What the fractals indicator shows
The fractals indicator is a Bill Williams tool that marks local turning points with small arrows.
- Up fractal: an arrow above a bar whose high is higher than the highs of the bars around it. This is a swing high.
- Down fractal: an arrow below a bar whose low is lower than the lows of the bars around it. This is a swing low.
The standard version is often called a five-bar pattern: a middle bar with neighbouring bars on each side. The indicator does not predict a reversal. It shows where price turned in a small window of bars.
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Formula and default settings
Call the middle bar the centre bar.
- Up fractal: the high of the centre bar is greater than the high of every neighbouring bar on the left and on the right.
- Down fractal: the low of the centre bar is lower than the low of every neighbouring bar on the left and on the right.
The built-in MetaTrader version uses a fixed window and has no period setting. You can change only the colours and the arrow style. Custom versions let you widen the window. A wider window gives fewer marks at more significant swings, but each mark appears later. A narrower window gives more marks, and more of them are noise.
How to add fractals in MT4 and MT5
In both MetaTrader 4 and MetaTrader 5, open the chart and choose Insert, then Indicators, then Bill Williams, then Fractals. Confirm the dialog and the arrows appear on the chart. The same menu path works in most MetaTrader builds. Some web versions place indicators in a toolbar list instead.
How to read it: a drawn example
The sketch below is illustrative and uses no real prices.
How to use fractals when reading a chart:
- Treat the most recent up fractal as the latest confirmed swing high, and the most recent down fractal as the latest confirmed swing low.
- A series of higher up fractals and higher down fractals describes an uptrend. Lower ones on both sides describe a downtrend. See market structure.
- A close beyond a recent fractal shows that the previous swing has been broken. On its own, this does not tell you whether the move will continue. See breakouts and false breakouts.
Typical uses in a fractals strategy
- Reference levels. Fractal highs and lows act as candidate support and resistance levels.
- Stop placement. Some traders place a stop beyond the last opposite fractal, or trail a stop from fractal to fractal.
- Alligator filter. Bill Williams used up fractals above the Alligator teeth and down fractals below them as context for trend.
- Drawing aid. Fractals give fixed anchor points for trendlines and Fibonacci retracements.
Where fractals mislead
- Delayed confirmation. A fractal is confirmed only after the bars to the right of the centre bar have closed. Until then, an arrow can appear and then disappear. This behaves like repainting: the marks you see on history were not visible at the time.
- Ranges. In sideways markets, arrows appear on both sides constantly and have little meaning.
- Low timeframes. Most marks on low timeframes reflect noise. Check a higher timeframe as well; see multiple timeframe analysis.
- Equal highs or lows. When neighbouring bars share the same high or low, implementations handle the tie differently. One tool may mark the bar and another may not.
- Gaps and news spikes. A single spike bar can create a fractal that does not reflect real structure.
The fractals indicator is a lagging description of past swings. It is not a signal system. Leveraged forex and CFD trading can lose money fast, so test any use of fractals on a demo account and apply risk management.
Frequent questions
What is the fractal indicator in forex?
It is a chart tool that marks swing highs and swing lows. It places an arrow at a bar that stands above or below its neighbouring bars.
Do fractals repaint?
A fractal stays in place once the right-side bars have closed. Before that, it can appear and then vanish.
Can I change the fractals period in MetaTrader?
The built-in version has no period setting. Custom indicators allow a wider or narrower window.
Is the fractals indicator the same as ZigZag?
No, but both mark swings. ZigZag joins swings with lines based on a deviation setting. Fractals use a fixed bar pattern.
Should fractals be used alone?
They show past turning points only. Most traders read them together with trend, structure and other technical analysis tools.