The Fractal Guru Strategy – Too Confusing for Newbies?
Full Review of The Fractal Guru Strategy for Binary Options
To be honest I don’t really know what’s up with the name of the strategy and I usually walk away when I hear stuff like “Guru”, “Expert” or anything along those lines. Well, I decided to give the strategy a go and try it out on my Meta Trader 4 charts. The main reasons why I didn’t dismiss it from the start was because it uses ADX (I am sure you remember the article where ADX is thoroughly explained), Fractals (don’t worry, I will explain them here) and Japanese candlesticks. The strategy is created by a guy named Navin Prithyani and can be found here //forex-strategies-revealed/basic/fractal-guru-strategy, but I will try to explain it in more detail. First, a few words about Fractals:
What are Fractals?
The Fractals used in trading are part of a strategy created by Bill Williams and are different from the Fractals used in mathematics. I am not going to explain them in full detail, because that is not necessary for this strategy, but what you need to know is that a bearish Fractal is actually a 5 candle formation and it is formed when the high of the middle candle is higher than the highs of the two candles to the left and the two on the right. A bullish Fractal is a five candle formation with the low of the middle candle being lower than the lows of the other four candlesplicated? Here’s the picture:
Above we have a bullish (a bearish one is the exact opposite) Fractal formation and although they might seem difficult to identify at first, let me assure you that it’s actually very simple because the grey arrow seen below the middle candle will appear automatically whenever a Fractal is identified by the Fractal indicator…yes, there is an indicator that helps us. After all, it’s the third millennium so an indicator for Fractals is not such a complicated task.
The Meta Trader 4 platform has both Fractals and ADX indicators built in, so you will easily find them by clicking on Insert – Indicators – Trend – Average Directional Movement Index (for the ADX) and Insert – Indicators – Bill Williams – Fractals to display Fractals on your charts. One thing you have to remember: the Fractal is a 5 candle formation so until the fifth candle is not closed, the arrow can disappear. Any trade will be entered on the opening of the third candle after the one where the Fractal appeared. Ok, enough about this, I don’t want to bore you so let’s get to the good part:
How to use the “Fractal Guru Strategy”
The strategy is relies heavily on the ADX and we only take Calls when the ADX is rising, the Green dotted line is above the Red dotted line and a complete Fractal appears (all 5 candles are closed). As an extra precaution, we only trade if the candle corresponding to the Fractal arrow has a long wick pointing towards the Fractal and a short wick on the other side. A picture will make things clearer:
The picture above explains a valid Call entry according to the strategy and for a Put, the opposite applies, except the ADX blue line: that must be rising, just like in the case of a Call because it (the Blue line) shows the strength of a move, not its direction. Here’s a brief summary of both Call and Put entries: