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Chaos Strategy - Mid term and long term trading.

  • #101
  • Sep 18, 2008 7:58pm Sep 18, 2008 7:58pm
Quoting dawveed
Hi there traders,

I've been reviewing every post of you regarding the Chaos Theory and i stil cant get something...
In order to indentify the Wiseman1 and filter the bad trades, you have additionally use Fibo projections?
And if it is so, from what point to what point should i draw the Fibo, because in the last post i cant see it clearly..
I have attached one pic of the EURUSD H1, and as you can see, there is angulation ok, BDB ok, and AO ok, but it's still a bad trade... Could I filter this with Fibo projections??? which way??

If someone can explain,please let me know.
Thanks..
I do, because Bill Williams did exactly that in his first book to set up a trading zone, and angulation is in the eye of the beholder. That doesn't seem to be an explicit part of his later methods, but I do think that he tends to assume it. You can spot a wiseman without it. Just be sure to keep your position size small, because a lot of wisemen are really pretty stupid, which is why I think he cuts the entry way down. I would say take what you plan to risk on the entire trade and use about 1/15 of it on this initial trade. If you plan to use a $1 lot total, then use about .05 on the initial wiseman trade. This way you lose very little on the incorrect ones. The largest amount is only at risk after the Super AO signal (three bars of the same color). By that time it may actually be rising above the alligator. After that you would be up to about 5 .10 lots. After the first fractal is taken, you might add three more .10 lots. On the next fractal you would add 2 and be done. Unless you really get into Fibos and know how to use them, you may be better off without them. Just don't stop learning. Keep adding new tricks to your arsenal.
  • #102
  • Sep 18, 2008 9:20pm Sep 18, 2008 9:20pm
Quoting dawveed
Hi Arcus.
Thanks for your reply!
Is there another additional tool to minimize the Gambling Phase risk (based on the BW advises)in order to make it more effective? As when someone glambles there is a lot probability in losing rather than winning, and that's precisely what we should avoid when we trade..
and BTW:
Wiseman 1= Gambling Phase,
then
Wiseman 2=Phase?
Wiseman 3=Phase?
Mostly, I would just look at divergence for confirmation (if I decide to play safe), if not, I just place order when I saw BDB with angulation (mostly I took the one that almost 90 degree, for me the steeper the better). But, it does not necessarily profit all the time. One mistake I made when I first trade Wiseman 1 is, whenever I loss with W1 and another W1 appears, I don't take it. Guess what? The price reverse. That is why trading is how you handle yourself (chaos).

To answer your questions. W2 and W3 is trade with the trend. W1 is gambling and counter trend trading. Happy Trading!
  • #103
  • Sep 18, 2008 11:23pm Sep 18, 2008 11:23pm
Thanks for your info, Arcus and Taxgeek, your advises are very helpful.
Do you know where i can find the Second Edition of Trading Chaos in pdf?
It's always better to get all the details and the theory background from the book ...
As I just have the two previous books of BW but the technique in the third one seems to be more improved than the others...
  • #104
  • Edited Mar 1, 2011 8:43pm Sep 19, 2008 5:00am | Edited Mar 1, 2011 8:43pm
Quoting taxgeek
Just don't stop learning. Keep adding new tricks to your arsenal.
If you like fib levels maybe you should check out Fib zones, I have never seen fibs used like this before, but if you see anything interesting in this animation, click to play it, then I'll give you a couple of links.

http://www.forexfactory.com/showthread.php?t=102993
http://www.forexgemini.com/page/3

Dean.
perception is reality
  • #105
  • Sep 20, 2008 5:14am Sep 20, 2008 5:14am
Has anyone tried this strategy with Oanda?
  • #106
  • Sep 20, 2008 5:48am Sep 20, 2008 5:48am
Quoting plasmapelz
Has anyone tried this strategy with Oanda?
Typo
  • #107
  • Sep 20, 2008 5:49am Sep 20, 2008 5:49am
Quoting plasmapelz
Has anyone tried this strategy with Oanda?
Oanda or any other type of brokerage has nothing to do with the strategy ,
Good luck bro and hope the best for you,
  • #108
  • Sep 20, 2008 8:11am Sep 20, 2008 8:11am
Quoting dznmrd
Oanda or any other type of brokerage has nothing to do with the strategy ,
Good luck bro and hope the best for you,
I ask because Oanda doesn't have all the indicators. Moving averages can not be shifted, and there are no fractals. Not sure whether you really need fractals and MA's shifted (to simulate Agillator), or if you could confirm the signals also with other indicators which are available...
Does anyone have experiences with that?
  • #109
  • Sep 20, 2008 8:19am Sep 20, 2008 8:19am
The same is true for CMC Markets. I use them and can't display neither fractals nor shifted MA's. It still works perfectly fine. The fractals you really get a feel for - no need to see them marked, and the shift of the MA's.. oh well, I'd like to have it, but it works without it too... sometimes I take a look at the Metatrader Charts and couldn't really say that they give me an advantage.. maybe depends on the phase the market's in, but be sure it works without shifting periods too.
The Essentials of Trading: Emotions, Risk Mgt, Price.
  • #110
  • Sep 20, 2008 9:11am Sep 20, 2008 9:11am
Quoting Slight
The same is true for CMC Markets. I use them and can't display neither fractals nor shifted MA's. It still works perfectly fine. The fractals you really get a feel for - no need to see them marked, and the shift of the MA's.. oh well, I'd like to have it, but it works without it too... sometimes I take a look at the Metatrader Charts and couldn't really say that they give me an advantage.. maybe depends on the phase the market's in, but be sure it works without shifting periods too.
Its rather easy to create an SHIFTED MA in CMC (Prorealtime). And it should be equally easy (if required) to program the "fractals".

