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Forex Forum → Forex Strategies → Base strategy - Fractal, Bar Closin EURUSD 1Day

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Posts: 8

Topic: Base strategy - Fractal, Bar Closin EURUSD 1Day

This strategy is simple enough to be used as a basis for further improvement.
Its logic is suitable for manual trading with all broker's platform.

Forex Strategy Builder v2.5.2.0
Strategy name: New
Exported on: 8/9/2007 7:45:47 PM

Market: EURUSD 1 Day
Spread: 4 pips
Swap Number: 1 pip

Intrabar scanning: Not accomplished
Interpolation method: Pessimistic scenario
Ambiguous bars: 1
Tested bars: 4741
Balance: 6187 pips
Minimum account: -125 pips
Maximum drawdown: 386 pips
Time in position: 13 %

A same direction signal - Does nothing
An opposite direction signal - Does nothing

[Opening point of the position]
Fractal
     Enter long at Fractal Up
     Is it visible  -  Yes

[Closing point of the position]
Bar Closing
     Exit the market at the end of the bar
     Base price  -  Close

Re: Base strategy - Fractal, Bar Closin EURUSD 1Day

Thank you for sending this. I take it the Fractal can appear and disappear on a bar several times during the day, and this strategy takes an entry when the fractal appears and exits at the end of the day, correct?

Popov wrote:

This strategy is simple enough to be used as a basis for further improvement.
Its logic is suitable for manual trading with all broker's platform.

Forex Strategy Builder v2.5.2.0
Strategy name: New
Exported on: 8/9/2007 7:45:47 PM

Market: EURUSD 1 Day
Spread: 4 pips
Swap Number: 1 pip

Intrabar scanning: Not accomplished
Interpolation method: Pessimistic scenario
Ambiguous bars: 1
Tested bars: 4741
Balance: 6187 pips
Minimum account: -125 pips
Maximum drawdown: 386 pips
Time in position: 13 %

A same direction signal - Does nothing
An opposite direction signal - Does nothing

[Opening point of the position]
Fractal
     Enter long at Fractal Up
     Is it visible  -  Yes

[Closing point of the position]
Bar Closing
     Exit the market at the end of the bar
     Base price  -  Close

http://gallery.forexsb.com/strategies/i … eurusd.png

Re: Base strategy - Fractal, Bar Closin EURUSD 1Day

It is not exactly that

I take it the Fractal can appear and disappear on a bar several times during the day

The fractal consists of minimum 5 accomplished bars. FSB draws the fractal level not earlier than the sixth bar, so a fractal cannot appear / disappear during a day. This is in direct connection with the safe trade and analysis. Some other platforms start plotting the fractal level when a new pick (bottom) appears during the current bar, but I think this is wrong, because the fractal will be accomplished after next two bars.

The fractal level shown from FSB is constant do not depends from the current bar price change. You can find more info into other topics.

Well, this strategy means that you enter the market when the price touches the fractal level. There is no averaging of the position.

A same direction signal - Does nothing
An opposite direction signal - Does nothing

Close the position at the and of the bar. (for this strategy - end of the day)

Re: Base strategy - Fractal, Bar Closin EURUSD 1Day

OK thank you for this answer, but now I must ask how to actually trade this then? For instance, MT4 has a "fractal" indicator, does this work acceptably for your strategy test results? Or how do we turn the results listed for this system into actual trading? Do we enter a limit order at the previous bars fractal level, and when it is touched we have entered the market and we close at the end of the day?

Popov wrote:

It is not exactly that

I take it the Fractal can appear and disappear on a bar several times during the day

The fractal consists of minimum 5 accomplished bars. FSB draws the fractal level not earlier than the sixth bar, so a fractal cannot appear / disappear during a day. This is in direct connection with the safe trade and analysis. Some other platforms start plotting the fractal level when a new pick (bottom) appear during the current bar, but I think this is wrong, because the fractal will be accomplished after next two bars.

The fractal level shown from FSB is constant do not depends from the current bar price change. You can find more info into other topics.

Well, this strategy means that you enter the market when the price touches the fractal level. There is no averaging of the position.

A same direction signal - Does nothing
An opposite direction signal - Does nothing

Close the position at the and of the bar. (for this strategy - end of the day)

Re: Base strategy - Fractal, Bar Closin EURUSD 1Day

This is a char from Meta Trader - EURUSD 1Day

http://forexsb.com/img1/fractals_mt.png

There are two fractals:
Fractal Up - 1.3837 and Fractal Down - 1.3606

The current price is 1.3693

To trade this strategy you have to set:
Pending order Buy, Stop 1.3837
Pending order Sell, Stop 1.3606

This orders have to be valid till the end of the period (the end of the day in this case)

If one of them have been executed you have to cancel the other order.
These orders are called OCO (the One Cancels the Other)
Some brokers allow this to be done automatically.

