Fractal is a geometrical figure which is defined by repetitive patterns. Fractals on the Binomo platform are exactly this, the patterns that occur again and again. On this basis, it is possible to identify important points in your trading. So let’s see how it works.
Preparations for trading with Fractals on Binomo
Log in to your Binomo trading account. Choose the asset and the timeframe. Then, click on the Trading instruments icon and find Fractals on the unfolded indicators list. After you click on it, the settings will appear. Leave them as a default for the beginning. Fractals arrows will be drawn on your chart.
How the Fractal pattern is built
5 candles form the Fractal pattern. On the price chart, you will notice the arrows. They will show up below, or above, the candle in the middle of the pattern. This candle is the low or high of the pattern.
A fractal low occurs when the candle with the lowest low has two candles with a higher low on each side.
A fractal high occurs when the candle with the highest high has two candles with a lower high on each side.
To catch the pattern you need to observe the candles. Find a low point on the chart. Check whether there were two higher lows before it. Now, wait for what candle will develop next. Two higher lows will confirm the pattern.
The same with the highs. When you identify a high point and there were two lower highs preceding, you might assume this is your pattern. Just wait for the confirmation in the form of two lower highs after your point.
A default period of Fractals is 5. You can, however, choose to change its parameters in indicator settings. Instead of the default 5, the indicator can be set to several other periods. The period will always be odd. Fractals are prominent points on the graph and have reference points on both sides. I present other periods of fractals in the picture below.
Trading with Fractals on the Binomo platform
Fractals appear quite often. There will be many arrows visible on the price chart. These arrows indicate lows and highs. But they do not necessarily tell you to open a trading position. You should always wait for the confirmation of the Fractal pattern that is for two candles that develop after the low or high. When the pattern is validated, open the transaction at the beginning of the third candle after candle with the arrow.
The pattern forms a letter U on the chart. A shape is upside down in the case of the bearish fractal pattern. It helps to forecast the change in the price direction. Therefore, you may open a long transaction when you spot the bullish pattern in the U-shape. Enter a short trade when the bearish Fractal pattern has formed.
There is also another way to trade with Fractals. You will have to look for the moments where the price closes over the fractal high or beneath the low. Consider the chart below.
Look at the up arrows. Observe the price and catch the point when it closes over one of the fractal highs. I drew a line to show you such a point. Here, you can open a long position. Keep it open for around 3 minutes.
If you wish to open a position for the price decrease, you will have to wait for a candle to close beneath the fractal low. We expect the prices to go down so you may open a short transaction for a duration of 3 minutes.
Final words
Fractals are repetitive patterns on the chart. When you add them to your chart, there will be many arrows drawn. They indicate low and high points. On this basis, you can identify the pattern and discover the entry points for your trades.
Remember, that the arrow shows only the low or high and not the entry point. You have to always wait for two more candles to be sure there is the fractal pattern created.
It could be a good idea to use an extra tool to confirm your predictions. You may, for example, support yourself with additional trend analysis or pivot points.
Check how you like trading with Fractals on the Binomo demo account. It is available for free and provides an excellent place to practice new trading techniques.
Wish you success!