Chaos Trading System

Believe your day has been going well .. ditto here. I got the Trading Chaos 2nd Ed book minutes ago. Plus I browsed one of the suggested websites fxcom.com I believe and just opened a demo account with GCI.

Have added the BW indicators to the S&P index (one of the symbols listed in the Market Watch section). Hurrah! I will check my notes before adding some entry/exit points to the graph for your confirming my understanding. Hmm, maybe I should wait until I finish reading the 2nd Ed book.

I am too "anxious" to start and do trades even paper ones .. haha ..

Oh, questions please .. How can I add more symbols, eg some stocks, so that I can apply the Chaos system to find good trades? How can one use the Chaos system to scan trades and not limit to one's stock list??

I do not have the answers and can only count on you to help me .. sorry ..

Thank you .. Thank you.

Enjoy a Great afternoon.

I agree with you wholeheartedly that one MUST trade with good MM. I started trading stocks and then options in 2006 ... no exit strategy .. no stop loss concept and simply waited to be told when to close the trades (mostly from the paid advisors or my friend - they all do not have an exit strategy - gosh!). Some winning trades became losing ones (some 100% write-off) ... most of the hard-earned $$ down the drains.

I still have some 2010 call options - all are penny ones now (I bought some at 2-digit $) .. sigh .. My heart bleeds everytime when I look at them .. It's almost another $10K write-off if I close them now though I doubt it very much if I may get more for holding them longer .. Time decay may kick in very soon ..

That's why I must learn how to trade and find good ones myself. Learn to fish and not begging for fishes ... Oh, I am a vegetarian .. smile ..

Well, I am very positive that my future trades will help regaining all lost ground + I will soon be on a Successful track ...

Yes, I will be a diligent bookworm and start reading the second Chaos book in minutes.

Take care! Thank you again.

i have same call as urs....2010 will be great i hate 2009...how you got the book? pdf format or notebook u have with you?

Please help my understanding on the enclosed chart.

1. Fractals - Up and Down Arrows

i) Up Arrow = buy fractal
ii) Down Arrow = sell fractal
iii) Up Fractal 9 not valid because it's below the Alligator's teeth
iv) Down Fractal 14 not valid because it's above the Alligator's teeth
v) Down Fractal 2 over-rode Up Fractal 1
vi) Down Fractals 3 and 4 could be signals to add-on more though sell orders were not executed because the price did not fall low enough to hit the orders
vii) All sell orders cancelled with Up Fractal 5
viii) Buy order (triggered by Up Fractal 5) cancelled with Down Fractal 6

In short, no buy or sell orders were executed because the Up and Down fractals have been cancelling each other and/or the price did not hit the order price before it's cancelling out.

That's my prelim understanding on the fractals. I believe I need to incorporate the AO, AC and Gator signals at the same time.

Thanks in advance for pointing out the missing pieces.

what this all about...u funny remove that gator and use 15 or 1hr tf 1min chart is to small u will get fake entry..
just take your time dont push too hard..u need more time to read the 2nd edition....i what i use the fractal for is 1-2-3 HL....

I got the first Trading Chaos book (pdf) from the forum.

The 2nd Ed one is a hardcopy which I ordered on-line. Will start reading it very soon. The 3rd book (New Trading Dimensions) is another hardcopy and will reach me next week.

Yes, 2010 calls are better than 2009 ones. I wrote off some 1/2Q 2009 ones earlier .. Now I am very cautious in buying 2-digit $ options and stocks.

I just signed up for a webinar on Ninja Charting which will start in 25 mins.

Bye for now.

I finished reading the 2nd Ed book + I found out how to locate most of the US stocks in the GCI MT4 platform using the demo account. Hurrah!

From the 2nd Ed book, I do not recall reading the AC (Acceleration/Deceleration Oscillator)?! Will it be replaced by the Second Wiseman (add-on signal) - either 3 "red" decreasing AO bars or 3 "green" increasing AO bars?

To validate the Second Wiseman, do the red bars have to be above the "0" line and the green ones below the "0" line? Or it does not matter if they are above or below the "0" line as long as the red ones are decreasing and the green ones are increasing. Please help clarifying the above. Thank you very much.

