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Trading Chaos: Applying Expert Techniques to Maximize Your Profits
A practical guide for making sense of chaos theory and applying it to today's financial markets. Enables traders and analysts to uncover hidden determinism in seemingly random market events and make accurate investment decisions with high probabilities for profit.
288 pages, Hardcover
First published June 23, 1995
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December 11, 2021Bill Williams books were some of the first trading books I read, I think it was because I was messing around with indicators and then wanted to see more about how the Fractal indicator worked, came across his books and blah blah blah.
A year or so later I like to think I know more about the financial markets than I did when I first read these books, maybe I don't though.
This is sort of a review for all three of this books, the first and second editions of Trading Chaos and New Trading Dimensions.
But idiot, aren't two of those books the same book?
Funny you should ask. There is a part of me that respects books that is kind of angry annoyed that the author(s) decided to just throw a second edition on their 'best-selling' book. The book is different enough that it should probably be called something like Trading Chaos in the 21st Century.
But then again all three books are also (painfully?) the same book that they called all be called Trading Chaos I, II & III.
If for some reason you have come here to decide which one to read first, I guess I would say read them in order, and if you aren't an anal retentive who has to read every chapter of every book to consider yourself as having read it, then be prepared to just skip large portions of the later books. You'll know when you can skip a section because it's basically verbatim from earlier books.
One review here calls this book ambigious as fuck, and then says the alligator doesn't work (smiley face) . This review amused me when I was browsing through what other people had said after finishing the first edition of the book, and I've kept it in the back of my mind as I made my way through the second.
Why? Because I couldn't shake the idea, how can anyone say the alligator doesn't work (the alligator is a trading indicator based on three moving averages that are offset into the future by various amounts for reasons not explained in any of the three books except to say that they were derived by over a million iterations on a supercomputer (Yeah, I'm not sure what that means either) Williams recommends using a 13, 8 and 5 moving average, which is supposed to represent the current time frame, the next lower time frame and then one below that. Williams describes lower time frames as being about 1/5 of the current one, so for example if you were trading a weekly chart then the 13 period line was supposed to represent the weekly, the eight day line the daily, and the 5 period line would be roughly the hourly (thinking 7 hours in a typical day for stocks, I don't know what you would break this down for markets that run 23 hours a day). The logic is screwy, and there is no good description given for the offset into the future in the first two books except that it probably tested as working well on those million iterations of the supercomputer (whatever that means), the alligators lines will be intertwined when it is 'sleeping' and they will be moving apart when it is awake and 'eating') is confusing to me.
Not that I think the alligator is some kind of magical holy grail indicator, but it's never presented as a tradable indicator in any of the three books (although maybe it's understandable to be confused about this in the 2nd edition of Trading Chaos). The alligator is just a compass pointing to generally the direction the market is moving and is just used to find trade entries that are in line with the overall direction of whatever you are trading. Saying it doesn't work is like saying a compass doesn't work because it can't show you how to get out of the woods.
Weirdly though, there is quite a bit online about trading the 'alligator' which makes me think there are a lot of people who aren't so good at reading but are good at taking information in second hand.
There is a progression in the books where the first one was an attempt to be a comprehensive trading manual. Williams says in that book that he believes he is presenting everything you need to successfully use his system in that book. By the third book his daughter is equally straight forward in saying that the book is just a taste of what their home study course entails and then for even better results you should come in for special group training.
I think this is where the other reviewer is correct in saying that the book is ambiguous as fuck, although I think that it's more just kind of 'feel-good' in a way that will motivate you to want to 'take action' and spend more money, especially if you read the concluding FAQ and read that you need to know more to be successful.
Are these books worth reading?
Sure. Are they are a magic bullet or holy grail? Of course not, although Williams does call it a holy grail at times (which is weird since that's like one of the things everyone is always like, "This isn't a holy grail, blah blah blah, but it will teach you all the secrets so you will never be wrong, but we aren't a holy grail, get rich quick, but you can never be wrong and you'll have millions in your back account next week, but we aren't a holy grail or get rich quick blah blah blah").
It's a way of looking at the markets, and honestly it's not all that different from what you will read in most decent trading books.
Williams spends a lot of time creating the metaphor of Chaos Theory as a justification for his method, and if it's a metaphor that works for you that's awesome, but honestly it's not all that important. His indicators are all just regular old technical analysis indicators given new names and using slightly different inputs. For example his Awesome Oscillator is just the MACD with slightly different ranges that make up the averages. The alligator is just three moving averages. Fractals are just pivot points.
