Profitunity (Chaos) Trading System by Bill Williams

Here is something I found and I'll meditate on during the holidays.

Few only words but so hard to follow

Tej 5 minutes... i think its what i was searching for a long time.

Okey on Friday i had about 1.2%... thats nice.... isnt it?

Hi Protei,

Thats Really great..... { See the effect of Compunding }

If you can make only 1% everyday
you will be able to Double you capital in 3 months &
By the Year end, your capital should be 20 times...

All the Best....


regards
tej

Hi isto,

Is there any significance of Divergence between Price & AO
or Price & AC
Can we use such divergence to enhance our trading.... ?

I have attached a chart showing divergence....
Pls Give your opinion...

regards

tej

Thanks Tej, i am glad to hear that
Yesterday and today i've made about 5%!

Now i can write my system here.... look on the chart...
Today i had 1 long position and 2 short positions.

In the morning after price failed to break level 28.578 i opened long position with target 28.81 and it was triggered after 1 hour..... then after the price got to level 29... i found that we have 3AO red bars. SO i immidiately put my stop sell lower than this signal was... actually i put it on 28.81 (again this level eeh) and after few seconds it was triggered and my target was 28.67 and price hit it after 10 minutes... so i was really happy after this 2 trades i had about 1.8%... and the last one... and the worst one

I knew that movement down is slowing and soon it will grow... any way i opened short position on 28.399... and put my target on 28.25.... can you imagine... but price hit only 28.251!!!! only 1 more point... and after it growth higher... and hit my stop loss on 28.46.... any way today i have about 1.4% of profit! not bad


And concerning my system... yes now i use money management... and my target is about 0.7-1% from 1 trade. Of course i dont get all movement... like it could be seen on the chart... but i think 1 percent per day will be enough...

Also i'd like to admit that entering by 3AO signal is the best way to earn some money works in 90% situations with me!

Hi,

Does anybody know what are the new rules for this system in the second Edition of "Trading Chaos"?

I wanted also to ask you if in the new version there is a better filtering of the trades, because I get a lot of false signals.

And also, I don't know really when to exit a trade, when I'm in profit and also when I'm losing. When I'm in a losing trade, price will often cross the red line and then again rebound in the same direction, so is there a better signal to use?

I've also a problem trading the fifth dimension. What is that balance line drawn on the chart? Is it the teeth's line? If yes, then it should never happen that we are long below the line. I've looked in the book and on Alpari's website, but I was not able to find any information about that line.

Another question. If we have closed an order on a stoploss triggered after five bars af same color or we exited after a divergence bar, can we take the signals on the Awesome oscillator or Acceleration oscillator if we are still outside the mouth or do we have to wait for a new fractal first?

How should be the alligator when we enter? If the lines are intertwined, we should not take a fractal, but that's often at that time that a big move is coming and just after the fractal the 3 lines are diverging as required.

Cheers,
Daniel

Hi protei,

I was trying to understand your method,

I believe you enter once you get 3AO signal...

Can you tell me, how do you calculate your stop loss & target

regards

tej

Well stop loss usually lower than Dbar... and target... well it depends on type of stock.... usually about 0.7%-1%

Hi isto,

I would like to better understand the new rules for trading chaos. Is the 5 SMA a new exit signal from Bill Williams?

Could you please explain me how you enter? Do we have to wait gor a green-green signal on the Gator indicator before taking a fractal? How should be the Alligator lines? The problem is that often the mouths opens right after the fractal was hit and we missed the entry.

Is there a better filter for entry? I also noticed that you initially set a stoploss below the last down fractal if you enter long and reverse for short entry. Is there a filter on how to know if we have to exit when the prices crosses and closses on the other side of the red line or if we have to wait for the fractal in the other direction to be triggered?

It often happens to me that the price crosses the fractal signal, goes 1 or 2 pips high and the the price is going in the other direction. Is there something I'mdoing wrong when I enter?