Oh, last question: Should I focus on the 3 Wisemen signals (Bullish/Bearish Divergence Bars, AO and Fractals) on the 2nd Ed book and not including the ones in the 1st Ed? I am a little confused.

Will read my notes again on the two books before practising the newly learned skills on some sample charts.

Have a Wonderful weekend Everyone!

He does not use the AC in the new version. He still says all the signals work. I just don't think those work quite as well. The AO appears to be used only for the second wiseman signal. If you read the first book and remember that the AO and the MACD (or Elliott Wave Oscillator actually) are in fact pretty much the same, you will also recognize it's value for determining where you are in the waves and verifying a potential count, which can keep you out of poor trades by just following the fractal signals. The second wiseman is not a replacement for the AC but a whole new signal. The only requirement for the second wiseman is three bars of the same color. It doesn't matter if it crosses zero, but it might be actually a better signal if it did.
I would focus on the latest system with reinforcement (as I pointed out above for the AO) from the first volume. He's doing the same thing, just with different indicators and less emphasis on wave counting. The principles enumerated and explained there will help you understand how to find quality signals with the newer methods. He refers to the first book in the second, but he does not really explain some key concepts there. That material is in the first.

Your response has made my weekend. Thank you!

I will focus on the 3 Wisemen signals on the 2nd Edition book per your kind suggestion. Am going to re-read my notes and summarize my understanding .. Hope you and others will continue coaching me in my learning process. My Big Big Thank You!

Hey, I am thinking of adding US$/C$ forex in my paper trades. Plan to attend a free forex webinar first as I have no idea on how to do forex trades. I know again that I can count on all of you (seasoned forex traders) in this venture. Smile ..

Take care and have a Great Successful week ahead.

Hi Everyone

I finished reading my notes several times and would appreciate your confirming my understanding as follows:

1. Wiseman 1 - Bullish or Bearish Divergence Bar (D/B)

a. it's a counter-trend signal
b. it maybe the first entry (though I learned that Wiseman 2 (AO - 3 consecutive bars of the same color) and Wiseman 3 (Up or Down Fractal) can be an entry signal on its own)
c. MUST be outside the alligator
d. Angulation MUST be present, ie price is moving away from the Blue Line
e. AO MUST be Red with a Bullish D/B or AO MUST be Green with a Bearish D/B

Note: When the Bullish D/B becomes a Down/Sell Fractal, have to stop and reverse. Same for the Bearish D/B.

Question: How can I add a B/D/B indicator to the Chart please?

2. Wiseman 2 - AO

a. add-on mostly after B/D/B and/or Fractal
b. better entry signal if they cross the "0" line

Question: Must the 3 Red AO bars be decreasing for Sell and the 3 Green AO bars be increasing for a Buy?

3. Wiseman 3 - Up or Down Fractal

a. Must be above or below the Red line
b. Could be a stand-alone entry

4. Buy or Sell Stop: 1 Tick Above or Below the price bar in question

Question: How can I find out more on 1 Tick in $ term?

4. Timeline for Chart Analysis

a. 10-min for volatile markets like the indices
b. 30-min for currencies
c. Do not trade on less than a 5-min chart

Note: I will also look at the hourly, daily, weekly and monthly charts.

I am almost ready to paper trade my Mentors!! Smile.

Appreciate your comments and guidance please on the above. My trillion thanks again.

Have a Nice evening/Great week.

Sounds like you're making progress. Comments are in bold below.

wgreenie
1. Wiseman 1 - Bullish or Bearish Divergence Bar (D/B)

a. it's a counter-trend signal
b. it maybe the first entry (though I learned that Wiseman 2 (AO - 3 consecutive bars of the same color) and Wiseman 3 (Up or Down Fractal) can be an entry signal on its own) That's not quite correct. You can use a current fractal on the proper side of the red line as an entry. Wiseman 2 is an add on entry only.
c. MUST be outside the alligator
d. Angulation MUST be present, ie price is moving away from the Blue Line
e. AO MUST be Red with a Bullish D/B or AO MUST be Green with a Bearish D/B

Note: When the Bullish D/B becomes a Down/Sell Fractal, have to stop and reverse. Same for the Bearish D/B.

