ABC of Breakout Trading with Fractal Pattern

Here we introduce ABC of Breakout Trading with Fractal Pattern. Fractal Pattern is the ultimate tool to predict Fractal Wave in the financial market. We are not talking about the Fractal indicator by Bill Williams. Fractal indicator does not adapt the fractal wave since the indicator is not alternating peak and trough in turn. However, we are talking about more like Elliott Wave pattern, which encompasses small waves inside bigger wave.

We call this big fractal wave made up from several mini waves as the Mother Wave. We call the mini waves inside the mother wave as child waves. In Fractal Pattern Scanner, detecting of highly probable breakout pattern is an automatic process. Hence, you will notified when the potential breakout pattern is detected. When the breakout pattern is detected, we need to understand what is the A, B, C to trade with breakout. A, B and C are all expressed as the number of bars for easy application in practice. We count the bars from the latest bar to backwards. For example, 2 bar ago in H1 timeframe means that it references the bar in 2 hours ago. Here is the brief description of A, B and C for trading breakout in terms of their time reference.

A:  Position of the origin (peak or trough) of the breakout: This is the important reference for breakout because this is the first fixed reference position before breakout happens.

B: the current position of breakout (peak or trough) after the profit was running for sometime.

C: Distance between origin of breakout and current position of breakout ( A-B =C)

Hence, with A, B and C, we have the following relationship of A – B = C.  A, B, C helps you to recognize if the signal is how fresh or mature for your trading. For example, if the distance C is small, it means that it is fresh and young opportunity to trade. If the distance C is large, it means that the breakout signal was running for some profit already.

For working example in H1 timeframe, 52 – 2 = 50 indicates that the origin of Breakout was 52 bar ago (i.e 52 hours ago) and current position of breakout is 2 bar ago (i.e. 2 hour ago). Hence, the distance C is 50 bar (50 hours.).

Up to this point, someone might question back why not using the actual breakout at the breakout level as the time reference ? Yes, it could be valid thinking. However, counting the actual breakout at the breakout level is fuzzy. Sometime, price might just touch the level, pull back for sometime and revisit the breakout level, etc. Around this area, all sort of things can happen. However, peak and trough before breakout happens provides the fixed reference point for the breakout.

We hope that with this simple article, you can understand how peak and trough analysis is connected to Breakout Trading. Please check the screenshot to find out ABC of breakout trading. The screenshot combines two screenshots. First screenshot shows when the breakout was just detected in EURUSD H1 timeframe. Second screenshot shows the breakout ran for profit for sometime in the same chart. You will find this is almost easy as ABC with the screenshot.

Here is the landing page to our  Fractal Pattern Scanner. With Fractal Pattern Scanner, all the breakout trading opportunity detection is automatic.

https://www.mql5.com/en/market/product/49170

https://www.mql5.com/en/market/product/49169

https://algotrading-investment.com/portfolio-item/fractal-pattern-scanner/

Breakout Trading and then Recommendation for Turning Point (i.e. reversal)

Fractal Pattern scanner will do a lot of complicated calculation at the background. However, it provides really simple trading operation for you. Hence, here is some explanation.

Firstly, the Mother Wave pattern (i.e. breakout patter) will provide you breakout trading opportunity. When the price crosses the breakout line, there is a good chance to catch profit from this breakout.

The good thing is that it also provides the potential reversal price level as soon as the breakout pattern is detected.

In summary, for your trading, you use breakout for the first profit opportunity, then you will use reversal for the second profit opportunity. However, if the market is too strong on breakout, then you can skip the second profit opportunity and just keep holding the first breakout opportunity.

That is it. Trading operation is simple. However, you can digest these articles for your trading.  You could become the professional trader, who can pull the profit from Fractal Pattern and Fractal Wave. You understand the principles of nature and you make profits from them. It is awesome things to do in the this world.

https://algotrading-investment.com/2020/05/24/fractal-pattern-scanner-trading-operation-tips/

https://algotrading-investment.com/2020/05/31/breakout-trading-or-reversal-trading/

https://algotrading-investment.com/2020/06/11/abc-of-breakout-trading-with-fractal-pattern/

Fractal Pattern Scanner Version 19.2 Ready to Download

So we have already mentioned the powerful update on our Fractal Pattern Scanner. So we just released this hot features on Version 19.2 of Fractal Pattern Scanner.

