The Fractal Guru's Strategy
This Forex strategy known as "The Fractal Guru Strategy" consists of the following:
Chart : 15 minutes and more
Indicators : Average Directional Movement Index or ADX (Average Directional Movement Index) (Settings: 14) and Fractals .
The context of Fractals and the ADX
The ADX Indicator or Average Directional Movement Indexallows you a reading of how strong the market trends are. We will use this to our advantage and combine it with the Fractal Indicator to pick a high probability trade. These indicators can be found by default in your list of indicators on the Metatrader 4 trading platform of your online broker. Fractals show peaks and valleys. To put it more simply, an Up Arrow fractal is formed when there is a lower peak on both sides of a candle. A Down Arrow fractal forms when there are higher valleys or declines on both sides of the Japanese candle. Please note that fractals will only form when the candle closes with the given criteria of high lows or high lows on both sides.
Understanding the Fractal Guru's Strategy
When the ADX is trending as we see the blue line rise stable, we look for Fractals that enter the trend. We don't take all Fractals, only those with tails that point to the Fractal. Here are some examples that can help clarify:
Long positions (buy) using the Fractal Guru Strategy
- In the ADX, the green dotted line should be above the red dotted line, and the solid blue line should be growing steadily
- Look for a candle whose tail points to a Down Arrow Fractal
- When you see this Fractal Down Arrow, go long.
- Place stops 5 pips below the low Fractal candle.
- Exit using proper money management or by crossing the green and red dotted lines on the ADX.
Short (sell) positions using the Fractal Guru Strategy
- In the ADX, the red dotted line should be above the green dotted line, and the solid blue line should grow steadily
- Look for a candle with a tail pointing to an Up Arrow Fractal
- When you see this Up Arrow Fractal, go Short
- Place stops 5 pips above the high fractal candle
- Exit using proper money management or at the intersection of the green and red dotted lines on the ADX.