How to Trade the Forex Fractal Strategy in Olymp Trade.

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What is the Forex Fractal Strategy?

The Forex Fractal Strategy is a forex trading strategy that utilizes basic repeating patterns of the price of an asset called fractals to spot market entry points.

It may combine the use of fractals with other confirmatory analytical tools like the Alligator or any other for surer entry signals.

The Principle Behind the Forex Fractal Strategy.

As prices of an asset move, they will appear random and sometimes unpredictable.

So much that you may find difficulty telling where the price will move next especially where there is no apparent trend.

But did you know that prices actually move in repeating patterns that can be of so much use in predicting their direction if identified? 

The Forex Fractal Strategy helps in identifying those repeating patterns on the candlestick price patterns.

It makes a prediction of price movements easier and presents so many profitable trading opportunities.

As mentioned earlier, this strategy also utilizes basic repeating patterns of the price called fractals to spot market entry points.

Fractals in Olymp Trade MT4

But what are Fractals?

Fractals are 5-candlestick reversal patterns that occur repeatedly along with the price of an asset.

 
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No matter how chaotic the price of an asset seems, these patterns will always be forming and be identified after a close search.

Fractals are of two kinds. There are bearish reversal fractals and bullish reversal fractals. Bearish reversal fractals, as the name suggests hint to a downward reversal of the price which has been trending upward.

Bullish reversal fractals, on the other hand, point to an upward reversal of the price which has been trending downward.

Bearish reversal fractals will be formed by 5 consecutive candlesticks with the middle one having the highest high while the two candlesticks on the sides post progressively lower highs from the middle on each side.

The high of the second candlestick is higher than the high of the first while the middle candlestick has the highest high.

The fourth candlestick posts a high lower than that of the middle candlestick while the last candlestick posts a high lower than that of the fourth.

Bullish reversal fractals 

This fractal will be formed by 5 consecutive candlesticks with the middle one having the lowest low while the two candlesticks on the sides post progressively higher lows from the middle on each side.

The low of the second candlestick is lower than the low of the first while the middle candlestick has the lowest low.

The fourth candlestick posts a low higher than that of the middle candlestick while the last candlestick posts a low higher than that of the fourth.

After the complete formation of a bearish reversal fractal, the price will be expected to continue falling.

Conversely, after a complete formation of a bullish reversal fractal, the price is expected to continue rising.

Note also that the fractals described are the basic classical forms that may not form perfectly as described but some variants which adhere to the basic pattern will also be valid.

Here comes the challenge.

Will you keep your eyes so much glued on the price chart counting candlesticks and trying to spot fractals?

Definitely not.

The Olymp Trade MetaTrader 4 platform has a Fractal tool incorporated which you only have to apply to the price chart.

Fractals Indicator

The Fractal tool on the chart will be showing an upward pointing arrow above the middle candlestick of the bearish reversal fractal.

The tool will also be showing you a downward pointing arrow below the middle candlestick of the bullish reversal fractal.

Once the work of identifying fractals has been simplified this much, then yours is to wait for the two last candlesticks to form after the Fractal tool posts an arrow at the middle candlestick.

After the two last candlesticks form, the use of an additional confirmatory tool like the Alligator or Moving Averages is recommended to filter out fake signals.

Once a bearish reversal fractal has been formed and confirmed successfully by the Alligator or any other means, then the price will most likely truly keep falling.

On the other hand, once a bullish reversal fractal has been formed and successfully confirmed by the Alligator or other means, then the price will most likely keep rising.

That is the simple principle about the simple forex trading strategy – Fractal Strategy.

Trading the Forex Fractal Strategy in Olymp Trade.

Let us now make money trading the Forex Fractal Strategy. 

  1. Apply the Fractal tool on your price chart.
  2. Identify the Fractal Tool Signal.
  3. Wait for Fractal Completion.
  4. Confirm Price Reversal.
  5. Enter Buy or Sell Position.
  6. Adjust your Stop Loss.
  7. Adjust your Take Profit.

1. Fractal Tool.

The basic tool we are using in the Forex Fractal Strategy is the Fractal tool.

Choose it from the list of indicators available on the Olymp Trade MetaTrader 4 platform and apply it on your price chart.

You will also need to add a confirmatory tool like the Alligator or two Moving Averages of different periods. Any other confirmatory tool of your choice will also do.

2. Fractal Tool Signal.

The Fractal tool on the chart will be showing an upward pointing arrow above the middle candlestick of the bearish reversal fractal.

The tool will also be showing you a downward pointing arrow below the middle candlestick of the bullish reversal fractal.

Fractals in Olymp Trade MT4

3. Fractal Completion.

If the signal appeared on the third candlestick of the fractal in formation, allow the last two candlesticks of the fractal to form.

4. Price Reversal Confirmation.

If you identified a bearish reversal fractal, you will need to confirm that the price will truly keep falling.

This can be shown when all the moving averages of the alligator point downwards with those that had been above crossing over below the moving average.

If you used Moving Averages, a crossover of the short period Moving Average up down the long period Moving Average, then consider that a confirmation of the reversal.

If you identified a bullish reversal fractal, you will need to confirm that the price will truly keep rising.

This can be shown when all the moving averages of the alligator point upwards with those that had been below crossing over to be above.

If you used Moving Averages, a crossover of the short period Moving Average bottom up the long period Moving Average will confirm a bullish reversal.

You can use your own confirmatory tools other than the Alligator and Moving Averages too.

5. Opening a Buy or Sell Position with the fractal tool.

A confirmed bearish reversal fractal calls for a Sell position while a confirmed bullish reversal fractal calls for a Buy position.

6. Stop Loss.

The price will need space to move in your favor.

You need to identify a recent low to place your Buy position/Stop Loss and a recent high to place your Sell position/Stop Loss.

That way, the price can move freely, and given that the reversal was confirmed, it will most likely move in your favor.

7. Take Profit.

Proper Risk to Reward ratio will help here.

Consider how many Pips you have risked in your Stop Loss and adjust your Take Profit to a Risk to Reward Ratio of at most 1:5.

That way, you are not too aggressive or too conservative to make profits.

Conclusion.

Forex Fractal Strategy is, indeed one of the best forex trading strategies to use in Olymp Trade.

It is also very clear that it is a very simple forex trading strategy. Apply it on your Olymp Trade Forex Trading Account and enjoy the profits.

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*Risk warning:

The information provided does not constitute a recommendation to carry out transactions. When using this information, you are solely responsible for your decisions and assume all risks associated with the financial result of such transactions.
 

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