Regards
Forex37
  • #111
  • Sep 20, 2008 9:12am Sep 20, 2008 9:12am
Quoting plasmapelz
I ask because Oanda doesn't have all the indicators. Moving averages can not be shifted, and there are no fractals. Not sure whether you really need fractals and MA's shifted (to simulate Agillator), or if you could confirm the signals also with other indicators which are available...
Does anyone have experiences with that?
In the first book, he used what he called the TWR. That was composed of the the 5,13,34 emas. It gives you almost the same thing as the alligator and will work on any platform.
  • #112
  • Edited Mar 1, 2011 8:43pm Sep 20, 2008 9:44am | Edited Mar 1, 2011 8:43pm
BTW,,
In Oanda, there is a setting for Awesome Oscillator...
Anyone know the setting of it for chaos methods??

Sonic
  • #113
  • Edited Mar 1, 2011 8:43pm Sep 20, 2008 9:47am | Edited Mar 1, 2011 8:43pm
I can see that Trading Chaos is based somehow in Elliott waves Theory and if we look at the waves pattern they appear like this (pic 1):

Where every part of the wave pattern is a fractal (self-similarity), but if we zoom at the pic we can see that when a valley is reached, it should be a DB in showing us the imminent bullish movement (in this case).

Now, my question is this:
Is there some way to know, based in the Elliott Wave Theory, when a valley is reached, some kind of oscillator or indicator that throw us a signal?

So when appears this DB and a valley is reached, the oscillator or indicator will throw us a signal, and then we will know for sure that this is a real BDB...
  • #114
  • Sep 20, 2008 9:58am Sep 20, 2008 9:58am
Quoting sonicdeejay
BTW,,
In Oanda, there is a setting for Awesome Oscillator...
Anyone know the setting of it for chaos methods??

Sonic
I have set it to 5/24 and it seems to be correct at a first glance, with respect to the trend indication. On this page (http://fxtrade.oanda.com/learn/graphs/indicators/ao.shtml) you see how the thing is calculated and what the settings mean...
  • #115
  • Sep 20, 2008 10:13am Sep 20, 2008 10:13am
If you don't have the fractals indicator available, just learn to recognize the pattern. It's basically just a five finger hand pattern pointing up for a buy fractal and down for a sell fractal. Fractals are used for adding lots or an entry above (below) the spreading alligator mouth (per New Trading Dimensions). The wiseman 1 and the initiating fractal are the only entry signals for the system. To begin with you might want to just trade one lot until you understand and have confidence in the system.
  • #116
  • Sep 20, 2008 10:14am Sep 20, 2008 10:14am
Quoting plasmapelz
I have set it to 5/24 and it seems to be correct at a first glance, with respect to the trend indication. On this page (http://fxtrade.oanda.com/learn/graphs/indicators/ao.shtml) you see how the thing is calculated and what the settings mean...
5/34 is the correct setting for the awesome.
  • #117
  • Sep 20, 2008 10:35am Sep 20, 2008 10:35am
Quoting dawveed
I can see that Trading Chaos is based somehow in Elliott waves Theory and if we look at the waves pattern they appear like this (pic 1):

Where every part of the wave pattern is a fractal (self-similarity), but if we zoom at the pic we can see that when a valley is reached, it should be a DB in showing us the imminent bullish movement (in this case).

Now, my question is this:
Is there some way to know, based in the Elliott Wave Theory, when a valley is reached, some kind of oscillator or indicator that throw us a signal?

So when appears this DB and a valley is reached, the oscillator or indicator will throw us a signal, and then we will know for sure that this is a real BDB...
The fib projections will do that. Locate wave 4 pull an external retracement projection off it. Then locate wave 4 of minor wave 5 and pull one off it. Where they coincide is the most likely point of trend change. You can also pull a fib expansion off wave 1. This will add to the confluence, but is unreliable by itself. Williams does the same thing in the original Trading Chaos but uses a slightly different and a bit more complicated method. If you move to a time frame where the wave in question has at least 100 bar but less than 140, you can use the awesome oscillator to identify the the minor waves and spot the minor wave 5 divergence (price continues its direction but the oscillator reverses). You will have additional confirmation. Key to identification is that wave 3 will always be the tallest. When the oscillator gets almost to 0 start looking for a wiseman 1. That's the final piece. This puts you in right at the end of the correction (corrective wave c is always 5 waves) or the trend. Get it right, and you won't think of 20 pips as a big gain anymore.
  • #118
  • Sep 20, 2008 3:17pm Sep 20, 2008 3:17pm
For those of you who are trading this system, which time frame has the best ratio of wins to loses? (30 min - 1 hour - 4 hour)
  • #119
  • Sep 20, 2008 6:00pm Sep 20, 2008 6:00pm
Quoting loophole
For those of you who are trading this system, which time frame has the best ratio of wins to loses? (30 min - 1 hour - 4 hour)
I think it's really designed for daily, which doesn't necessarily mean you enter off the daily chart. I would work best above 4 hr. Williams has even been known to trade it on the weekly charts.
  • #120
  • Sep 21, 2008 6:25am Sep 21, 2008 6:25am
Quote
Its rather easy to create an SHIFTED MA in CMC (Prorealtime). And it should be equally easy (if required) to program the "fractals".

Regards
Forex37

Is it? I tried it with no programming skills and ended up nowhere. I then had someone do it for me who knows what he is doing and he couldn't quite figure it out, especially the MA shift. So if you know how to do it, why didn't you respond to my thread in "Programming Discussion", when I asked about exactly that! Could you pm me for the code please? would be highly appreciated
The Essentials of Trading: Emotions, Risk Mgt, Price.
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