Profitunity (Chaos) Trading System by Bill Williams

Not exactly. A squat bar is a bar where price makes a new high/low with lots of volume but not a lot of range in that movement. Not all reversal bars are squats and not all squats are reversal bars. There is however a similarity in that both reversal bars and squats can happen at the end of a trend.

oo ic ic.. do you know how to mark a squat bar on mt4 just like on bw chart where he has it with a blue color??

thx

On MT4 there is an indicator called BW MFI which displays as volume type bars at the bottom of the screen. Each one of BW's four Profitunity Windows is represented by different color coding. The squat bar is described as having greater tick volume and a lower MFI (Market Facilitation Index which is range divided by volume) than the previous bar. Williams describes it as a battle between bulls and bears, with lots of activity but little movement, sort of like the market is "squatting" before making it's next move. As Rbr trader mentioned, a squat bar in and of itself does not necessarily signal the end of a trend. It is one of Williams 5 magic bullets that when combined together almost always signal the end of the current wave. Please read Trading Chaos the first edition for a thorough explanation.

The only problem for me here is this. I understand that in the forex market volume statistics are somewhat inaccurate and not reliable, so the squat bar and BW's other Profitunity Windows might be rendered ineffective. Does anyone have better knowledge or experience regarding forex volume?


Richard

The indicator is actually just called the Market Facilitation Index and it should be part of the regular MT4 indicator package. Let me know if you have trouble finiding it.

i mean without looking at the mfi, so everytime a squat bar appear it will be automatically mark as a blue color bar/candle. in investor dream (bw charting software), they have this kind of facilitation, but investor dream is no longer available, i dunno if metastock n other charting can do that.

i was just wondering if mt4 can do the same..

hey all

havent been here since forever .. but thought i just jump in quickly.
i am still using this method .. also pretty profitably i would have to say. i only do fractal trades combined with the Elliott Wave though. I barely enter on div bars or anything else.

regarding the squat bar and why i never pay attention to it: in my opinion, correct me if i am wrong, it makes no sense using this bar if you have the "average joe forex account." thats because your broker will only show you the volume that goes through their desk, but the volume of all the other brokers is not shown. with that, you might get squat bars where there actually is none, or you get none where there is one. so, unless you trade currency futures through cme or have an interbank account, it doesnt make sense using it since its based on incomplete information your broker shows you.

also what i would like to add is, that this method is profitably enough without any squat or divergent bars. picking tops or bottoms in a trend following system really isnt necessary and might just cost you more than what it makes. entering on the fractals at saddle points is highly profitable on higher timeframes for me. i am more interested in following a long move than trying to casino-play div bars going against a major trend. of course, there are certain div bars (the ones occurring at the end of wave 2 and wave 4) that can be identified easier, and that work very well. but they are still a casino signal compared to what the fractal provides for you.

hmm.. good point..

Slight,

Good to hear from you again. I quit trading for about two years and am just getting my feet wet again, but I remember seeing your posts back then. Your answer regarding volume was well reasoned and makes sense to me, so thanks for that.

I'd like to know more about your trading style. It appears you're trading BW's chaos 2nd edition without the divergent bars? I visited your blog and it looks like your mostly trading daily charts? Also I notice you trade other markets which also interests me. I have a trading partner who is into ETF's and othere equity instruments. I'm curious if you have found any brokers who use MT4 for equities, futures, etc.

Anyway, I will read your blog in more depth, but anything you care to share here about your trading would be welcome. I'm particularly interested in your interpretation of Elliott Waves and how you determine where we are in the sequence.


Cheers,

Richard

Hi Richard,

I also remember you from some time back, good to see you around again. I have been absent myself, but I have been studying various markets and been active trading-wise every single day...

In the following I hope I can give you a little bit more insight into what I know and do regarding Chaos ... feel free to ask more questions - it can only benefit the both of us and everyone who cares to read through this thread.

