If It’s Not Fractal, It’s Fragile
Wikipedia defines fractal as “a natural phenomenon or a mathematical set that exhibits a repeating pattern that displays at every scale.” For our purposes, a fractal system or indicator is one that can be used on any instrument, time (or tick) frame or bar type. For example, see the following charts. Click on them to enlarge. The first chart is EURUSD 610 Tick:
The next chart is GC Weekly:
The next chart is AAPL 7 Range:
The next chart is ES 4 Renko:
As you can see, all the indicators provide the same functionality regardless of the instrument, time frame or bar type, and regardless of whether you’re trading Forex, futures or stocks. Why is this important? First, reliability. Knowing that an indicator or system is fractal allows you to utilize it any time with confidence that it will function properly. Second, accuracy. With fractal indicators, you are assured of consistent accuracy regardless of the chart upon which they are utilized.
If you trade with a system or indicators that can only be used on certain charts or instruments, you may be wondering why it’s important whether your system can be used on other charts or instruments. The answer lies in taking advantage of the market’s multidimensionality. As described in detail in a recent blog post Using the Market’s Multidimensionality to Your Advantage, if you’re not utilizing multiple time frames, you’re missing valuable information that could significantly affect your trading results. In essence, you’re trading with blinders on.
Yet, so many traders buy into and use non-fractal limited systems and indicators, and their trading results suffer. Several systems out there tout the use of renko bars only. Sure, renko bars can be useful. But, by themselves, you’re not getting the whole picture. You wouldn’t try to land a plane with most of the windows and gages covered up, so why would you put your hard-earned cash at risk without a fractal system? Information is power, and fractal systems provide you with the information you need to make accurate, precise trades. That’s why at Stealth Traders, our system and indicators are fractal. And, you can try them free for 7 days so you can see the difference for yourself.