Fractals indicate natural resistance and support levels, which helps to identify good entry how to use fractals in forex trading and locate stop-loss points. Most importantly, fractals help me identify trends and ranges.
Fractals can be used effectively in forex trading, especially with the power of a mechanical trading system. USD currency pairs gives the best results. A fractal is a repetitive natural patternA fractal is a geometric shape or set of self-similar mathematical patterns found in nature. When broken into smaller pieces, fractal shapes exhibit the same shape or characteristics of the larger object. Likewise, many mineral and crystal forms exhibit similar patterns on both large and small scales. Price movements in marketplaces are often thought to be random and chaotic.
Yet, as with other seemingly-random forms found in nature, fractal patterns can be observed in price charts of forex pairs and other assets. Forex price movements show certain repetitive fractal patterns which can be profitably traded. Fractals used in forex trading may show the same form at every size scale, or they may show nearly the same form at different scales. Stated simply, in forex trading a fractal is a detailed, self-similar pattern that repeats itself, often many times over. The distinguishing characteristic of fractals in forex trading and elsewhere is their natural organic scaling when contrasted with ordinary geometric figures. For example, doubling the length of one side of an ordinary geometric square will scale the area of that figure by four, since the square has 2 sides, and 22 equals four. In contrast, when the one-dimensional lengths of a fractal are doubled, the space contained within that fractal scales up by a number that is not a whole integer.