You correctly observed about my trading style, that I pretty much only trade daily charts. I have found it to be the most consistent and reliable timeframe that also suits my daily schedule. Plus, I remember AvidTrader, who has met Mr Williams and bought, I believe, 2 versions of the homestudy course, saying that Bill Williams recommended it makes sense to stick to the higher timeframes with this system. Signals appear at more significant levels and trends unfold clearer from those points on. There is much less noise (esp in FX) and that makes it a lot easier to know where to get in, put the stop and get out again. Daytrading has not proven to be profitable for me on smaller TFs like the 10m or whatever you would prefer. Combining this with one significant higher timeframe can give you a good idea of where the next trend is going to go.

My knowledge is based on TC2, as you correctly observed. However, I do combine it with the Elliott Wave and Saddle points (= no div bars for me) from earlier books. This way, I make sure to stay away from any gambling trades that kill too much of my equity. I dont have a problem leaving some profit on the table, waiting for those saddle points to set up and then enter for a relatively safe trade after an initial move. Especially in FX I noticed that div bars are highly vague and the concept of angulation doesnt make a difference at all. Sometimes there is angulation and the div bar doesnt work, sometimes there isnt and it works perfectly well. I wasnt able to make sense of that until now, so I am staying away.

I would also like to mention, that other markets such as stocks (that includes Indices like SP500, Dow, Nasdaq etc) and commodity markets are much better suited for this system as the FX markets. If you bother to check out some charts of those markets and the way trends behave and move, you will find that they are much more stable. What I mean by that is, that once underlyings on those markets have established a trend, it seems much easier for them to continue that trend from a chaos trading perspective compared to the FX market. I, for instance, have developed a much higher trust in those markets than the FX market. E.g. when price is right at the green line and you kind of know that the next day will be the desicion-day regarding "will I have to close out this position or let it run", the stocks & commodity underlyings can be trusted much more regarding the continuation of the trend (thats also true for Bonds). It has happened all too often to me that forex pairs didn't give about the green line (meaning: the green line just doesnt mean we are at a significant level of correction) and just go against me even hundreds of points (on the daily..) .. meaning the next day price closes WAY above/below the green line. Stocks & Commodities run much smoother in that respect.

I am pretty sure you will not find a single broker offering futures and etf's on MT4. What you do find is commodity trading via CFDs on MT4. Honestly, MT4 is a pretty shitty platform compared to what you could afford if you were a serious stock or future's trader. Tradestation, Metastock or CQG, even Ninjatrader (I am sure there are others...) are the platforms you want to trade off if you are willing to put more money into the market. MT4 is simple to deal with regarding settings and putting in orders, but it is a piece of s/-/!7 compared to what you can do, and the reliabilty(!) of the above mentioned platforms.

I dont really know why, but a lot of people are asking me about the Elliott Wave. I have not been to a tutorial nor did I have any help from outside regarding the EW counting with the AO. I just studied the book Bill W. explains the EW in and did that like crazy. It took a while until the "aha effect" set in, but now it is just automatic. I see a chart and if there is a clear wave count (you dont always know what wave you are in - from a mail from Justine Williams - I can tell you that this is even true for them) you see what wave you are in immediately. It doesnt even take a split-second, it's simply automatic. So if you dont know how to count the waves, it's simply because of a lack of studying, not because there is some additional twist to it that is not mentioned anywhere. I have taught counting the wave to 3 other traders, and they are perfect at it now.. you only have to make the effort to go through the explanation a thousand times and compare it with the live charts you are looking at right now.

Altogether it has been my experience that the FX market is kind of tough to trade with this system. It seems there is much noise, even on high timeframes.
I am always active trading Indices and commodities and have a much higher success rate there. Even div bars are easy to spot and work hella good in those markets .. I love to take them at the end of corrections in an on-going trend .. you pretty much cant miss them, even in unpredictable wave 4s.