Williams does give some interesting ideas of how to use these together, but you don't need to cloak them in some kind of cutting edge science, but the metaphor could help to make sense of why some of the things work the way they do, but honestly I think if you believed Wall Street fairies dropped magic dust at the spots where a pivot occurs and that metaphor worked to help you understand what is going on with the charts it would be just as worthwhile to you than thinking that it is Chaos Theory at work.
Williams spends time saying how technical analysis doesn't work but his trading based on Chaos Theory does, but he's just doing Technical Analysis. Similarly, he makes a point to saying that traders who find an NLP coach aren't doing anything to help their trading before he gives his advice on the proper psychology for trading that is full of NLP techniques and I'm pretty sure took certain things from some books by Richard Bandler verbatim.
This isn't necessarily a criticism, it's just that the information here isn't as novel as the author makes it sound. But if the authors presentation of these concepts works better than other people's presentation of them, then its probably valuable for someone to read.
I've sounded kind of critical, but I actually did enjoy re-reading these books. I think the most important parts of the three books are the overall psychology of accepting the markets as they are, like learning to look at them for what they are doing, not what you expect them to be doing or what you want them to be doing. From a more practical side the exit strategies in the second book New Trading Dimensions I thought were quite good. That said, exit strategies are almost completely ignored in the 2nd edition of Trading Chaos (and because I meant to return to this idea, the Alligator is pretty much worthless in Trading Chaos 2nd edition. He gives three entry signals in the book after presenting the alligator, the first is counter-trend and doesn't rely on the the famous alligator at all (and could/should be against it), the second is alligator ambivalent and the third is the only one that uses the alligator, but you might be forgiven if you missed that point. So I can see how you read this long chapter on the alligator and think it's tradable since well he did spend all this time talking about it, but I think he expects that you are remembering what he wrote in his second book and for some reason decided that taking that section from the second book and copying and pasting it into the third book wasn't important (not that it stopped him in other parts)), actually, writing that parenthetical aside, I guess I could just say that the third book (this one, the 2nd edition) is more of a self-help book with a little bit of trading advice thrown in, where the original edition was a trading book with a little self-help thrown in.
Thank you for reading my review. If you are going to read his books I'd recommend the original edition of Trading Chaos and New Trading Dimensions, and then save your time and just read the chapters on the First and Second Wise Men (as he decided to inexplicably call his entries in that book) and just add those on to the trading advice given in the first two books.
A year or so later I like to think I know more about the financial markets than I did when I first read these books, maybe I don't though.
This is sort of a review for all three of this books, the first and second editions of Trading Chaos and New Trading Dimensions.
But idiot, aren't two of those books the same book?
Funny you should ask. There is a part of me that respects books that is kind of angry annoyed that the author(s) decided to just throw a second edition on their 'best-selling' book. The book is different enough that it should probably be called something like Trading Chaos in the 21st Century.
But then again all three books are also (painfully?) the same book that they called all be called Trading Chaos I, II & III.
If for some reason you have come here to decide which one to read first, I guess I would say read them in order, and if you aren't an anal retentive who has to read every chapter of every book to consider yourself as having read it, then be prepared to just skip large portions of the later books. You'll know when you can skip a section because it's basically verbatim from earlier books.
One review here calls this book ambigious as fuck, and then says the alligator doesn't work (smiley face) . This review amused me when I was browsing through what other people had said after finishing the first edition of the book, and I've kept it in the back of my mind as I made my way through the second.
Why? Because I couldn't shake the idea, how can anyone say the alligator doesn't work (the alligator is a trading indicator based on three moving averages that are offset into the future by various amounts for reasons not explained in any of the three books except to say that they were derived by over a million iterations on a supercomputer (Yeah, I'm not sure what that means either) Williams recommends using a 13, 8 and 5 moving average, which is supposed to represent the current time frame, the next lower time frame and then one below that. Williams describes lower time frames as being about 1/5 of the current one, so for example if you were trading a weekly chart then the 13 period line was supposed to represent the weekly, the eight day line the daily, and the 5 period line would be roughly the hourly (thinking 7 hours in a typical day for stocks, I don't know what you would break this down for markets that run 23 hours a day). The logic is screwy, and there is no good description given for the offset into the future in the first two books except that it probably tested as working well on those million iterations of the supercomputer (whatever that means), the alligators lines will be intertwined when it is 'sleeping' and they will be moving apart when it is awake and 'eating') is confusing to me.
Not that I think the alligator is some kind of magical holy grail indicator, but it's never presented as a tradable indicator in any of the three books (although maybe it's understandable to be confused about this in the 2nd edition of Trading Chaos). The alligator is just a compass pointing to generally the direction the market is moving and is just used to find trade entries that are in line with the overall direction of whatever you are trading. Saying it doesn't work is like saying a compass doesn't work because it can't show you how to get out of the woods.
