1/5: Determine the market direction

You should now know the key terms you need to start learning the beginner strategy. The first step is determining the overall market direction, which is the base for making the rest of your trading decisions.

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Use the fractals on the 30 minute chart to determine the market direction

Switch to the 30 minute time frame (M30).

How to switch to the 30 minute chart in MT4 Show instruction

Fractal

The image to the right shows a fractal. A fractal is a small triangle that is either plotted above or below a Japanese candlestick. When a fractal is plotted above a Japanese candlestick it is an up fractal and when it is plotted below a Japanese candlestick it is a down fractal.

You will use fractals throughout the beginner strategy, however it is very important to know that you should wait for two candles to close on the right side of the fractal to confirm that the fractal is valid. Until this has happened, completely ignore the fractal.

A broken fractal is an indication of market direction

Broken at the high

An up fractal breaks if a candle to the right of it has gone higher than the high price of the candle below that fractal. A down fractal breaks if a candle to the right of it has gone lower than the low price of the candle above that fractal.

Note: it is the immediate break of the high or low price of the candle at the fractal, not the fractal itself, that gives the indication.

In the image to the right, you can see that it is the high price below the fractal at number_1 that is broken by the candle to the right at number_2.

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The market direction depends on which type of fractal has broken last

In order to determine the market direction, find the last broken up fractal and the last broken down fractal. Determine which of these two fractals broke last. If the up fractal broke last, the market direction is up. If the down fractal broke last, the market direction is down.

Note: it does not matter where the actual fractal that is broken is located, what counts is the location of the point where it breaks. It is important to understand that it is the last break of a fractal that counts to determine the market direction, and not the fractal itself. Take a look at the following chart:

The last break of a fractal

You can see that there is a down fractal, shown as number_1 that has been broken. The break of this fractal is shown as number_2 – this is the break-point of the fractal. However, the last fractal to be broken is the up fractal shown as number_3, the break-point of this fractal is shown as number_4. This is the last break to happen of a fractal and because this fractal is an up fractal, the market direction is up.

You can break this down more easily into the following steps:

  1. Find the last break-point of an up fractall
  2. Find the last break-point of a down fractal

Whichever fractal broke last will be the market direction. So if the last break point was of an up fractal then the direction is up and vice versa.

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  • When i switch to 30 minutes chart it's saying "Waiting for update". And in the bottom right corner it says "No connection" even though ive put my login details correctly. Any help?
  • You might have entered the wrong login details or selected the wrong server. You can change it by clicking on the lower right of the MetaTrader 4 platform. If you continue to have problems, please post a screenshot in our software forum and we will do our best to help you out. Or contact the support of your broker. The brokers usually have very good customer service.
  • Waiting for update also.
    I have almost the same problem , it says "invalid account" down right although i think i log in correctly.
  • Hello,

    I've wanted to ask you why you use 30min time frame? Why not 1h, 4h? As the most commons are 15m, 1h, 4h, 1d. Just curious why 30m..
  • Hey BoyRobot777,

    The beginner strategy uses the concept of multiple time frame analysis. The 30 minute and the 5 minute work well together. They are close enough together to show an overall direction on one time frame and fine-tune an entry on another - but far enough apart to show valid pull-backs to enter the trend.
  • is there a reason why my charts are black? also, i cant see fractalls on my chart? really could do with software tutorials.....
  • ignore my questions above ^^, ive downloaded and installed the template. But still could do with tutorials, please.
  • Some 30m bars on my chart have both up and down fractals, should these be ignored?
  • Ho djrolphy,

    no, you should take them to account also smile

    If you have any doubts about it, please post your trades into our evaluation forum
  • Hi,
    maybe I haven't read instruction well enough but I'm confused... What defines the movement of market (up/down): is it the last fractile or candle? For exsample: if in the last picture 2nd candle to right from no:2 would have broken the down fractale, in which direction market would be going?
    Thanks in advance,
    "Noobie"
  • Scotty200480 I'm having the same problem that you were with fractals not showing and charts being black. Any tips on how you resolved it?
  • hpholly:
    Scotty200480 I'm having the same problem that you were with fractals not showing and charts being black. Any tips on how you resolved it?

    download & install pivot points + template as told in instructions.
  • Hi hpholly,

    As Claret advised to you, you should download and install tradimo template and pivot points. You can find them in our MT4 tutorials: Starter kit.

    To set up fractals, please see following guide, where you will find all important information: Setting up fractals in MetaTrader 4 (MT4)

    I hope that this will help. happy

    @Claret74: Thank you for being helpful, it´s really appreciated and it´s great to have you in our community. If you have a minute, feel free to introduce yourself here. Would be cool to know more about you. happy
  • Hi there! In case the market just opened, do I have to wait for a broken UP/DOWN fractal before I move-in with the next step?

    or

    Can we also consider the trading history from the past week?
  • Success! thanks for the detail
  • Hi 36bullets,

    I see that you are new here so why not to Introduce yourself to the rest of our community? happy

    Regarding your question, it´s better to wait for a new setup when you start your trading session after weekend. wink

    According to the strategy, the same principle should be applied after you have determined the market direction (M30). You switch to M5 chart and you are waiting for a pull-back -> always wait for a new fractal to appear and break.
  • Hi jkol2,

    how are you? happy

    As I can see this is your first post in our community and I hope you´re enjoying the site. If you have any questions, don´t hesitate to ask. Btw, why not to Introduce yourself as well?
  • I want to ask if one candle break both up and down fractal, should i wait new fractals form and break?
  • Hi yhy2008,

    You always seek for the last break of fractal so when one candle breaks both fractals take into consideration the very last action. If you are not sure which break of a fractal came last I would recommend you to wait for another confirmation. But this situation should not occur very often. happy

    Do you like the Beginner strategy?

    By the way, welcome to the community, I see that this is your very first post. If you want to feel free to Introduce yourself to us. We will be very happy if you do so. smile

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