Trading Chaos : Maximize Profits with Proven Technical Techniques

Rating:
Summary: Waste of money
Review: Having read both of Williams' books, I was eager to get my hands on this one. Two words for you: Don't bother. It's a complete waste of $70.00. The book contains only about 60 pages talking about the technical aspect of this strategy (most of which has been regurgitated) from his other two books), and the remainder of the book is dedicated to psychology, meditation and relaxation techniques. Now I know why. If you attempt this strategy, you're going to need them! The strategy consists of a countertrend technique, in which it attempts to pick the bottom to get long, or the top to get short via proper 'angulation' away from the alligator using a 'bullish/bearish divertion' bar. There are a couple of problems with this. 1.) Proper angulation is way too subjective and interpretive. 2.) There can be more than one divertion bar along the way that is hit to signal an entry, or no divertion bar at all. 3.) This setup rarely shows up; I've scanned about 500 daily charts. Sure, the book contains pictures of charts where there have been successful countrend trades, but old data makes anyone look smart. There is a big difference between old data and trading real-time. The author explains that if a countertrend trade hits your stop (set under the low/high of the divertion bar), and it has become a fractal, you simply go in the opposite direction. However, he doesn't explain how to exit, or if/how to pyramid into the position. Additionally, I found several contradictions in the book, notably the chart of TEVA on page 152. The 'short' trade is stopped out and reversed long on a Wise Man 3 signal which is a fractal in the opposite direction that is way below the teeth on the alligator when it's hit. A few pages earlier the author explains that if the first signal isn't a divertion bar, but a fractal, it should only be taken only if it's hit above the teeth!

Conslusion: Sure the book inlcudes some impressive pristine countertrend trades based on angulation and divertion bars in both directions, and exiting by either a SAR divertion bar in the opposite direction or a 3-5 bar trailing stop (discussed in book). Realisticaly, these trades just don't show up that often in the market (most stocks meander too close to the alligator to warrant proper entry according to this book), and a mechanical 3-5 bar trailing stop is going to get you out way to soon if you just so happened to guess correctly when entering. Simply put, the methodology is too interpretive - Like I said, anyone looks smart using old data. Also, there is no detailed explanation on how to exit a trade if stopped and reversed after a countertrend trade doesn't move in the expected direction, and the book doesn't offer any examples. Lastly, because there is no systematic way of testing this system because it's based on subjective interpretation, you can expect countless whipsaws and endless frustration if you decide to trade it without any predetermined probability of success. But what the hell, some of the relaxation methods discussed can help with that!

Rating:
Summary: A different approach
Review: Having read this book recently,and being familiar with Bill Williams' work,I would like to state my opinion here,which I am afraid is totally different than that of the previous reviewer.
First of all,let me explain that I have no personal connection or mutual interest with Mr. Williams and unfortunately for me I haven't taken his course or participated in his private seminars.Furthermore,I have also found his methology unprofitable a couple of years ago.....

This book made me reread his past books and reevaluate his methology.And I realized something very special : the reason I have failed in the past to profit from this methology and the reason the last reviewer makes such a critism,is that both of us haven't understood that Mr Williams doesn't simply teach a system.He teaches a completely alternative approach to the markets and life in general.And I believe that the main reason he devotes such a big part of the book for the psychological part of trading,is because he knows that it's extremely difficult for anybody to change his perceptions.

I can parallel the way most of the other systems work,with someone who tries many shoe sizes in order to find the one that fits his foot.All of us approach trading as a probabilities,or gambling game,trying to find out if a system,tested in past data,fits the present data of the market.If we are wise enough,we cut our losses short and we go on for our next try.That's the reason,almost 97% of the traders (mechanical systems included) fail to produce consistent profits.

Mr. Williams proposes another approach.Let the market tell you each time which system you must implement to have profits.Let the shoe determine which "foot" you must use to walk properly.And if you think that this example is not appropriate,let me state it otherwise.Which parameter determines what clothes you are going to wear to get out? the weather,of course.If it changes you must change your clothes also,to feel comfortable.You can't change the weather....

Now,if Mr.Williams techniques can guide you to be in tune with the markets,it's another story and I am working on it.It seems that his daughter brought fresh and original ideas to the whole approach.Surely,the book is only the starting point to understand this mans' logic and the way he trades the markets.But I really consider the money I have spent in buying this book as the best spent money in my whole trading career.And I certainly look forward to buy his course,when my financial ability permits it.

Rating:
Summary: A book is a book. It's what you do with it that counts.
Review: I am not affiliated with the Bill Williams, he doesn't know me, I don't know him and I don't get compensated to speak on his behalf. I read his works and in my view this book is a good one. Written in layman terms for everyday traders, it describes a method that is profitable without resorting to complicated mathematical formulas with which others attempt to elucidate the mysteries of the "chaos theory". (What the heck is chaos anyway?) That it cannot be backtested, it absolutely doesn't matter. There are many other trading theories that cannot be backtested and are just great. On the other hand, I have seen many traders who use well tested methods and who either lose money or make so little profits that they would be better off going back to their former professions.
That there are a few incongruences in Bill's book, they are a test for the reader to discover them and to use his understanding of the ideas in the book to solve them. Let's not forget that a single book cannot cover everything for everybody. Such book does not exist. Why blame the inaccuracies when the whole concept can be praised?
"Trading chaos" is an invitation to study Bill's style and practice it.

On another note, in MetaStock, the Profitunity method is the most detailed Expert Advisor from among the several that come standard with the software package. It can be traded without the need for other bells and whistles. "Trading chaos" and the MetaStock Expert Advisor can and does make a trader a few dollars. Period.

John Craciun,
http://www.MarketTide.com

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Rating:
Summary: Trading Method that works.
Review: I would have given this book five stars if it did not have 'chaos' in its title. The books is not about chaos theory, it is about trading.
The second edition is really a sequel to another book by Bill Williams: New Trading Dimensions. This book completes the trading methods explained by Bill.
Many like me have used his 'Alligator' to identify trading opportunities. However, the Alligator did not provide for efficient exits. This book completes the picture by discussing appropriate exit strategies and also methods for counter trend trading. Just for this piece of advice, the book is well worth its price.