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Profitunity (Chaos) Trading System by Bill Williams

  • #1,261
  • Sep 24, 2011 4:57pm Sep 24, 2011 4:57pm
Quoting kisruh
Hi, I've just begun to learn Profitunity. Have already grabbed the basic but some areas are still vague. Please kindly someone help me with these:

Question 1:
1. Up fractal comes up
2. A buy signal is generated
3. But the buy stop doesn't get hit yet
4. Down fractal comes up

Now, does it mean that the up fractal (no. 1) must now be ignored?

Question 2:
I've learned that it is best to stay away from the market when the alligator lines are intertwining. Now, what about downtrend? Is it possible to still make profits in downtrend market...
Have you read the books by Mr Williams yet...?
  • #1,262
  • Sep 25, 2011 10:16pm Sep 25, 2011 10:16pm
Quoting kisruh
Hi, I've just begun to learn Profitunity. Have already grabbed the basic but some areas are still vague. Please kindly someone help me with these:

Question 1:
1. Up fractal comes up
2. A buy signal is generated
3. But the buy stop doesn't get hit yet
4. Down fractal comes up

Now, does it mean that the up fractal (no. 1) must now be ignored?

Question 2:
I've learned that it is best to stay away from the market when the alligator lines are intertwining. Now, what about downtrend? Is it possible to still make profits in downtrend market...
Q1. as long as it formed above the red line, it's still a valid fractal

Q2. yes, as long there's a trend, you can make profit using this technique

Q3. if you want to stay longer in a trend, use the green/red line stop loss. but if you don't like to give away your profit too much, use previous 5 bar highest/lowest. there's no best method to exit, it's all come down with our own executive decision..
  • #1,263
  • Sep 27, 2011 9:15am Sep 27, 2011 9:15am
Hello BW folks,

Certainly I perceived this system can amass thousands of pips for a short period of time IF APPLIED PROPERLY.

May I ask you guys if you actually trade on the impulsive (Elliott) waves and try to refrain from the corrective waves even though there seems to be favorable setup by BW indicators alone? If this is the case, do you employ the five magic bullets explained in TC 1st edition to corroborate your wave counting?

Any comment/suggestion is highly appreciated as this must be the last piece of the puzzle on making a fortune by the system.
  • #1,264
  • Sep 27, 2011 11:22pm Sep 27, 2011 11:22pm
Quoting cacique
Hello BW folks,

Certainly I perceived this system can amass thousands of pips for a short period of time IF APPLIED PROPERLY.

May I ask you guys if you actually trade on the impulsive (Elliott) waves and try to refrain from the corrective waves even though there seems to be favorable setup by BW indicators alone? If this is the case, do you employ the five magic bullets explained in TC 1st edition to corroborate your wave counting?

Any comment/suggestion is highly appreciated as this must be the last piece of the puzzle on making a fortune by...

yousafzai has made several posts in this thread with posted charts and diagrams...... check those out..... also. check out his site.... his blog.

He has studied this carefully and shared a lot of his research, he also has posted some charts showing his entries and earnings.

You will be quite impressed with his skill.

Hope that helps.
  • #1,265
  • Edited 6:48am Sep 28, 2011 3:32am | Edited 6:48am
Blaiserboy,

Although my question is how BW traders in the forum incorporate Elliott wave principle into their own system, I don't expect anyone to make me reference to the lowbrow research.

Cheers!
  • #1,266
  • Sep 30, 2011 4:55am Sep 30, 2011 4:55am
Guys,

I wrote to Profitunity asking about the different kind of signals mentioned in their book "New Trading Dimensions" and "Chaos Trading 2nd Edition" and Justine (Bill's daughter) wrote me back that due to current market's different condition, they no longer use the old signals (saucer, twin peaks, AO zero cross, and trading zone). They only use signals as written in the latest book (Fractals, Wisemen 1-3, DBD/BDB and Super AO).

Now, in your experience, do you still use those old signals in your current trading? How are they doing? If so, in what time frame?

Thanks
  • #1,267
  • Sep 30, 2011 5:26am Sep 30, 2011 5:26am
Quoting kisruh
Guys,

I wrote to Profitunity asking about the different kind of signals mentioned in their book "New Trading Dimensions" and "Chaos Trading 2nd Edition" and Justine (Bill's daughter) wrote me back that due to current market's different condition, they no longer use the old signals (saucer, twin peaks, AO zero cross, and trading zone). They only use signals as written in the latest book (Fractals, Wisemen 1-3, DBD/BDB and Super AO).

Now, in your experience, do you still use those old signals in your current trading? How are they doing?...


What's DBD/BDB?
  • #1,268
  • Sep 30, 2011 9:29am Sep 30, 2011 9:29am
Quoting kcsali
What's DBD/BDB?
My bad. I mean BuDB/BeDB, Bullish/Bearish Divergence Bar
  • #1,269
  • Sep 30, 2011 12:02pm Sep 30, 2011 12:02pm
Quoting kisruh
My bad. I mean BuDB/BeDB, Bullish/Bearish Divergence Bar
It's all clear know. I tought it was something else/new.
  • #1,270
  • Sep 30, 2011 12:21pm Sep 30, 2011 12:21pm
Quoting cacique
Blaiserboy,

Although my question is how BW traders in the forum incorporate Elliott wave principle into their own system, I don't expect anyone to make me reference to the lowbrow research.

