When I first started reading this book I thought it was going to be great. He really sounds good talking about Zen and Chaos theory and non-linear vs linear - and I think he is right that the markets behave under these concepts. However, he doesn't really tell us how to apply any of this to trading. Read this book and then look at a chart. Can you trade better now knowing that you should be using a non-linear, chaos approach? No! Why? Because he doesn't tell us how to apply that theory to trading. He tells us to be one with the market and flow with it etc. That's fine and dandy - but how do we do that?

He tells us that ta and mechanical systems don't work, then he reveals the system he uses to trade by - a mechanical system!!! I was shocked to see that his system is just another dime a dozen 3 ma system. How is his system using non-linear chaos theory? How is his system flowing with the market and making you more "in tune" with the market? It's just another mechanical ta system!!!(kind of sad really)

This book started with great promise but ended up being a total disappointment.

This is the finest trading-related book ever published; if you are just starting to learn about trading and investing, please pick up a copy of Trading Chaos before you spend another dime on newsletters, software or 'hot tips.'

It's not about trading a system, it's about trading your mind .......

Bill and Justine are made me aware of what is driving the markets. Before I met them I was caught in a circle of winning and losing money in trading. The first edition opened my eyes, new trading dimensions got me out of the dream. The home study course showed me that It is possible to trade consistently, The personal workshop with Bill taught me more than enough of the inside of the markets to grasp the why and how. Eventually workshops by Justine in the middle of Chicago made me implement it all.

This new edition of Trading Chaos is refreshing. It's not about "the magic system", it's not about how to design the perfect system. No it's about real life and how the markets fit in. The perfection in the chaos, the perfect repetition of the small in to the bigger picture.

Don't buy this book if you want to know which market to trade and make money. Don't buy this book if you are looking for the magical tip.
Do buy the book if you want to learn what the market is driving and how you can profit.

Do buy this book if you are clueless (like I was) about your trading mistakes.
If you are serious go for the book, think of the implications and contact Bill and Justine to do a follow up. I did it 10 years ago and never had a moment of regret.

For large traders and institutional traders who need to move large volume and order flow, this book offers multiple entry and exit strategies and tactics. Out of necessity, these traders have to scale in and out of their positions to dampen the immediate effect of their trading on the markets. Even for private retail traders, this book conveys choice of logical set-ups to incorporate into their trading operations. Overall, I feel that this book deserves your attention.

I've been looking for a book like this for a while. I first came across Bill Williams through the Metastock indicators and the Expert System. After loading an expert called "PS Fractal Trading System 2" I was amazed at the signals.
Having read through the book - I have the following quibble. There is a huge difference in the parameters of the alligator in what comes with Metastock (v9 and v10) and what the book gives. The book says the green line is 13 bar smoothed average offset 8 bars into future. Likewise the red is 8 bar offset 5, and the green is 5 bar offset 3. However this does not correspond to the Metastock indicator he provides. For the curious, the Metastock ones referred to in page 206 of book have the following values: Green: 9 period EMA of Median offset 3. Red: 15 period offset 5, and Blue 25 period offset 8

This book has methods to get buy signals before the lows and sell signals before the highs. This will help one sell into strength and buy into weakness. It has helped me get my positions off. I have recommended this book to all of my trading friends. It will take careful study to fully understand it. This book is original, all mechanical and all objective. The three wise men make up very powerful trading tools.

Another great book from Bill Williams!
Interesting for trend trading and for good living.

I am a BIG believer in Bill Williams and his body of work.

I have personally met with Bill, taken his home study course and even attended a private tutorial. Bill is the real deal. He is a *highly* profitable trader and Bill trades EXACTLY like he describes in his books (simplified over time, so Trading Chaos, 2nd Ed. is the LATEST and most refined method).

If you just want to trade with no other background information, Buy Trading Chaos, 2nd Edition (not this book) and start with chapter seven. When you get to the end of the book, you'll say, "That's it?!?! Than can't be it!" That's what I said. I then went on to take his home study course (13 weeks) and then went to a private tutorial. 95% of the methodology is IN THE BOOK! The more advanced stuff is for those who are scaling into positions and want more aggressive money management techniques.

Who am I to say this works? I started trading Bill's techniques from scratch. In LESS than 6 months I was up 95% in a medium sized account. I found some like-minded investors and we started our own Hedge Fund (more specifically, a commodity pool). I called Bill personally and he spoke with me at length about how I should flow into and out of my positions, etc. He went far above and beyond the call of duty. I cannot speak to how well my Pool is doing (not legal to disclose - considered solicitation of investors), so I cannot give figures of returns for the Pool.

Buy Trading Chaos 2nd Edition and then buy "New Trading Dim mentions" (his second book) and read chapters 9 - 11. Those chapters will give you more ideas of the SCOPE of just what is possible when you simplify your trading and align it with natural market tendencies (chaos principles).

Good luck and Good Trading!

-- Q

I purchased this book because I was trading with a method that used the awesome oscillator. I figured I should know something about the person who created it. I got much more than that. The book helped me to quit focusing on trading techniques and to start looking at my own mental state for trading. Turning inward has allowed me build better confidence in myself and my method. That in turn allows me to trade with a mindset which successful traders have. The fact that the book also presents a very viable trading method is just an added bonus. This book and "Trading In The Zone" by Mark Douglas transformed my trading career.

I purchased this book because I was trading with a method that used the awesome oscillator. I figured I should know something about the person who created it. I got much more than that. The book helped me to quit focusing on trading techniques and to start looking at my own mental state for trading. Turning inward has allowed me build better confidence in myself and my method. That in turn allows me to trade with a mindset which successful traders have. The fact that the book also presents a very viable trading method is just an added bonus. This book and "Trading In The Zone" by Mark Douglas transformed my trading career.