Weirdly though, there is quite a bit online about trading the 'alligator' which makes me think there are a lot of people who aren't so good at reading but are good at taking information in second hand.
There is a progression in the books where the first one was an attempt to be a comprehensive trading manual. Williams says in that book that he believes he is presenting everything you need to successfully use his system in that book. By the third book his daughter is equally straight forward in saying that the book is just a taste of what their home study course entails and then for even better results you should come in for special group training.
I think this is where the other reviewer is correct in saying that the book is ambiguous as fuck, although I think that it's more just kind of 'feel-good' in a way that will motivate you to want to 'take action' and spend more money, especially if you read the concluding FAQ and read that you need to know more to be successful.
Are these books worth reading?
Sure. Are they are a magic bullet or holy grail? Of course not, although Williams does call it a holy grail at times (which is weird since that's like one of the things everyone is always like, "This isn't a holy grail, blah blah blah, but it will teach you all the secrets so you will never be wrong, but we aren't a holy grail, get rich quick, but you can never be wrong and you'll have millions in your back account next week, but we aren't a holy grail or get rich quick blah blah blah").
It's a way of looking at the markets, and honestly it's not all that different from what you will read in most decent trading books.
Williams spends a lot of time creating the metaphor of Chaos Theory as a justification for his method, and if it's a metaphor that works for you that's awesome, but honestly it's not all that important. His indicators are all just regular old technical analysis indicators given new names and using slightly different inputs. For example his Awesome Oscillator is just the MACD with slightly different ranges that make up the averages. The alligator is just three moving averages. Fractals are just pivot points.
Williams does give some interesting ideas of how to use these together, but you don't need to cloak them in some kind of cutting edge science, but the metaphor could help to make sense of why some of the things work the way they do, but honestly I think if you believed Wall Street fairies dropped magic dust at the spots where a pivot occurs and that metaphor worked to help you understand what is going on with the charts it would be just as worthwhile to you than thinking that it is Chaos Theory at work.
Williams spends time saying how technical analysis doesn't work but his trading based on Chaos Theory does, but he's just doing Technical Analysis. Similarly, he makes a point to saying that traders who find an NLP coach aren't doing anything to help their trading before he gives his advice on the proper psychology for trading that is full of NLP techniques and I'm pretty sure took certain things from some books by Richard Bandler verbatim.
This isn't necessarily a criticism, it's just that the information here isn't as novel as the author makes it sound. But if the authors presentation of these concepts works better than other people's presentation of them, then its probably valuable for someone to read.
I've sounded kind of critical, but I actually did enjoy re-reading these books. I think the most important parts of the three books are the overall psychology of accepting the markets as they are, like learning to look at them for what they are doing, not what you expect them to be doing or what you want them to be doing. From a more practical side the exit strategies in the second book New Trading Dimensions I thought were quite good. That said, exit strategies are almost completely ignored in the 2nd edition of Trading Chaos (and because I meant to return to this idea, the Alligator is pretty much worthless in Trading Chaos 2nd edition. He gives three entry signals in the book after presenting the alligator, the first is counter-trend and doesn't rely on the the famous alligator at all (and could/should be against it), the second is alligator ambivalent and the third is the only one that uses the alligator, but you might be forgiven if you missed that point. So I can see how you read this long chapter on the alligator and think it's tradable since well he did spend all this time talking about it, but I think he expects that you are remembering what he wrote in his second book and for some reason decided that taking that section from the second book and copying and pasting it into the third book wasn't important (not that it stopped him in other parts)), actually, writing that parenthetical aside, I guess I could just say that the third book (this one, the 2nd edition) is more of a self-help book with a little bit of trading advice thrown in, where the original edition was a trading book with a little self-help thrown in.
Thank you for reading my review. If you are going to read his books I'd recommend the original edition of Trading Chaos and New Trading Dimensions, and then save your time and just read the chapters on the First and Second Wise Men (as he decided to inexplicably call his entries in that book) and just add those on to the trading advice given in the first two books.
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May 5, 2009I wouldn't recommend this book to a friend. It's hokey, slow-moving, and wordy, full of pop psychology, feelgood bromides, and scattered here and there with some drawn-out attempts at real science. Read about chaos theory elsewhere; and Elliott waves too, if you must.
June 28, 2015
I've just read this book, and well... There is some good and alot of bad let me start with the good:
The author got a philosocal kind of approach to trading, he got a nice and understable style of writing, he got some general knowledge in differents fields which he incorporate in the book, sometimes I found myself thinking that this was treating another subject then trading all together, which is not a bad thing unless its overdone
The first chapters are more psychologically oriented which is in term with a kind of zen attitude goind with flow of things, Then we are introduced to some variable of some famous indicators
Now the cons:
The slow writing,I was annoyed at the phrases: " you will learn this on next chapter, you will become a champion in chapter XX" Damn just show it to me !
