To
forecast the financial markets such as
Forex,
stock, commodities and futures markets,
market participants often rely on the Elliott wave patterns.
Nevertheless,
only few use
the predictive fractal patterns to forecast the market. This article
will help traders and investors to
discover
the power of fractal patterns in the financial markets. Today fractal pattern trading can no more be ignored.
What
Is
A Predictive
Fractal
Pattern?
It
is a chart pattern that duplicates itself on various time frames with
precision.
For
example, a specific fractal pattern may appear on the five minute, hourly and
daily charts. Though, its size may vary from one time frame to the
other, its shape, form and structure do not change.
The
predictive fractals
are originally developed by Mr Benoit Mandelbrot a
French American.
Though,
Mr Benoit Mandelbrot was not a financial market trader, his discovery
becomes a powerful tool to forecast the financial markets and predict
in real time the price-action.
In
this instance if a trader recognises a fractal patterns on various
time frames, he or she may forecast the next price action on a higher
time frame as soon as the same pattern begins
to form. Fractal trading is an advanced trading strategy.
Primary
Characteristics
Of
Predictive
Fractal
Patterns
1/ Fractal patterns maintain their structures on different time frames.
2/
Fractal patterns
reach their full shape on a lower time frame before the next higher
time frame.
3/
Their
form and shape do not change irrespective of the time frames they
appear on.
4/
Fractal patterns
attain bigger size on higher time frames in comparison to the lower
time frames.
5/
Fractal patterns
can
appear
on any time frame.
6/
It
is always easier to forecast the last part or portion of a predictive
fractal pattern.
7/
Predictive
fractal patterns
are completely different from the
normal fractals.
8/
Fractal patterns
are powerful tools in the arsenal of the best analysts who want to
forecast the financial markets with precision.
9/
They
are similar to Benoit Mandelbrot fractal patterns.
10/
Fractal patterns
are easily detectable by the advanced patterns recognition software
readily available today.
11/
The
first and unique fractal pattern often appear on a lower time frame
but not always.
12/
A predictive fractal pattern may also appear for the first time on a
higher time frame before duplicating itself on lower time
frames.
How
To
trade Predictive
Fractal
Patterns
1/
Example One
First,
one detects that a appears on two or three time
frames.
fifteen-minute
and four-hour charts. And in both cases the expanded flat correction
pattern is completed.
2/
Few months later, one discovers that the same pattern is under way on
the weekly chart but not yet completed.
For
example, the weekly chart only exhibits
a
double
retracement with almost the same structure like the ones
noted
on
the fifteen-minute and four-hour charts.
3/
As one already know the pattern's exact structure, one can easily
forecast
the
next price action with 70% precision.
Application
Of
Predictive
Fractal
Patterns
In
The
Financial
Markets
With
the advance of the electronic trading, and patterns recognition
software, it is now easier for traders to screen for
fractal
patterns. Indeed, a pattern recognition software can help find a
repeatable pattern on various time frames.
Elliott
wave traders use the predictive fractals to forecast the Elliott wave
cycle. By using the structure of the first and
second
Elliott wave, an Elliott practitioner can forecast the structure of
the whole motive wave and corrective phase.
It
is noted that the motive wave often duplicates the structure, form
and shape of the first Elliott wave, but the corrective
phase
duplicates the structures of the second wave. Indeed, those are
real
time applications
of the predictive fractals.
Whether,
one is dealing with the Fibonacci patterns such as Gartley,
butterfly, crab or bat pattern, one should be ready
to
spot the predictive fractal Fibonacci patterns on various time
frames. There is no limit to what traders can do with the predictive
fractal patterns. They are powerful, but one should take sufficient
time to master this topic.
Conclusion
The
predictive fractal patterns are truly the holy grail of
the financial markets forecasting tools.
It
is useful market prediction tool for day and swing traders as well as
position traders or investors.
Though,
it is not a scientific formula, it allows those who master it to have
a tremendous edge in the
financial
market. If there is truly a leading technical indicator, it has to
be the predictive fractal patterns.
Many
algorithmic trading software rely on the predictive fractal patterns.
Moreover, if there is a secret
about
successful financial market trading, it will be the predictive
fractals of Benoit Mandelbrot.
Now watch videos about fractals trading.
