Fractal is an indicator of technical analysis of markets invented by Bill Williams. The author first described it in his book Trading Chaos. Williams' theories, which say that markets are something natural, existing within the framework of a single nature of things, have always had many opponents. Indeed, among other things, the author argues that markets do not obey statistical and / or mathematical rules, but rather empirical ones. And even the fact that Bill's theories have won a huge number of dissenting conservatives, many in the trading community believe in the effectiveness of the proposed approaches and are constantly used in trading. It is not for nothing that Williams opened his own school for the study of trading, and the trading tools developed by him are included in the standard equipment of programs for technical analysis and trading platforms.
A fractal is a part of an object that has the same shape as the entire object. The world around us is filled with them, so to speak, to the very top. Plants, landforms, snow, clouds - everything contains fractals.
Williams used a simple rule to identify fractals. There are two types of fractals on the charts of trading instruments: up and down. Each is calculated in five bars. If the middle bar forms a minimum or a maximum of the five, then the corresponding fractal is drawn. Many fractals can be found on any period of the chart. We also recommend reading NO Indicator Trading.
Fractals Fractals are an indicator that will become an irreplaceable assistant in any trading system. It doesn't matter how you trade: “intraday” or “long-term”, you will always need to identify price extremes, support and resistance levels, and so on. The indicator will be useful for trending strategies, for reversal strategies, for breakouts. In fact, it is difficult to come up with where it could not be used in one way or another. Think!