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Monday, February 26, 2024

Forex Trading Guide 2021: Profitunity Strategy for Alligators and Fractals

The Profitunity strategy is a popular and well-known trading system described by Bill Williams. Let’s consider this strategy using the Alligator indicator and fractals. When working with Alligators, the following principles are used: when the Alligator is “sleeping”, we are out of the market and wait for the Alligator to “wake up”. When the Alligator “opened its mouth”, it is “hungry” and, accordingly, you can start trading.

Technically, a fractal is a sequential series of at least five bars, where the bar with the highest price is preceded by 2 bars with the lower one and, accordingly, the same bars with the lowest price are located after it.

Only the maximum price values ​​of the bars should be used for buying, and only the minimum for selling. Almost all modern programs have a built-in automatic indicator for determining fractals and displaying them on the chart. This saves time when looking for fractals on a price chart.

The principle of strategy

Opening long positions: The Alligator should wake up and “open its mouth” upwards, that is, the green and red lines of the indicator should cross the blue line from the bottom up.

After that, we find a buy fractal located above the red line of the Alligator, the so-called balance line. The found fractal will serve as a market entry level. That is, when the price moves up and the level of this fractal is broken, a long position should be opened. And as long as the Alligator is “hungry” and the price moves above the level of the selected fractal, we can increase the number of buy positions.

As the trend moves, new fractals with buy signals will appear on the chart. Their level can also be used when opening new positions to increase profits.

Apply this same strategy to a sale. The Alligator indicator should open its mouth down. Next, find a sell fractal below the red balance line. After the breakdown of the level of the found fractal down, open a short position until the Alligator is “hungry”.

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