Fractals are a popular technical analysis tool used by many forex traders. They are a type of indicator that can help identify potential market reversals by highlighting key levels of support and resistance. In this article, we will explore where to get fractals in forex charts and how to use them in your trading.
Fractals were first introduced by Bill Williams in his book Trading Chaos. The concept behind fractals is based on the theory that markets are fractal in nature, meaning that they exhibit similar patterns at different scales. A fractal is a pattern that repeats itself at different scales, and in the case of forex trading, these patterns can be used to identify potential trade setups.
There are several ways to get fractals in forex charts. One popular way is to use the built-in fractal indicator that is available on most trading platforms. This indicator is usually located in the “indicators” tab and can be added to your chart with just a few clicks.
Once you have added the fractal indicator to your chart, it will display fractal arrows above or below the price bars. These arrows represent potential reversal points in the market. A fractal buy arrow is shown when the highest high of the previous five bars is higher than the highest high of the two bars before that. A fractal sell arrow is shown when the lowest low of the previous five bars is lower than the lowest low of the two bars before that.
Another way to get fractals in forex charts is to draw them manually. This method requires a bit more skill and experience, but it can be more accurate in certain situations. To draw a fractal manually, you need to identify the previous swing high or low and draw a horizontal line through it. If the price breaks through this level, it could be a potential reversal point.
Fractals can be used in a variety of ways in forex trading. One of the most common ways is to use them as part of a breakout strategy. When a fractal buy or sell arrow appears, it can indicate a potential breakout in that direction. Traders can then place a buy or sell order above or below the fractal level, depending on the direction of the arrow.
Fractals can also be used to identify key levels of support and resistance. When a fractal appears at a previous swing high or low, it can indicate that this level is significant and could act as a support or resistance level in the future. Traders can use this information to place buy or sell orders at these levels or to set stop-loss orders to protect their trades.
In conclusion, fractals are a powerful tool for forex traders that can help identify potential market reversals and key levels of support and resistance. They can be easily added to your trading platform and used in a variety of trading strategies. Whether you use the built-in indicator or draw them manually, fractals can provide valuable information to help you make better trading decisions.
