Profitunity (Chaos) Trading System by Bill Williams

Just wanted to say, I just checked your blog excellent stuff. Keep it up! cheers

HAS losing trade..

believe it or not wm3 is the best cus it very similar to elliot wave

Hi

We all know you can enter a market anywhere you like. Its the exits that would decide your profitability. having said that timing is the most important thing in trading. So we know how to time our entries, either trade off a sleep alligator (saddle point) or BDB depending on what your taste and the market conditions.

Likewise for exits we should let the market dictate which exit or should I rather say Profit Taking strategy should we employ. WE have a choice.
You can choose any one or a combination of the following. In the long run they balance out.

1. Trail last 3 or 5 candles. (Can be used as a standard exit technique in all sorts of market conditions.

2. Exit on either Red or Green Line. Chose to exit on close on red line during the start of the trend and then later on move your exit to green line.

However this cannot be used with Wiseman technique while you are trading into the mouth of alligator.

3. Exit on Divergence. This requires patience and also depends on how the market moves. e.g. If there is a runaway market, and you have consecutive green/red candles or bars you would not like to wait for divergence. Sometimes it would save you pips other times it would exit you early.

4. Trail behing 5 consecutive Red/Green Bars or Candles. This is best for any time frame but superb for For volatile markets and specially on Shorter Time Frames ie. all Intra day. This what I use the most. I also use or try to use one more technique.

5. Trail behind fractals. this is easy for me, because my AIMS Levels indicator shows it very clearly but may be as easy, visually to see using other forms of fractals.

I hope this helps.

Imran

ps: check out my Blog for one more technique, using Fib Expansion.

Thank you for sharing with your valuable ideas.

My current entry & exit system that employs Wiseman 2 as the confirmation is as follows.
Entry

 

1. Place the pending order to buy at High of Bullish divergent bar + 1 pip and the stop loss at Low of the bar - n pips, or sell at Low of Bearish divergent bar - 1 pip and the stop loss at High of the bar + n pips.
2. Buy at a current market price (current price >= buy stop level) or at the buy stop level (current price < buy stop level) when three positive AO histograms (0 > values) in green appear consecutively, or sell at a current market price (current price <= sell stop level) or at the sell stop level (current price > sell stop level) when three positive AO histograms (0 > values) in red appear consecutively. <-- Confirmation by loosely applied Wiseman 2.

Exit

 

1. Long is exited when bearish Wiseman 1 setup (with the confirmation by W2) is fulfilled - simultaneously the initial short entry is made.
2. Short is exited when bullish Wiseman 1 setup (with the confirmation by W2) is fulfilled - simultaneously the initial long entry is made.

Please note that the above is not a genuine stop & reverse system that always stays in the market. A couple of profit-taking techniques pause the routine before either Wiseman 1 or Breakout Fractal (with the confirmation by W2) makes a fresh start.

You may think this modification grossly deviates from the original BW tenet, since the counter-trend entry is no longer used. However, the W2 filter offers us a critical advantage that can eradicate false entry signals by W1 alone.

P.S.
Thank you for referring to your proprietary info in your blog, Imran.

Today I've closed my GE trade with a nice 2.9% gain. Moreover, I've closed my BLDP trade with a small loss.

Conclusion
I've opened GE trade according to the rules of profitunity trading system. This trade was perfect, though I didn't earned a lot, however, I traded when the system told me to trade.

On the other hand, I have one losing trade BLDP. I've entered to early (i was greed), i've entered to late (we can see a bearish divergence in AO indicator). However, I've closed my trade according to the system and I'm glad of it.

Cable had a saddle point on H1 last night. I bracketed the market and Put TP at FE 62. It worked well. Please check my blog for further details. here is a picture.

http://1.bp.blogspot.com/-IrIao3kQLN...successful.gif

Nice trading!

I have one question for B.W. profitunity system lovers. Do you have a trading preparation sheet? I've read it about in first B.W. book. Right now i want to prepare something to watch monthly, weekly, daily results, indicators for futures, forex and stocks that i like.

