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Sunday, August 22, 2010

Chaos Trading System by Bill Williams

I recently found out chaos system and read the books about it (by Bill Williams). I was convinced by the reading I tried the system for a while...

I seems worthable for me and I didn't find discussions here about this trading system and here it is:




Profitunity System

On the chart apply following tools
Alligator - Three SMAs (13/8/5) with a future offset of 8/5/3 respactively.
Fractals - 5 bars sequence where middle one has highest High / lowest Low and its preceded and followed two bars have lower highs / higher lows
preceded by two lower highs and is followed by two lower highs
Awesome Oscillator (AO) - difference between the 34-period and 5-period simple moving averages of the bar's midpoints (H+L)/2

To apply then into MetaTrader 4 platform use these menus
Alligator: Insert -> Indicators -> Bill Williams –> Alligator
Fractals: Insert -> Indicators -> Bill Williams –> Fractals
Awesome Oscillator: Insert -> Indicators -> Bill Williams –> Awesome Oscillator



Entry:
When (Alligator) lines are opening we put a buy stop one point above the most recent fractal outside of the lines in trend direction

Exit:
When (Alligator) lines are closing we are closing too.

we stay out of the market when and while lines are intertwining.

Adding:
After the first fractal is taken, we take any and every signal in that direction.

Adding Entry Signals:
AO:
  1. we go long when AO cross zero line from negative to positive values and short on the opposite scenario.
  2. we go long we have 3 consecutive AO bars above zero line last two having higher highs (i.e. AO pulls back for a while)
- opposite for sell

for short - reverse scenario
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