In case of opening a position you have to close it at the end of the day.

This is the exact application of the mentioned strategy.
But, I DO NOT ENCOURAGE YOU TO TRADE IT. If you do this you take the risk from eventual loss and the responsibility alone.

This is a demo for a basic strategy and it needs of refining with additional filters.
This strategy do not have a Stop Loss protection.

ps.
Do you see the fractal down at 1.3745. This fractal is not visible from the current bar. If you want to include it in a strategy you have to leave the check-box "Is it visible" empty (in the fractal properties window).

Re: Base strategy - Fractal, Bar Closin EURUSD 1Day

This makes perfect sense now, thank you for the explanation. I never trade any system live until extensive back and forward testing.

Do you know if there are any "complete" systems on here? I couldn't find any posted in the user strategy section.

Popov wrote:

This is a char from Meta Trader - EURUSD 1Day

http://forexsb.com/img1/fractals_mt.png

There two fractals:
Fractal Up - 1.3837 and Fractal Down - 1.3606

The current price is 1.3693

To trade this strategy you have to set:
Pending order Buy, Stop 1.3837
Pending order Sell, Stop 1.3606

This orders have to be valid till the end of the period (the end of the day in this case)

If one of them have been executed you have to cancel the other order.
This orders are called OCO (the One Cancels the Other)
Some brokers allow this to be done automatically.

In case of opening a position you have to close it at the end of the day.

This is the exact application of the mentioned strategy.
But, I DO NOT ENCOURAGE YOU TO TRADE IT. If you do this you take the risk from eventual loss and the responsibility alone.

This is a demo for a basic strategy and it needs of refining with additional filters.
This strategy do not have a Stop Loss protection.

ps.
Do you see the fractal down at 1.3745. This fractal is not visible from the current bar. If you want to include it in a strategy you have to leave the check-box "Is it visible" empty (in the fractal properties window).

Re: Base strategy - Fractal, Bar Closin EURUSD 1Day

As I said, I posted this on the forums I am on, and here are some questions I got. Can you answer these if you have time?

"So from the screen shot in the attachment,  I assume you are using the 1 day time frame.  I set it up with just the basic Fractal indicator that comes with interbankfx MT4.  Is this the appropriate setup?     


Also according to your rules,   "When up fractal appears, go long"   you do it immediatly when the little fractal pops onto the screen,   you dont wait to make sure it stays or anything.

according to my charts,  you only trade once every 3-7 days approximatly.

Is this all correct?"

Thank you.

Re: Base strategy - Fractal, Bar Closin EURUSD 1Day

Ok. Let start one by one.

1.

I assume you are using the 1 day time frame.

It is right. You can see this here:

Market: EURUSD 1 Day
Spread: 4 pips
Swap Number: 1 pip

2.

I set it up with just the basic Fractal indicator that comes with interbankfx MT4.  Is this the appropriate setup?

I think so.
There is more info about how FSB calculates fractals in this post.
This posting describes the same strategy also.

3.

Also according to your rules, "When up fractal appears, go long"

Yes. It is correct.
The entry is determined from the "Opening point of the position" slot only.
There are no additional conditions.
We enter long or short every time when the price touches a fractal's top or bottom.

4.

you do it immediately when the little fractal pops onto the screen, you don't wait to make sure it stays or anything.

As I wrote before, FSB plots (calculates) a fractal when it is accomplished. It cannot appear and disappear. It is of great importance for the back test whether we have reliable information about the indicators' values when making a deal. 

Example:
bar No 1 Highest price - 1.0010
bar No 2 Highest price - 1.0020
bar No 3 Highest price - 1.0030 <-- the top of a fractal up
bar No 4 Highest price - 1.0025
bar No 5 Highest price - 1.0015 <-- the current bar (not accomplished yet)

In this case MT plots a Fractal UP if the current highest price stays below 1.0030, but if the price advances above this level the fractal disappears.
This is not reliable behavior (According to me of course)
A fractal consists of minimum 5 accomplished bars. Before the end of bar No 5 we ARE NOT SURE about this fractal.
We have to trade after the end of bar 5. In bar 6 we are 100% sure if there is a fractal or there isn't.

To apply this strategy you have to point a fractal's top/bottom that is minimum at the third bar behind the current bar. Safety first!!! :-)

5.

according to my charts,  you only trade once every 3-7 days approximately.

As we can see the example, we have 1 - 2 deals per week.

"Time in position: 13 %"

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