Quote:
Originally Posted by RickW00716
I bought this book and it is GOLD!
I probably won't use all the patterns but the ones I have looked at seem to work very well.(Iuse some at sup/res areas)
Simba, I am curious about hte fractal pattern(5 bar)...one of the examples in the book doiesn't seem to match the description(page 68 to be exact)
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1-Rick,
You are right,the example is not absolutely 100% as per the definition...but it is a 5BF,I hope my next explanation will help
the 5 bar fractal is either a 2-3 or a 3-2 combination of higher highs and lower lows or lower lows and higher highs...It is an extremely visual pattern,very difficult to explain(unless you use the wide definition I just wrote) and code,but easy to recognize once you have seen several of them.
The important thing ,at least in my case,when I see a 5BF,as long as it meets the wide definition,is not to be strict with the definition,but to be absolutely disciplined with the rules for entry...so,lets explain the pattern(keep in mind my previous wide definition
)
1-A Fractal 5BF,consists of 5 bars,after a prolonged move.
2-After a down move a 5BF has 3 bars with higher highs and 2 bars with lower lows...or 2 bars with higher highs and 3 bars with lower lows
3.After an uomove a 5BF has 3 bars with lower lows and 2 bars with higher highs...or 2 bars with lower lows and 3 bars with higher highs
4-Rules for entry Short
4-1:After an upmove,wait for a 5BF to form(1,2,3,4,5 in the chart)
4-2:Wait for a new bar to CLOSE below the bar number 5 low:trigger bar(T in the chart)
4-3:Entry short below the LOW of the trigger bar(red entry line)
4-4:Place a stop order slightly above(3/5 pips +spread ) EITHER the HIGH of the Trigger bar OR the HIGH of the fractal formation
4-5:Target a major swing low prior to the fractal formation.
5-Rules for entry Long
5-1:After a downmove wait for a 5BF to form(1,2,3,4,5 at the bottom of the chart)
5-2:Wait for a new bar to Close above the bar number 5 High,trigger bar(T)
5-3:Entry long above the high of the trigger bar(red entry line)
5-4:Place a stop slightly below(3/5 pips)EITHER the LOW of the trigger bar or the LOW of the 5BF formation
5-5:Target a prior major swing high area.
I believe that a picture is worth a thousand words...so,please see attached chart.
2-Linuxser:Yes that would be a good idea