The false promess of success, don't be fooled, it's just another system but written in a different way while at first he stated on the 70 first pages that all mechanical ways of predicting the market were just impossible, he later introduce us to some indicators which are just famous indicators with differents settings, the guru analogy that he used on earlier chapters ironically did apply on him by the end of the book.
As expected from chaos nothing is set in stone, an ever changing environnement.
I will edit this review after trying the method more profoundly.
The author got a philosocal kind of approach to trading, he got a nice and understable style of writing, he got some general knowledge in differents fields which he incorporate in the book, sometimes I found myself thinking that this was treating another subject then trading all together, which is not a bad thing unless its overdone
The first chapters are more psychologically oriented which is in term with a kind of zen attitude goind with flow of things, Then we are introduced to some variable of some famous indicators
Now the cons:
The slow writing,I was annoyed at the phrases: " you will learn this on next chapter, you will become a champion in chapter XX" Damn just show it to me !
The false promess of success, don't be fooled, it's just another system but written in a different way while at first he stated on the 70 first pages that all mechanical ways of predicting the market were just impossible, he later introduce us to some indicators which are just famous indicators with differents settings, the guru analogy that he used on earlier chapters ironically did apply on him by the end of the book.
As expected from chaos nothing is set in stone, an ever changing environnement.
I will edit this review after trying the method more profoundly.
February 17, 2021
Trading Chaos book provides a clear and concise explanation of Bill Williams trading indicators and the relationship of these with Elliott waves and trading psychology. An excellent read for serious traders.
Buy the ebook now:
Trading Chaos: Maximize Profits with Proven Technical Techniques
Buy the ebook now:
Trading Chaos: Maximize Profits with Proven Technical Techniques
December 17, 2008
This is a great trading book. One of the best ones that I have read in a long time. Very good info on getting your mind in the right place for trading.
October 5, 2016
Ambiguous as fuck. The guy is obviously counting on his vagueness to make people believe he actually has something going on.
PS: The alligator doesn't work :)
PS: The alligator doesn't work :)
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May 11, 2021Hard to review a book in trading before trying out the techniques covered in the book. Though I will say the book was interesting and dwelled deep into the psychology of trading and why the vast majority of traders fail, which I really enjoyed. It was easy to follow along and can be read be a total beginner as well as the experienced trader.
I found it hard to test the principles since most of the websites listed in the book that provide these indicators cost a lot of money. Maybe I’ll find a place where I can try them for free and then I’ll come back to update my review after the initial trail period.
I found it hard to test the principles since most of the websites listed in the book that provide these indicators cost a lot of money. Maybe I’ll find a place where I can try them for free and then I’ll come back to update my review after the initial trail period.
June 27, 2020
You either get Bill Williams or you don't. I have found his writings, and this book in particular, to offer a lot of excellent actionable concepts.
Some of his concepts may seem esoteric, but his technical indicators are pure gold. If you don't mind getting your hands dirty, you will be rewarded.
Recommended for any serious trader's bookshelf.
Some of his concepts may seem esoteric, but his technical indicators are pure gold. If you don't mind getting your hands dirty, you will be rewarded.
Recommended for any serious trader's bookshelf.
June 26, 2020
Using the book
The first time reading this book I started using the Alligator indicator and started making money in my trading. It was simple and easy to do and also do not forget to train your mind in the process he talks about.
The first time reading this book I started using the Alligator indicator and started making money in my trading. It was simple and easy to do and also do not forget to train your mind in the process he talks about.
August 6, 2021
The best of all trading books.
This book combines all the previous books (Trading Chaos first edition, and The New Trading Dimensions) and goes deep into the psychological aspects of trading. Very practical and useful lessons.
This book combines all the previous books (Trading Chaos first edition, and The New Trading Dimensions) and goes deep into the psychological aspects of trading. Very practical and useful lessons.
August 17, 2021
В целом все верно, но достаточно долго разжевывали про правильное психологическое состояние во время трейдинга, а также особенностях мышления и ошибках в которые мы попадаем при неправильном мышлении. Слушал аудио-книгу на скорости 2х, полностью осилил за 2 дня в итоге.
May 17, 2020
Excellent book on trading on financial market. I recommend this book to those who want to hone their trading skills.
January 20, 2021
good stuff for trading
so many unrelated stuff about world and deer's and butterflies and ...
so many unrelated stuff about world and deer's and butterflies and ...
October 20, 2021
Really good strategy for investing - Great for entry but medicore for exiting strategy
December 11, 2019
Great!!!!!
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