In version 19.2, Fractal Pattern Scanner will provide the following three information for the breakout signals.

Buy or sell breakout signal + status of breakout signal if the current price crossed or not crossed the breakout price level + origin of breakout price.

Then enjoy this powerful trading system for your trading.

Make sure to download the latest version for the maximum trading performance.

Breakout Trading and Reversal Trading

Breakout Trading and Reversal Trading are the two main trading strategy for the day trading community in Forex and Stock market. It is even better if you can spot these trading opportunity from Fractal Wave patterns. They will often show much clearer entry and exit for your trading in comparison to the slow lagging technical indicators.

With Fractal Pattern Scanner, you can use both Breakout Trading and Reversal Trading. If you prefer breakout trading over the reversal trading, then you should use the Fractal Pattern Scanner to detect breakout patterns. If you prefer the reversal trading over the breakout trading, then you can use the Fractal Pattern Scanner to detect reversal pattern.  Check the attached screenshot on how to switch from breakout trading to reversal trading and vice versa.

When you set Fractal Pattern Scanner to detect Breakout Pattern, it will detect the patterns at the low turning point probability. In the statistical sense, there is a good chance to have the turning point when the turning point probability is high. Hence, if we just reverse this logic, then we can tell that at low turning point probability, price can continue to move in the same direction as before. Hence, in the low turning point probability, we can often find good breakout trading opportunity. This is the core trading logic when you use Fractal Wave analysis in your breakout trading.

When you set Fractal Pattern Scanner to detect Reversal Pattern, it will detect the patterns at the high turning point probability. In the reversal pattern detection mode, the Fractal Pattern Scanner will try to detect the patterns that already run quite far in the same direction. Often the current price will be at the area of high turning point with multiple of ZigZag movement. With some knowledge in Fractal Wave analysis like Fibonacci Ratio, Harmonic Pattern or Elliott Wave pattern or X3 Price Pattern, you can spot the turning point more accurately.

With Fractal Pattern Scanner, just pick the best trading strategy works for you in between Breakout trading and reversal trading. Fractal Pattern Scanner can help you with both trading strategy.

In addition, we recommend you to spend a bit of time to understand the winning trading logic with the Geometric Prediction from the link below, just to perfect your trading skills.

https://algotrading-investment.com/2020/04/05/geometric-prediction-the-bible-for-successful-trading/

Fractal Pattern Scanner in MetaTrader 4 and MetaTrader 5 is the premium Scanner with all the latest prediction methods and Fractal Wave modelling algorithm.

You probably do not need our free Forex Market Prediction Service because Fractal Pattern Scanner provides more powerful features for your trading than our free Forex Market Prediction service.

However, our Free Forex Market Prediction Service might help you to use the Fractal Pattern Scanner better in terms of knowledge.

Hence, here you can have a look at how the Forex Market Prediction Service works to undestand some basics of Fractal Pattern Scanner.

https://algotrading-investment.com/2020/10/23/price-prediction-for-day-trading/

Turning Point Prediction for Forex Trading

Fractal Pattern Scanner provides the ability to predict the turning point in the financial market. In this article, we provide the practical guide line on how to use the provided turning point prediction for your day trading. The turning point prediction consists of two prediction types. The first one is the prediction of trough. In the trough prediction, we are trying to predict the possible bullish turning point while the price is falling. The second one is the prediction of Peak. In peak prediction, we are trying to predict the possible bearish turning point while the price is rising. The turning point prediction is useful because it tells us the complete story of the price series. For example, it will provide you the visual guidance of price movement + it will also provides the probability information. It is a true hybrid of statistical prediction and technical analysis.  As a trader, we can manage the entry and exit with the turning point prediction. Another advantage is that the probability provides us the opportunity for the second level of decision making. This is in fact the important part because many other technical indicator miss to provide the probability information, which we can use for the more advanced level of decision making. With ability to read these probability, practically we can use these turning point prediction to decide the price action in the financial market. They are the good predictor of the price movement assuming you are not misusing the probability information.