I hope that cleared up some questions you had.

Have a good weekend, and good trading to you!

Slight, thanks for the thorough reply. I agree with your assessments about the forex market. I am doing a little scapling and some swing type trading, but I don't really have time for that, so I'm glad to have a trading partner with deeper pockets than I who wants to trade other markets. speaking of that, how do you determine what you are going to trade? Do you have some favorite commodities or equities that you like? Having had most of my trading experience in the forex, I feel overwhelmed at the amount of choices out there, and I'm wondering how you go about narrowing them down.

As to trading platforms, I have a shared Tradestation account with my partner, but he's got some autotrader running on it most of the day so I can't get on the platform very often. I have Ninjtrader but haven't messed with it too much. I'll have to see if I can work up BW's indicators as they don't seem to be part of the standard indicator package.

Then on Elliott Wave, I never really got too far into it when I was active before, but I knew there was something to it, and now I see that everything fits in wave of one degree or another. I'll keep studying and looking for them. Sometimes I see them, sometimes not.....

So thanks for the help, I appreciate it.

Well I just select about 20 charts from the commodities, stocks and index area that I will watch all the time. when something is going on on one of them, i just take it. should there be nothing going on on anything, then I will add a new chart. it very rarely happens though.

I know someone who has all the indicators going in NT .. I can ask him for the code or how he managed to have them show, if you like.

Good Trading..

I guess the 20 that you trade regularly are ones that you cover in your blog? I'll keep an eye on it, and also look around some. BTW, I noticed you've posted a couple of times over in the Commodities and Stocks forum. Anything worthwhile to learn over there?

If you can pass along the indi's or a template, workspace, whatever they call it for NT that would be great.

Thanks!

I cover them on my blog partially... most of the time I try to put up what people could be interested in. Orange juice or Lead won't come up that often.

I have kind of stopped posting there for no particular reason. I kind of lose touch with posting on forums again and again... I mainly just trade than talk about it

I'll try to see if I can get the bw stuff for you .. I'll let you know.

hey mate whats new...long term, inraday scalp work with trading chaos so far..

nice post mate...i suck in wave counting but getting use to it since i think it's important using the fractal....wave 4 are bastard ...

Hello, guys. I have just started trading this system, however, right now only in the demo account. I'm trading it only for one week. I don't want any fast results, but to sum up this week was very bad. I had only loss'es and no profits trading it. Right now i'm only using WS1, WS2 and WS3, aligator and AO, no wave counting..
I've tried trading on 5min chart, but it was bad. I think it is better on bigger charts such as 4h and bigger..

you need to add the wave count IMO....trading ws1 and ws2 are way to risky for me so i mainly trade ws3 , i will miss alot of pips but i prefer to be in confirmation and consistence profit. 5min is bad my best tf is 15tf,1hr and daily..the trend in 4hrs are often confirmation of swing not intraday ..
i only watch daily closing price and pick entry on 15tf, so try demo and practice little wave count 1-2-3-4-5 and abc correction..caution of wave 4 is often correction and need consecutive bars to complete..

Still in the same position, however, it started to go against my short. While it will not close abode the lips (green line) I will not close my position.

I like this system and it really fits my style, however, after one week of trading and not a one profitable trade.. Am i doing something wrong?

I will try posting charts here. Maybe you guys will help me a bit with this...

Use the wave count, it'll help you a lot. Make sure you have the 5 magic bullets when taking wm1..

Hi Isto,

I'm Reading Bill Williams' Trading Chaos now, Its been very helpful so far (Novice Trader), and actually your posts over here got me to the read the book from the first place.

I'm having troubles applying the Elliot waves in level 2, i'd be grateful if'd have any help from you explaining or handing me some links for online Tutorials as the ones i found were very unhelpful.

Thank you.

Nour El-Assal

watch this videos on youtube 1-9 video when u get on youtube look up for them. it will help u with the wave count.