Bill Williams is a famous American trader known for his unique approach to the market that combined trading psychology and the Chaos Theory. Williams developed several technical indicators (Accelerator/Decelerator Oscillator, Alligator, Awesome Oscillator, Fractals, Gator Oscillator, and Market Facilitation Index). You can find these indicators in MetaTrader (click Insert, choose Indicators and then Bill Williams).
Bill Williams thinks that fundamental and technical analysis are not sufficient to provide for good trades because they don’t enable traders to see the market as it is: turbulent, nonlinear and chaotic.
Market structure according to Williams’s Theory
According to Williams, the market has a structure. To be successful, a trader has to understand this structure.
The market’s structure has 5 dimensions:
Fractal
Momentum
Acceleration/Deceleration
Zone
Balance line
According to Williams, it’s necessary to understand all dimensions of the market.
Markets have a fractal structure. That means they are made of shapes that can be in turn divided into smaller copies of themselves. Any decision a trader makes is a behavioral fractal. To trade with profit, one has to recognize the fractal behavior of large numbers of traders. This will enable a trader to forecast the direction of the market.
Traders shouldn’t think about the market’s chaos as something negative. Williams calls chaos a higher form of order, governed not by cause and effect, but by randomness. The market follows a path of least resistance, defined by a hidden structure, like the flow of a river depends on the underlying structure of the riverbed. A trader needs to learn the market’s structure, and trade according to it.
In addition, a trader needs to know their own “underlying structure” - the routines and daily habits that determine their approach to trading, their behavior, and their reactions to movements in the market.
Summary
A trader’s goal is to combine the knowledge of market structure with self-knowledge. Bill Williams named his approach “profitunity”. In his opinion, it’s important to stop doubting oneself and simply enjoy trading.
Get ready to find out how to use the indicators developed by Bill Williams for profit!