Maybe there is someone who could share it? a?

Hello,

In the world of Japanese Candlestick patterns, the followings are deemed as reversal signals.

 

1. Tsutsumi (Engulfing pattern)
2. Doji (and the variants such as Hammer for bullish or Hanging man for bearish)
3. Kabuse (Piercing line for bullish or Dark cloud cover for bearish)
4. Harami

As it would be obvious for those familiar with them, the first three patterns are appropriately corresponded to Bullish/bearish divergent bar. However, the B/D/B doesn't encompass the Harami, which is the most likely reason when occasionally B/D/Bs do not appear around the top or bottom.

May I ask your thoughts as I think it is a critical flaw in the B/D/B concept?

BDB is just one way of entering a market. The whole idea is actually to trade chaos. Understand the structure of the market and act accordingly. When Price moves too fast and too far away from Alligator the rubber band principle comes into play. This is indeed a reversal technique. I get impression from majority of people that after the 2004 book perhaps taking reversal trades (wisemen technique) is the only way forward. I do not agree with that. I believe, and this is what I follow even all the way down to M1, the best place to start campaigns is saddle point. A proper sleeping alligator. I find that when you take setups under the umbrella of a 4th wave the BDB, Wiseman technique becomes very useful. But in the end, as long as you see trending markets, following trend is the best strategy. IMHO>

BDB is just a way of entering the market. 80% depends on your "mind". Moreover, a BDB only becomes worth trading when all the other requirements are met, that is angulation b/w Alligator and price, which is subjective because it depends on how experienced you are in the markets.

e.g: for H4 Traders, following trends and adding on each fractal would have been hugely profitable, just look at NZD/USD, EUR/JPY, USD,JPY, GBP,JPY, and AUS/JPY. Amazing.

cheers

yes yousafzai, I agree. No real need to look for countertrend opportunities when you have trending markets. i always think of it as traders getting really greedy. because when you look at what kind of a gamble countertrend-trading is, it appears to be flat out "stupid" to take those signals instead of keep on looking for underlyings that are simply in a trend. you just buy/sell the fractals in that direction .. doesn't get easier and more profitable than that. the underlyings yousafzai mentions are the best proof for that.. funnily though traders always talk more about the divergent bar than how to pick out good fractals for trend following .. that's a mystery to me.

Thank you for your valuable comments.

Actually, the backtesting EUR/USD in H4 by an Expert Advisor loyal to BW literature that my friend in Japan coded astoundingly produced 18,000 pips in year 2010 alone.
Thank you for your tip on referring to our currency, JPY pairs. We'd like to inform you of the precise backtesting results afterward.

As a mechanical trader, I have a concern that B/D/B excludes the Harami patterns, which brings about non-existent B/D/Bs around the top/bottom of every swing. As long as we take such a flaw into consideration, the current BW system can still change for the better. That's my point.

Regards,

poyais .. in my opinion there is no system that takes into account every possible formation in its signals or whatever you want to call the matter. if it's true what you say, that the BDB already corresponds to your above mentioned 3 patterns, thats astonishing. but I have to tell you that I couldnt care less if it does or if it doesnt. that does not make the system any better or worse. the system is what it is without anything else considered - candle stick patterns, trend lines, fibs or whatever. sure, everyone likes to change it around to fit his/her personality, but saying that it's a flaw in the system is a little out there in my opinion. it's just one way of looking at the market just as there are a thousand other profitable ways to do the same - and almost none of those correspond with each other..
also .. an ea making 18000 pts with this system .. well that sounds really good, I'd be very interested in actually seeing what trades it took and a proof of those results. i highly doubt though that it'll work for a long time. not even a really good trader will spot the permanent changes in the market right away, how will a computer program do that? it's impossible. it can't account for the differences of just the fractals at the end of a wave 1, in the middle of a wave 3 - let alone a wave 4 or the final change in trend on a high timeframe with a thousand divergences that just dont make a lot of sense in the technical perspective. so you see, i am a little sceptical here, don't mean to bash you or anything, but I just dont really see it ...

