Trading Chaos?

Quoting Richard7

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Recently I have been wondering if it is better to trade this method by taking every trade signal that comes or by being more selective. Based on that question, I manually backtested the GBP/JPY for January 1 until the 22nd just taking every signal. I wound up with four trades, all short, 3 winners one loser for a total of 3,982 pips. Till then, I had sort of been patting myself on the back for making 3,200 pips in less than three months by being selective, and then I find almost 4,000 pips passed right under my nose in three weeks.

So I decided that at least on this pair, I would take the next signal that came along, and trade as many of them by the book as possible. Here's what happened. I'm not sure if this is strictly Bill Williams' way, but it's mighty close. On the chart, the arrow marked Divergent Bar was the exit signal. The four arrows to the left designate fractal highs that when broken to the upside provided long entry points. The yellow/gold lines underscore the checkmarks which indicate the initial entry point (the lowest of the four checks) and the three successive entries where the position was added to in that nice run up.

The funny thing about this trade, the candle (4 hour) that was an exit signal for me opened and closed while I was sleeping, so I missed the initial exit point. When I did get to the computer, price had gone below where the exit should've occurred, but it seemed to have found a bottom on the smaller time frames so rather than exit, I held on to see what it would do. Good thing, because it went up pretty well from there and I cranked out about 60 more pips of movement. Sometimes lucky (favor of God) is better than good (who is it around here that has the quote in their sig. line "it's funny, the harder I work, the luckier I get"), but I don't recommend sleeping through exit signals too often. By the way, the Divergent Bar is supposed to be a stop and reverse signal if traded by the book, but I had already decided to not hold this over the weekend. These volatile Yen pairs often gap at the weeks open and I can't be there for the open, so I wanted to find an exit.

Anyway, I posted this just to show what this system can do. There may be questions about the implementation of the system, but it is well described in the books as well as other threads here on FF by people more qualified to explain.

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Quoting Richard7

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To say that this is a rehashed breakout system would be a vast oversimplification, but in all fairness part of the system does rely on fractal break entries, and fractals are really just swing highs and lows. However, there are certain filters regarding fractal entries which make it more effective. Also, there is another trade in the system designed to catch a reversal move quite early which has nothing to do with breakouts.

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