Cheers!
I didn't realize it was a lowbrow research...... BUT. the research does lead to fantastic profits....

Maybe one day you would be good enough to point us to some acceptable research of your own that generates equivalent profits and we will all benefit.
  • #1,271
  • Edited Oct 3, 2011 3:18am Oct 2, 2011 8:32pm | Edited Oct 3, 2011 3:18am
Hi fellow traders,

I'd like you guys to evaluate my idea, Chikou-span遅行スパン (Lagging span in English) breakout.

For example, an emerging Up Fractal above Alligator lips in green from the bracketed market usually indicates the inception of bull market. This notion is always true in hindsight. The Chikou span gives you a clue on effectively identifying the false breakout.

Check your chart by plotting Ichimoku.mq4 after turing all of Colors except #4 Lime (for Chikou span) into None, then locate the candles where the expression of inequality below holds true:
Bullish: Chikou span (note: the latest value is shown 26 periods ago) > High price of the candle of 26 periods ago,
Bearish: Low price of candle of 26 periods ago > Chikou span.

If this is the case, your Up/Down Fractals formed above/below Alligator are highly likely to be a promising bullish/bearish Wiseman 3 signal, thus you are able to enter/add your position least stressfully.

Then, when should we close the existing positions? That's the moment the above inequalities become inadequate (when getting to the equilibrium point (Kinkou均衡)), which might be well before three Alligator lines are intertwining. However your exit must be less painful than the New-Trading-Dimensions way of exit formula where you give back what you will have amassed to the market.

Finally, please note that the Chikou-span breakout is a popular strategy for Japanese, which has proved over half a century. My idea is merely an application to the Bill Williams system.

Good luck!
  • #1,272
  • Edited 10:00am Oct 7, 2011 8:38am | Edited 10:00am
As this thread seems stagnating, let me raise one more topic.

Can markets allow us to properly calculate the standard deviation? Unless you can substantiate it, the credibility of your technical analysis must be deteriorated down to almost nothing. Why? Because you unconsciously presume the 19th century's Gaussian distribution.

This assumption alone provides us with an enormous edge in the market.
Because now we are able to pick up trading systems or methods that reasonably work among the waste collected over centuries.

Do you make sense what I'm arguing? If not, you are most likely to lose money in the market. Read this book, The Misbehavior of Markets: A Fractal View of Financial Turbulence by Benoit Mandelbrot.
  • #1,273
  • Oct 7, 2011 7:32pm Oct 7, 2011 7:32pm
Quoting poyais
As this thread seems stagnating, let me raise one more topic.

Can markets allow us to properly calculate the standard deviation? Unless you can substantiate it, the credibility of your technical analysis must be deteriorated down to almost nothing. Why? Because you unconsciously presume the 19th century's Gaussian distribution.

This assumption alone provides us with an enormous edge in the market.
Because now we are able to pick up trading systems or methods that reasonably work among the waste collected over centuries.

Do you make sense what...
I'm not sure what you are saying. If you refer to the fact that markets are not stationary, I could not agree more. However, when the series is stationary, the standard deviation calculation is not dependent on the distribution. It is calculated the same way for a Gaussian distribution as for any non-gaussian.

On the other hand, the standard deviation is meaningless if stationarity does not hold. By definition stationarity does not hold if the moments depend on the time when they are calculated, or the duration of the sample used.

The FX market may be in some sense short term stationary, i.e., the moments may change very slowly w.r.t the TF in use. In that case, it makes sense to compute the S.D. and any other moments that are useful. However, the computation must use a sliding window that is short w.r.t. the time it takes the S.D. to change much. This means that the start time for computation must slide.

Also I don't see how the Gaussian assumption provides us with an edge. It is not true, and it is meaningless in the long term due to stationarity considerations. The only edge I could see is if I were trading against someone that assumed stationarity. But I don't think many traders think that deeply, or make trades on that assumption.
  • #1,274
  • Oct 7, 2011 10:55pm Oct 7, 2011 10:55pm
Quoting poyais
Hi fellow traders,

I'd like you guys to evaluate my idea, Chikou-span遅行スパン (Lagging span in English) breakout.

For example, an emerging Up Fractal above Alligator lips in green from the bracketed market usually indicates the inception of bull market. This notion is always true in hindsight. The Chikou span gives you a clue on effectively identifying the false breakout.

Check your chart by plotting Ichimoku.mq4 after turing all of Colors except #4 Lime (for Chikou span) into None, then locate the candles where...
If you can work out all that theory, surely you can work out how to post a chart to explain it further, an example of a winning trade at least?

You don't even need any extra software, MT4 can do, I'm just saying...
OPPORTUNITY IS NOWHERE
  • #1,275
  • Edited 12:56pm Oct 8, 2011 4:09am | Edited 12:56pm
Thank you for the nice introductory explanations of standard deviation concept (S.D.).