I agree with Yousafzia and Slight. Contra-trend trading is a fools game even using the Elloitt Wave. The simpler you make this system the better. Fractals out of a saddle point are the way to go. I do just fine not paying attention to the wave and trading bracketed and tight saddle points. If there is any drawback its that you have to have patience for the right setup.

there is no reason to jump in the market at top or bottom if you can have patience for market to decide where to go, I have been using this system for a while and i think it worth the price they sell the home study course but only if one can afford it.
I Trade this system with Alligator if price above or below and using the fractal as my Elliot wave, i can also scalp on 15tf using the fractal for entry.
Wait for your setup and trail your profile, sometime it you will earn more profile and sometime you will have small profit.
you will know when to get it when to trail profit and where to put profit, you will know why you are getting the market and why you are staying out and also what the market is doing especially in bastard wave like wave 4.
Nothing is 100% in life and i believe we all have chaos in our life..

After several days range, i have small lose on the last entry but still running until we complete wave 4 it will turn profit 4hrs chart still showing good down move.

Nice trade there, 2 Questions:
1. Did you not consider exiting on the consecutive bars exit signal around 12 april?
2. Moreover, dont you think H4 is showing a possible 4th wave after the previous impulse wave up?

cheers

Bill Williams systems make perfect sense. If you take the time to test each entry system and pyramiding system along with the various exit signals, the entire methodology Bill Williams created is extremely practical and based in plain common sense. Just one reading of the book should have convinced any reader that Bill Williams is on the Cutting edge of trading thought. For one the basic statement he makes in Chaos 1st edition, he says "the basic underlying structure of the market is the Elliot Wave and the basic underlying structure of the Elliot Wave is the Fractal." He also states that the sometimes unseen structure is our own individual belief systems concerning the market. This is one of the most logical breakdowns of how to look at the market from a practical to a more abstract. He also developed all his indicators and systems, a system being a simple entry into a given market and not his entire methodology, are primitive and simple, yet they help understand how the market is behaving in the present moment using non-linear dynamics and chaos theory. This means that when I am in a trade, I know exactly what is happening in the market on multiple dimensions related to crowd psychology (fractals) to information and energy dynamics to finally price action. He even explains in "New Trading Dimensions" how price moves in relation to the balance line measuring the flow of information and its speed. Bill Williams to me is standing on the shoulders of some of the greatest market technicians in history. Furthermore, just reading the books by Bill Williams will not be enough. You need to learn money management and Elliot Wave. For money management I recommend "The Mathematics of Money Management" by Ralph Vince. Also, study thoroughly as much of Robert Prector's materials, but also Robert Bain. Also, it might help to study Steve Nison for Candle Sticks Education. Bottom-Line: Bill Williams has developed one of the few methodologies and insightful contribution to trading the markets than few today. This should be apparent from the first reading of Chaos Theory 1st Edition. If you don't think that Non-Linear Dynamics and Chaos Theory are inherent in human behavior as well as all natural phenomena then you need to visit the library and study some of the recent literature on quantum physics and non-linear mathematics, then you will see that we have come a long way.

Hello!

Nice post there buddy! I agree with almost all of what you said! Nice summary. We tend to forget that trading is 90% mental.

just out of curiosity, please tell me some one is atleast 10 contracts long on NZD/USD. It would give me extreme pleasure if I see at least one persons chart who's traded this H4 trend using at least one dimension of entries. Unfortunately I'm left to the world of "I wish, coulda, woulda, shoulda,...." LOL

please some one! I will donate 10, 1 Lot pips to charity if I see anyone who's loaded with either any Yen H4 or NZD/USD or NZD/JPY..

cheers

May I interrupt your discussion please to ask a question..?

I would like to know the time frame that seems to be preferred by you traders, I think Mr Williams uses a daily chart for a lot of his work, I am just wondering what you are using.

Thanks so much


daveM