Fractals

Forex traders make money when currency rates change. However, the market remains stationary most of the time; there are trends only 15% to 30% of the time. Therefore, it’s important to know when a trend is likely to develop.

The Fractal pattern is one of five indicators developed by Bill Williams. It’s used to detect tops and bottoms in trends. It’s defined as follows:

  • It consists of at least five consecutive intervals
  • A buy Fractal occurs when the middle interval is the highest of the five intervals
  • A sell Fractal occurs when the middle interval is the lowest of the five intervals
Use the Alligator indicator to filter Fractal patterns:
  • Don’t buy if the Fractal is below the Alligator’s teeth
  • Don’t sell if the Fractal is above the Alligator’s teeth
Fractal signals remain in force as long as they are outside the Alligator’s mouth and no further Fractals have appeared.

Fractals

 
You can find more information about technical indicators in the MetaTrader 4 User Guide. Select Help > Help Topics > Analytics > Technical Indicators.