exceeds the 3 previous bar's high, you go long? You mean by fractal the any previous 3 candles, and the recent candle is out of the 3 candles, or the recent candle is the part of the "fractal" ?