Profitunity (Chaos) Trading System by Bill Williams

Here's a sample of possible false signal.

What we currently have is

General down trend

1. Bullish Fractal
2. Three Bearish Divergent Bars with not so acute abgle as it should be
3. 68 Fibo level touched
4. 38 retracemtn almost touched
5. Momentum and Acceleration negative

The question is wich signal is false - Bearish Divergent Bars or Bullish Fractal?

And of course - Why?

Hi Dale,

This remind me something I've red (unfortunately I don't remeber where...)
It was a quotation of a famous trader and it was something like:

"... I've got the bigest profit when I was sitting in my chair and didn't move..."

in other words "...let your profit run..."

I also do not like to stay in fromt of the monitor stairing at what will happen.

This is wny I've wrote some scripts to draw my attention on importent moments... It has lot's of bugs yet but I'm free to do something else once I've made my moves.

Bigger timeframes gives the freedom to enjoy the life while your pocket is filled up

I have the opposite problem: I LOVE sitting in front of my monitors watching things go on - but that's all you can do - and - wherever you saw that quote - that's me! You would not believe the amount of times I have closed a trade (or opened a bad trade JUST because I wanted to be 'trading')!

Anyway - I'm over that now (finally). It's just that sitting around doing seemingly nothing just makes me feel like I'm not working. It's difficult.

Anyway - I have just received another 'trading classic' - 'New Concepts In Technical Trading Systems' by J. Welles Wilder (been wanting to get it for months now but never got around to it) so that should keep me away from the keyboard long enough to let my Profitunity Trades mature! I am also waiting for my Second Edition of Trading Chaos and I believe that there are a couple of changes or additions to this system in that book (although I have a feeling that it is just the 'divergent bar' which you already seem to have covered).

Anway - thanks for putting so much time into this thread and your website - stay in touch.

Regards,

Dale.

Hye isto, Good Morning!

Listen - I want to try and start adding to already open (and profitable) positions based on AO, AC, and Balance Lines.

I have attached a daily chart of the MSCI Taiwan. The graph has just updated i.e. new day.

Please check me out here:

According to the system:

1 - AO

There is NO valid buy signal here i.e. according to the system the price would have to drop i.e. red bar then turn up again i.e. green bar for there to be a valid buy signal according to AO. Correct?

2 - AC

There IS a valid buy signal here i.e. according to the system there must be two consecutive green bars and the second bar must be higher than the first for there to be a valid buy signal (which is the case on my chart)? Correct?

3 - Balance Line Trade

Because I am looking for a buy signal only at this point there is no valid Balance Line Trade? Correct?

There is one other thing I am not getting:

Let's assume that I am correct in 2 above i.e. that AC is giving a valid buy signal - the system says to place an order one tick above the price bar that corresponds to the signal bar. Correct? BUT - remember that because this chart has JUST been updated - yes - the AC signal bar is green NOW - but - if the price dropped today - tomorrow this same bar would be red not so? Even if the price continued to move up today but ended up closing lower today - this signal bar would be red tomorrow. Or am I missing something here? If I'm right - what then - this is not explained anywhere in the book (at least - I can't find it)!

Regards,

Dale.

Correct

No, you have four (4) consecutive bars.

Correct

At this point you could ad buy orders because you are in the Green Zone - i.e. both AO and AC are green

Bill recommends adding order on session's close, i.e. you have to place your order(s) either at the end of the session or to ajust to the previous to current bar. This is because the bar is just forming and it could goes either up, down or closes at the open (I mean to go nowhere)

I think that this depends how trader corelate with the market information and this is strogly individual...

Hello - thanks for the replies.

So here:


you are saying that the same rule applies as to AO i.e. for AC to be giving me a valid buy signal the price would have to go down now i.e. red bar and then up (1 green bar) and then up again (another green bar) and only then would this be a valid buy signal?

Regards,

Dale.

Hi Dale

Here I quote the "New Trading Dimentions" book because I like its simple and clear definitons.

"A buy signal is created when there are two consecutive histogram bars with higher highs than the most recent lowest low (a down peak).
...
A second buy signal cannot be created until the histogram moves at least one bar lower, creating a red bar. A new buy signal can then be created after two higher (green) bars."

I think this will help you more that my explanations...

Where is that - in the first or second edition?

Dale.

Beginning of chapter 6

Current sate of EURUSD at beginning of European session (post #201) is available here together with summarazation of previous comments.

There is strong support on H4 EURUSD.