Have you seen the USDCHF chart on the 30m, 1h our 4h timeframe? It is full of bad signals. How do you do to avoid big losses like in this case?

Thank you very in advance for your help!

Cheers,
Daniel

Hi,

Have some of you tried to modify the way to exit when a fractal breakout is not working so good?

I think the idea of the breakout is really good. Bill Williams wrote that, if we are not in the market, it is better to wait for the alligator to sleep and place a stop order for both last valid up and last valid down fractal.

I think that if a fractal breakout occurs and this breakout is a valid one, the the price should have a strong move and it should not go back under the fractal. That's a bit like if you have a trading market moving between a support level and a resistance level, then if it breaks out in one direction, if the price comes back again inside the channel, it is likely to be a false breakout. Also the bar which is doing the breakout is as much important than the fractal bar.

As we want to enter as soon as the fractal is broken to get the most of the move, then we have to change the way to exit. What do you think of using something like the following:

When the breakout occurs, we wait for the bar to close and we put a stoploss order 1 tick below or above the bar. But we don't wait for that next bar to close, as soon as the stoploss is triggered we exit.

Well I'm only trying to find a good way to reduce losses and I'm really insterested if you're experimenting a bit on a way to reduce losses and you want to share with us.

Cheers,
Daniel

Dvarrin.... my system for now is to enter only after 3AO signal..... and also i enter with all my money and shoulders.... and then i use Money Management to exit.... but now i am trying to modify this system... using trend following system and money management as well. For example we have price went up for about 1% then i put stop loss on this price... and if market is going to reverse, stop liss will be hitted... But if price go higher, than we will have more profit about 2-3% and exit with 3AO signal in opposite side... or when alligator is closes....


Anyway this week i got about 7% of profit... and about 5% after all brokers fee's. I think thats nice.... We'll see what is next

It is great to learn from all of you. By the way, I have confused about the Dbar formation (not angle). Since I have read Chinese translated "Trading Chaos 2nd" book, it would be better if someone tell me the original English word.

My book said the Dbar formation is:

1. 3 consecutive bar made lower low/higher high
2. the last bar closed below/above half of candle

My question is:

1. Does these 3 candles must be same type? for example: Bullish>Bullish>Bullish or Bearish>Bearish>Bearish? Since I saw many chart did not shown this rule. May we have Bearish>Bullish>Bearish or any other inconsistence combination?

2. Does the highest high or lowest low must be the 3rd bar? I saw many chart here shown the highest or lowest in 2nd or 1st bar, but my book did not mention about these formation.

3. Is the 3rd bar formation important? or just "close half" rule enough? For example, a Bullish DBar formation shown the 3rd bar close price lower than open price, but the close price still higher than half candle. Is it still valid DBar?

Thanks for any help in advance!

raytracy, Dbar is a formation of simple Fractal... that has accute angle.. and also highest bar (for Bearish Dbar) closed in the bottom half.

Yes but I didn;t find it officially announced anywhere...

Trading is subjective and I decide when to enter on the chart picture and tools state (AO, AC, etc). Same is for the stops.

Yes this happens all the time and only your experience could help you what to do....

I use only H4 and D1 charts and I think that shrter time fremes are not suitable, but this is my point of view

Isto they are suitable but you should be more concentrated... thats all

What do you mean? I missed it... It seems I really should.

Ahh no problem, i was talking about short timeframes, like 5m ,10m....
IF you want to trade using them, then you should concentrate on one stock, or one pair....

So now i trade only 1 stock.... but there are many opportunities to trade during the day.

Yes this is style of trading. Each trader has own prefered time frame.

The main problem in lower time frames is false signals. But concentrating on the trading chart lot of them could be avoided.

Isto... i use only 2 kind of signals... 3AO and fractal.

3AO i get when trend is changing... and fractal i take when alligator is closed.

Thats all... And my opinion is that fractal give more false positions than 3AO....

Till this moment i had only 2 wrong 3AO signals.This situation turned to closed alligator..... in this case we should act on broken fractals.