Question: How can I add a B/D/B indicator to the Chart please?

2. Wiseman 2 - AO

a. add-on mostly after B/D/B and/or Fractal Only after BDB
b. better entry signal if they cross the "0" line

Question: Must the 3 Red AO bars be decreasing for Sell and the 3 Green AO bars be increasing for a Buy? Three bars of the same color

3. Wiseman 3 - Up or Down Fractal

a. Must be above or below the Red line
b. Could be a stand-alone entry

4. Buy or Sell Stop: 1 Tick Above or Below the price bar in question

Question: How can I find out more on 1 Tick in $ term? I'm not sure. I remember this being discussed on the forum somewhere. It not the same as one pip. The stocks and commodities he trades are better regulated. I would be care in Forex of setting stop orders too close.

4. Timeline for Chart Analysis

a. 10-min for volatile markets like the indices
b. 30-min for currencies
c. Do not trade on less than a 5-min chart

Note: I will also look at the hourly, daily, weekly and monthly charts.

I

Great post!

Explanations of tick size and tick value can be found here:

http://daytrading.about.com/od/choos...tsTickValu.htm

Quite interesting are the new currency micro futures (1 contract equals 1 minilot) and their tickvalue:

http://daytrading.about.com/b/2009/0...-shrinking.htm

Regards

Forex37

Thanks taxgeek and Forex37 for your prompt guidance! You have made my day "again" .. haha ..

I have amended my notes accordingly + visited the suggested "Tick" link. I will practise the Wiseman signals on a sample chart and post it sooooon. Will count on you to coach me again then. Thank you in advance.

Take care and Enjoy a Great day.

Good afternoon

Today is a downday and I have been practising the Wiseman signals (esp the B/D/B and Fractals) on the ES Futures market. What a shock when I noticed I'd placed the entry the other way round, ie sold 1 tick above the top of the fractal bar when I should be selling 1 tick below. Glad that I was paper trading ..

The following questions arose and appreciate your guidance please:

1. Bullish D/B and Bearish D/B

I will only focus on Bearish D/B and disregard all Bullish D/B since they're all below the red line. Right?

Note: No buy when it's below the alligator. No sell when it's above the alligator.

Regarding angulation, I am not 100% sure on how to draw the price line properly. Would be great if you have a chart handy to illustrate how to draw it. Thank You!

2. Alligator Set-up (13-25-38 SMAs): Please correct me if I got the blue and green lines wrong.

38 SMA for the blue Line (Jaw)
25 SMA for the red line (teeth)
13 SMA for the green line (lips)

3. Wiseman 3 Signal - Up and Down Fractals

Again, I need to observe the following:

- Only buy when the Up Fractal is above the red line
- Only sell when the Down Fractal is below the red line

4. Can I trade based on Wiseman 3 Signals (Up/Down Fractal) alone + making sure the entry is above or below the red line? I can cross-reference the S&P 500 index (using the alligator system) with the 3 SMAs. Will it work?

Appreciate your guidance again. Thank you.

Continue enjoying a Great day!

Hi to everyone ! I'm a chaos trader too, glad to see there's a chaos thread

Sorry .. Correction on my earlier post:

Can buy with a bullish D/B when it's below the red line .. It's a counter-trend signal! The bars are below the red line. Same for the bearish D/B even it's above the red line and we can sell. Am I right this time?

However, I need the respective AO bar to confirm the signal before entering the market.

Please confirm. My Big Big Thank You.

I am forex trader i also trade chaos and have my own thread..i think u have the book right so u dont have the problem....divergence base on time frame u are using but mosthly 1hr divergence is for intraday and daily ow weekly can be a swing position if the price action show a strong reversal..
that is all i know so far ..

something like this is a perfect BDB......u will find many more base on the pair u are trading .

Here's my first question: it's bad use chaos system on 15M timeframe?