Yes, S.D. can be appropriately computed in hindsight, however almost in vain if we apply it to the future as we see past returns are most likely not indicative of future results. The backtesting provides a good example. The EA usually becomes obsolete in a couple of months even though it demonstrates an impressive equity curve for the last ten years. Can we always attribute it to the over-fitting issue? I think almost all of technical analysis are on common ground of this matter. We can properly calculate the S.D. for a given period in the past, but the problem is we are trying to apply the probability distributions we get in backtesting to the market in the future regardless of consciously or unconsciously. This is the reason why a seemingly promising (statistically significant at present) trading strategy is most likely short-lived and destined to throw away to the wasteland.

Having said that, it might be possible to compute the S.D. in the foreseeable future if we alleviate the assumptions to the extent not practical enough to withstand as you mentioned "if stationarity does hold," which is totally irrelevant to what we pursue.

Chaos theory offers us a clue to evade the persistent issue and how to pick up a reasonably right method to approximate the current market. How? I'll leave the answer to the aforementioned book, however please don't misunderstand I'm not endorsing the Bill's trading system but just remind the thread participants of the foundation of Chaos trading. In this regard I'd also like to have comments by traders who subscribe different methodology, if possible.

Have a great weekend!
  • #1,276
  • Oct 8, 2011 1:48pm Oct 8, 2011 1:48pm
I remember when Mandlebrot's fractal article on the stock market was published.

One of the readers who wrote in to Scientific American to comment on the article, pointed out that Ralph Nelson Elliott had some nerve stealing Mandlebrot's ideas some thirty years before Mandlebrot had thought of them.

I like Bill Williams ideas because they attempt to use Elliott Wave without the need to really understand Elliott Wave.

Unfortunately there are so many people who falsely claim Elliott Wave expertise (including a few on this thread) that they give the subject a bad name. Nonetheless, if you study the wave principle and use Bill's fractals and alligator you can do very well.

No curve fitting required, no magic, no standard deviations, no secret sauce indicators; just learn to count waves and read the Alligator. Take the first fractal above or below the red line and keep it simple.
  • #1,277
  • Oct 8, 2011 3:50pm Oct 8, 2011 3:50pm
Quoting Wab
I remember when Mandlebrot's fractal article on the stock market was published.

One of the readers who wrote in to Scientific American to comment on the article, pointed out that Ralph Nelson Elliott had some nerve stealing Mandlebrot's ideas some thirty years before Mandlebrot had thought of them.

I like Bill Williams ideas because they attempt to use Elliott Wave without the need to really understand Elliott Wave.

Unfortunately there are so many people who falsely claim Elliott Wave expertise (including a few on this thread) that they...
Refreshing.... good solid Canuck logic.

There is no doubt in my mind that markets are wave within wave within wave ...... like in nature. William's attempt to delineate this structure and exploit it is a noble one and can no doubt be profitable (as can most other methodologies) if traded by one who has a good grasp of classic principles of technical analysis. One principle (and skill) in particular is that of understanding the importance of and the ability to recognize significant areas of support and resistance. I am actually quite surprised that William's never made this an important and more simple element of his methodology as opposed to the convoluted and arcaine Wisemen concepts. If markets truely are wave like in nature then it stands to reason that certain S/R levels are going to be the wave turning points i.e. fractals of greater importance or call them super fractals, if you will.

In my humble opinion, no matter what your trading methodology, one can hardly go wrong knowing your S/R theory, after that it becomes a matter of wait and see (the letting the market come to you approach) how price reacts at those levels then trading accordingly as indicated by the Alligator et al (or for that matter, any other system).

My 2 pips worth. Thanks for listening.
Stay calm, be brave, wait for the signs - Jasper Friendly Bear
  • #1,278
  • Oct 8, 2011 4:10pm Oct 8, 2011 4:10pm
O.K. as I don't trade the William's approach per se it took me a minute to put together a couple of simple charts to illustrate what I said in the above post. I usually draw the lines by hand (just takes a little practice), however being lazy in this instance, I used a generic indie. Don't ask me if its any good or not because I don't know, it's only for illustrative purposess. As you might notice, even if the market is quite choppy (corrective wave) your still on the right side of direction as price pushes away from an S/R level and in trading, that's almost the whole battle won or at least a good part of it.
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Stay calm, be brave, wait for the signs - Jasper Friendly Bear
  • #1,279
  • Oct 8, 2011 4:18pm Oct 8, 2011 4:18pm
wow...I dont know how you guys do this,so many indicators makes me nauseous. Im a firm believer if you still waiting on indicators to tell you when to get in and out, your not ready to trade yet.
Anything can happen in FOREX. There's no 100% sure
  • #1,280
  • Oct 8, 2011 4:40pm Oct 8, 2011 4:40pm
Quoting piptastic
wow...I dont know how you guys do this,so many indicators makes me nauseous. Im a firm believer if you still waiting on indicators to tell you when to get in and out, your not ready to trade yet.
Ahhh ...... a perfect example of how we all trade our own belief systems and that's what makes a market what it is.
Stay calm, be brave, wait for the signs - Jasper Friendly Bear
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