Here are the breakdown of the price action with the turning point prediction. We also provide the screenshot to explain each peak and trough cases with some visual aid. As you can see from the screenshot, we can respectively draw two price action for each peak and trough prediction.

When We Predict the Peak:

1. Possible bullish breakout trading opportunity at low probability area

2. Possible bearish reversal trading opportunity at high probability area

When We Predict the Trough:

1. Possible bearish breakout trading opportunity at low probability area

2. Possible bullish reversal trading opportunity at high probability area.

Probably, guessing of these price actions is so natural during the turning point prediction. The screenshot below is for you to confirm your understanding. If the term of peak and trough is not familiar to you, then google some physics articles explaining Peak and Trough in wave cycle. We are using the identical term here as we do not want to reinvent the wheel again. Once, you understand the cycle with peak and trough in those articles, it would be much easier to project the action items for your trading with this article too. In my opinion, the turning point prediction is in its unique position between the statistical prediction and technical analysis. Probably we can consider it as the hybrid of both world. We will recommend you enjoying this scientific advancement for your trading.

Applying Turing Point Prediction in Forex Market

In this article, we provide an explanation on how to apply the turning point prediction in Forex Market. Here we will be using Swing Size and Swing Age variable to identify the turning point probability for each price swing.

• Swing Age is the count of candle bars from latest bar to the swing right end.
• Swing Size is the count of candle bars from the swing right end to swing left end

As these two variable provides you the relative coordinate of the right end and left end of the price swing, you can locate the turning point value for each price swing. Check the screenshot to clarify your understanding.

In terms of application, the turning point prediction is useful as it quantifies your risk for trading between 0.0 and 1.0 (or 100%). Quantification in your trading is always good because you have something to stick as a guidance for your trading. When you do not have the guidance, you will often find that your emotion will ruin your trading.

There are two basic concepts in regards to the probability and some advanced concepts in regards to Mother Wave and Child Wave. For your own good, everyone should understand the basic concepts if you want to improve your trading performance in long run.

In the first basic concept, if the price reaches the turning point probability above 0.7 (or 70%), in this turning point probability range, you can look for the potential reversal opportunity. In another words, it is the good point to detect the directional change in the market. It could be either correction or global turning point.

In the second basic concept, if the price reaches the turning point probability between 0.0 and 0.5 (or 50%), you can find the good breakout opportunity. In another words, it is the good point to detect the continuation in the price movement. We will omit the advanced concepts here as it was already explained elsewhere.

What is the Fractal Decomposition Dimension parameter (2 or 4 only) in the Fractal Pattern Scanner?  In theory, any stock or forex symbol will end up one large fractal triangle (the fractal tirnalge in the bottom of the screenshot). Then such large fractal triangle can be breakdown to many smaller fractal triangles. If you increase Fractal Decomposition Dimension, then you will get more fractal cycle decomposed from the price series. In practice, you can probably use it up to 4 or less in Fractal Pattern Scanner due to the computation burden. You might use more cycles if you are using it as purely probabiilty machine. The recommended parameter is 2 for the operation.

We have made some review of this turning point prediction and fractal cycle analysis implemented in Fractal Pattern Scanner After two years of usage. 

You can read the full article here. If you are using Fractal Pattern Scanner, then you must read this article.

https://algotrading-investment.com/2022/05/30/turning-point-prediction-after-two-years-usage/

Fractal Pattern Scanner is the predictive tool that can be used for various purpose from predicting the market direction to the risk management. 

If you are using the old version of Fractal Pattern Scanner, then make sure to update to the latest version 21.8 of Fractal Pattern Scanner. 

Use the latest version for the best performance.