Fractal indicators for MT4 [+ download without redrawing and delay]
The fractal indicator in the foreign exchange market is quite popular, it is represented in a large number of modifications of technical instruments, each of which is based on the same principle - the use of certain formations in the analysis to determine local price highs and lows. It was created by Bill Williams - a famous successful trader.
A fractal is a sequence of five candles, where the third candlestick represents an extremum, and to the left and to the right of it are the other two pairs of candles, together creating a depression or apex. But this is ideal, in real trading, groups can be different, candlestick combinations are often intertwined, but the basic principle remains the same - the presence of a formation of 5 elements and an extremum point.
The use of fractals in trade
This type of figures is a universal tool for technical analysis, therefore indicators based on fractals are actively used in trade in combination with other means.
This type of figures is used for:
1) Identification of horizontal levels - here they are used in the format of a breakdown trading system. Entrance to the buy transaction is carried out after the candle is closed above the last upper fractal, for sale - below the extreme lower. The main goals in this case are to search for the nearest level, stop loss for sale is set at the level of the previous lower figure, for purchase - at the top.
2) Connection of trend lines - when formations appear on the chart, they help to look for important lows and highs through which trend lines are built.
3) Confirmation of the trend - the upward trend is characterized by the appearance of bullish fractals, the downward trend is bearish. When the value cannot break through the previous fractal several times, there is a possibility of the beginning of consolidation.
4) Definition of a flat - when the price is not able to overcome the previous formation, this may indicate the beginning of a side trend. To confirm this, they are waiting for the formation of the opposite figure, if it also does not manage to break through the past fractal, we can predict a flat between the lower and upper fractals, which will end as soon as the price breaks one of the levels.
When studying the indicator description, you need to remember certain features. This type of chart is a lagging analysis tool, so it is best to use it as a confirmation of other trading strategy tools. The higher the timeframe, the more reliable the generated signals will be, but the smaller their number will appear.
Using a technical tool and its options
It is practically impossible to find the fractal indicator without redrawing, because in the process of changing the price of the formation, the formations are constantly changing, candles create new and new shapes from which you can isolate the ones you need, and with the advent of a new candle the overall picture may become completely different. Given that even without a delay, the tool rarely works, since it draws figures already on the basis of formed candles, it is advisable to use it in combination with other analysis methods.
In the process of trading, a trader is given a lot of signals, not all of them are correct. For filtering, the author Bill Williams created another indicator - “Alligator”, which is also presented in the standard set of MT4 terminal.
An “alligator” is drawn in the format of several lines, the color and interweaving of which can provide important information about the movement of prices. So, with an uptrend, you can observe the interweaving of curves in the sequence "green / red / blue", downward - "blue / red / green". If the lines are intertwined, a flat reigns in the market or a trend changes. When an uptrend has formed, only buy signals are considered, if a downtrend is only a sell signal.
Here are some more strategies for this site using Fractals as an example:
1) Breakdown fractal ⇒
2) Alligator and Fractals ⇒
3) Simple fractal strategy ⇒
Varieties of fractal indicators:
- Fractals - standard for the MetaTrader4 / 5 trading terminal: draws shapes by pointing with arrows.
- Fractals Priсe - draws the maximum and minimum price values on the chart; it is convenient for determining the location of stop loss.
- Ind-Fractals - shows on the chart the values of the figures simultaneously for several time periods and paints them in different colors.
- Fractal-Channel - displays channel lines by connecting the maximum values of the formation above and the minimum below, makes the movement of quotes for analysis visual. It works with an alert, giving an audio signal at the moment of breaking one of the channel boundaries.
- X-bars Fractals - the indicator differs from the usual one in that it makes it possible to build figures with any number of bars on both sides of the main one, create asymmetric figures by indicating a different number of bars to the right and left of the extremum.
Formation Setup and Parameters
The internal settings of the Fractal indicator are set as standard and it is impossible to change them. But it is possible to change the external parameters: the color of the up / down arrows, set the thickness of the lines, indicate the visibility of the arrows in the selected period.
Additional options with settings are offered by fractal-based tools that are not included in the standard terminal set, which can be downloaded for free on the network.
Before starting work, it is better to test the tool on historical data. To do this, it is enough to take the quotes archive and simulate the indicator operation for a certain time period, evaluating the quality of the signals fed, creating a work strategy, analyzing the created resistance / support levels, etc. The fractal indicator for binary options works the same way as for Forex, giving the same signals and being used for similar purposes.
Key principles to consider in fractal analysis:
- To fix the figure, it is not necessary 5 candles at all (there may be more of them), but the average should be with the lowest or highest point.
- Local extrema following before and after the middle candle should not always go down or rise sequentially, but should not exceed the average extreme.
- If in combination there are two identical extremes that are superior to the others, only the first one is taken into account.
Everyone knows that the creator of the indicator was Bill Williams, but there is a term such as the “Mandelbrot fractal”,
because the real author of the concept (figure) itself, the creator of fractal geometry was a famous mathematician. In this case, we are talking about the initial element of nonlinearity - like the golden ratio, Fibonacci patterns, fractals are proof of the similarity of different market processes.
The technical tool allows you to open positions with maximum chances after the figure is confirmed. In short periods, usually a deal is opened immediately and in the opposite direction. The main objective of the tool is to determine market movement.