Wednesday, December 26, 2007

Chaos Trading System by Bill Williams, PhD



Let's trade with chaos:

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
Acceleration Oscillator (AC) - difference between 5/34 momentum histogram (AO) and a 5-bar simple moving average on the AO

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
Acceleration Oscillator: Insert -> Indicators -> Bill Williams –> Acceleration 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

AC:
  1. Go long after two consecutive bars above zero line
  2. Go long after three consecutive bars below zero line
-for short - reverse scenario

QQE (The strength Indicator (SI) or QQE-Value: Smoothing 5):

  1. we go long when QQE cross over the 50 lines upwards and short on the opposite scenario. If 1hr QQE iw way above the 50 line by the time QQE get across over confirmation from 4hr, which means a major retracement is due. Please wait until 1hr QQE turn bearish and go back to bullish again to enter.


References:
http://www.profitunity.com/
http://trading-chaos.blogspot.com/2007/05/chaos-trading-system.html
http://www.forexfactory.com/showthread.php?t=26044
http://www.pnwenterprises.com/auslanco/4-1strategy.htm
http://www.forexfactory.com/showthread.php?t=40582

1 comment:

moneyceo said...

Chaos Trading is Mainly About your inner trader. Only 10% about the 3 wiseman. I would like to share my article on the Inner Trader in my Blog.

http://moneyceo.blogspot.com