The Secret Mindset
Charts have fractal characteristics, which are the basic building blocks of price movements. Fractals indicate market turning points and every support or resistance formed starts with a fractal. Bill William introduced fractals in his book Trading Chaos. Fractals provide more reliable signals on higher time frames. To trade a fractal, you must wait for the fifth candle to complete before making a trading decision. Fractals can help identify at least a temporary level of support or resistance and help assess the potential direction of a price move. Fractals can also be used with moving averages or anchored VWAP to stay on the right side of the trend.
Understanding Market Fractals: A Guide to Correctly Trading Price Action
Introduction: Fractal Characteristics of Price Action Charts
– Importance of market fractals in trading
– Overview of the video’s content
What Are Market Fractals?
– Definition and basic concept of market fractals
– Indication of market turning points or swing points
– Bill William’s introduction of fractals in “Trading Chaos”
Identifying Fractal Formation
– Successive price bars and the third/middle bar as the highest high or lowest low
– Up fractal formation and down fractal formation
– Importance of fractal arrow only appearing above/below the third candlestick if it is the highest/lowest of the five bars
Reading Fractals for Trading Decisions
– “V” or “U” shaped bottom or top formation
– Temporary level of price support or price resistance
– Utilizing fractals to determine possible direction of price
– Need for filtering signals and evaluating fractal strength with other confluence factors
Fractals for Trend Continuation and Breakouts
– Utilizing fractals to assess potential direction of price movement
– Fractals’ relation to market trend and momentum
– Inability to break through previous fractal as hint for market consolidation or trend change
Fractals with Moving Average or VWAP
– Benefits of using moving average or anchored VWAP with fractals
– Dynamic level of support and resistance for staying on the right side of the trend
– Importance of longer-term traders supporting the move
Conclusion: Importance of Understanding and Properly Using Fractals
– Summary of video’s main points
– Final thoughts on market fractals as a reliable tool in trading.