Second time Bears failed to break down the 1.3380 level forming Double Bottoms.

Price is drifting inside the alligator's lines both on H4 and D1 charts so better to get out waiting for Bears or Bulls to take the power...

Here is the result from last short trade:

Hello isto,

How are you doing?

Have you ever tried this system on the 1 minute charts? Man - it takes concentration and order execution is important - but it works like charm!

Regards,

Dale.

Hello Dale

No.

For me it is too short period, even H4 is to short ...
I keep doing lots of ting simultaneously and cannot use all my attention to trade. May be some day I will...

Did you? Would you summarize your experience in figures?

Hi - how are you doing?

I was just playing around with it yesterday and it could be a 'scalpers' dream (at last on the DAX).

Yesterday I made $605.50 clear just out of the 'scalps' - this is not how I trade normally but I was getting bored and the DAX started moving around like crazy. I don't recommend doing this unless you are working with a very high volatility instrument and are prepared to take many (small) losses until you are up (once a position has turned into profit make sure that you move your stop OR use a trailing stop). You also need to find an instrument that is in a strong trend and basically you use the system to buy the 'dips' i.e. you only open positions in the direction of the trend and take profit when they turn into profit. Then - wait again until the price is going against the trend then buy the dip again. In other words - let's say the trend is up - when you get a valid fractal sell signal you place a buy limit order one tick below the fractal NOT a sell stop as you normally would. Get the picture? Speed of order execution is important so that depends on your broker (and admittedly the broker where I trade the DAX is not particularly fast so if you have a 'fast' broker you should do well). This is also not a system for newbies (actually I'm not sure it's a system at all). The reason I say this is that in order for this to be profitable you have to concentrate and can't make a trade and then walk away - you have to drive it otherwise you'll run into problems. Also - you need to be EXTREMELY fast and very familiar with your trading platform. As a matter of fact if you do decide to try this you'd be amazed how well the Profitunity System hold together - I mean - if you follow it EXACTLY as you would have on the time frames for which it was intended it's almost as if you are 'cramming' days into minutes. Even the signals that you get from AO and AC are valid. The only problem is when you are trying to place orders based on AO of AC - because it is happening so fast it is sometimes impossible to place a stop order one tick above or below the signal bar because the price has more often than not moved past the high or low of the bar by the time you have even entered your order but then you just stay out.

Even although I have tried this and made a few $$$ I DO NOT ADVOCATE USING IT - the Profitunity System is, in my opinion, one of the best and reliable system and to muck around with it the way I have is not the right thing to do (I know that is contradictory to everything I have said above but I don't think that those kind of profits are sustainable). I just thought that it was interesting to see how well the indicators work on this time frame.

Regards,

Dale.

hi guys.

does this method http://www.forexprofitpro.com/videos...de-videos.html simmilar to what you doing?

How about that - that's exactly it!

I only looked at the first video (I have already exceeded my 3GB bandwidth cap for the month so I don't want to go crazy in case it affects my trading).

Put it this way - that looks an awful lot like the Profitunity System to me - the only thing I would like to know is what the 'hook' is that they are talking about because that is always my problem i.e. when to take profit. This really is the only problem I have and it is not the systems fault it's mine. This system has turned some big profits in the last 9 trading days but some positions have turned to losses because they have been stopped out (I use the alligators lips as a stop loss as per the book) and this is on the long time frames for which it was designed. Put it this way - I have watched a $700 profit on a single lot turn into a $300 or $400 loss by not taking profit when I should (could) have - if I could solve this problem - things would be good (well - since I've been using this system things are good but they could be even better)!

Regards,

Dale.

Not exactly... look the Chaos System rules here

I agree with you isto but you have to admit it's probably where their idea came from.

Also remember - fractal analysis is not just a Bill Williams thing - and I'm still of the opinion that you could work with fractals alone - it's just that you would make many more trades and your profits would not be as 'sure' because you would be buying and selling based on every fractal signal i.e. not following any trend but I reckon it could still work. The original system worked the way it was designed TO THE LETTER still comes out tops!

By the way - how do you take profit? At what point (and anyone else that cares to throw in their three trillion dollars worth)?

Regards,

Dale.

USDCAD formed today on H4 chart a new Bearish Divergent Bar Setup.

A nice sample of using Divergent Bars on a ranging market is available here.

yes,it seems they are following the chaos without naming it .
long ago i have gone through the book left only due to no followers and many indicators to be addressed.
finally i found the method followed here
Thanks to isto for opening a forum for chaos theory.