Post questions answers for anything related to trade setups and systems
07/07/2010 09:56:48
Tom Leeson
Administrator
Posts: 662
|
What Are Fractals?
Most traders refer to fractals in a more literal sense. That is, as recurring patterns that can predict reversals among larger, more chaotic price movements.
The rules for identifying fractals are as follows: A bearish turning point occurs when there is a pattern with the highest high in the middle and two lower highs on each side. A bullish turning point occurs when there is a pattern with the lowest low in the middle and two higher lows on each side.
The obvious drawback here is that fractals are lagging indicators - that is, a fractal can't be drawn until we are two days into the reversal. While this may be true, most significant reversals last many more bars, so most of the trend will remain intact (as we will see in the example below).
http://www.investopedia.com/articles/trading/06/Fractals.asp?partner=answers
edited by tom on 07/07/2010
--
MicroTrends tom
|
|
0
• permalink
|
Powered by AspNetForum 7.0.1.0
© 2006-2011 Jitbit Software