As an experienced trader who has bought thousands of dollars of trading books from Amazon I found this one less than impressive.

This is not about Chaos. This is not about trading Chaos.

One of the other reviewers says "It's interesting to note that in this new book, the chaos-derived indicators (alligator, AO, and fractals) are not changed."

Given that these sexily renamed indicators are just moving averages and macds with tweaked parameters then its not really surprising. For a real book by a real trader try "Trading Day by Day" by Chick Goslin. For ideas about how to trade try "The Ultimate Trading Guide" by John Hill of Futures Truth. For psychology try one of Mark Douglas's books or Brett Steinbargers book.

Good luck in a tough industry :)

As an experienced trader who has bought thousands of dollars of trading books from Amazon I found this one less than impressive.

This is not about Chaos. This is not about trading Chaos.

One of the other reviewers says "It's interesting to note that in this new book, the chaos-derived indicators (alligator, AO, and fractals) are not changed."

Given that these sexily renamed indicators are just moving averages and macds with tweaked parameters then its not really surprising. For a real book by a real trader try "Trading Day by Day" by Chick Goslin. For ideas about how to trade try "The Ultimate Trading Guide" by John Hill of Futures Truth. For psychology try one of Mark Douglas's books or Brett Steinbargers book.

Good luck in a tough industry :)

The actual trading methodology is not really of interest to me. As a matter of fact, it's ironic that in the first half of the book statements such as "there is no magic system" and "all mechanical systems will fail" are made, then in the second half of the book a rather mechanical trading system that is referred to as "automagic" is described.

I suppose for a beginning trader looking for some kind of method to employ it's not a bad one to pursue. Allow me to suggest that the second half of the book should be given perhaps 10% of your consideration while the first half should be given 90%.

The first half of the book is revolutionary, and makes it a classic. It should be removed and marketed separately. In fact, I like your chances of success better if you only read the first half and then develop your own trading method based on what you notice happening in the market. Concentrate on developing a winning mindset and getting in tune with the market you trade. The first half of this book should be kept and reread regularly.

[...]

The actual trading methodology is not really of interest to me. As a matter of fact, it's ironic that in the first half of the book statements such as "there is no magic system" and "all mechanical systems will fail" are made, then in the second half of the book a rather mechanical trading system that is referred to as "automagic" is described.

I suppose for a beginning trader looking for some kind of method to employ it's not a bad one to pursue. Allow me to suggest that the second half of the book should be given perhaps 10% of your consideration while the first half should be given 90%.

The first half of the book is revolutionary, and makes it a classic. It should be removed and marketed separately. In fact, I like your chances of success better if you only read the first half and then develop your own trading method based on what you notice happening in the market. Concentrate on developing a winning mindset and getting in tune with the market you trade. The first half of this book should be kept and reread regularly.

[...]

The actual trading methodology is not really of interest to me. As a matter of fact, it's ironic that in the first half of the book statements such as "there is no magic system" and "all mechanical systems will fail" are made, then in the second half of the book a rather mechanical trading system that is referred to as "automagic" is described.

I suppose for a beginning trader looking for some kind of method to employ it's not a bad one to pursue. Allow me to suggest that the second half of the book should be given perhaps 10% of your consideration while the first half should be given 90%.

The first half of the book is revolutionary, and makes it a classic. It should be removed and marketed separately. In fact, I like your chances of success better if you only read the first half and then develop your own trading method based on what you notice happening in the market. Concentrate on developing a winning mindset and getting in tune with the market you trade. The first half of this book should be kept and reread regularly.

For me, books are either a 1-star, 3-star, or 5-star. The 5-stars are the classics that are too good to ever get rid of, like many of those I recommend on winningfinancialstrategies.com. The 3-stars get sold when the shelves overflow. The 1-stars go to Salvation Army.

I've read all three books by Bill Williams and they all have a very unique point-of-view regarding trading. I feel that his techniques are more relevant to stocks/equities than other markets (forex/futures), however, this does not dampen my enthusiasm for his ideas and writings.

His description of the psychological journey from novice to expert and trading psychology in general are entirely original.
Regardless of whether you actually adopt his techniques they will no doubt inspire you to improve on or create your own.

They are some of my favourite trading books in my library.

An exciting explanation why old trading theories is now old. Explains that linear studies are basically just wrong 4 out of 5 times and why. Shows how nature is not as simple as we think, but uses mathmatics far more complicated than Einstein thoery of relativity. Puts old scientific mathematics to rest. And shows how those chaos theories apply in the markets as well, which is why the markets are so difficult to predict. Explains how our brain causes us to lose. Has new studies that are quite usefull in the intraday markets.

The first seven chapters describes the psychology of trading. The rest of the book discusses the techniques advocated for successful trading. I have been trading for a few years and found the the first seven chapters are the essence to trade successfully on a consistent basis. My trading results improved dramatically after understanding how the mind works in trading in the first few chapters.

Once again Bill Williams and now his daugther, Justine, too, have contributed another advance in the field of trading stocks and futures. Dr. Williams' insights and advanced chaos theory techniques move traders to work in sync with the changing nature of the markets. Going with the flow and surfing the waves of the markets is now easier than ever. It's interesting to note that in this new book, the chaos-derived indicators (alligator, AO, and fractals) are not changed, but the way to interpret their information is adapted to take advantage of the choppier 21st century markets, compared to the go-go '90's markets. This new interpretation seeks to capture profits from short-term swings in the market, entering the market much closer to the turning points of each wave (fractals) and aggressively scooping up profits before the short-term swing runs its course. This method also reduces risk to the span of a single bar. Also included with even more emphasis than in previous books, are methods to adapt the mind of the trader to the ebbs and flows of the market, rather than the emotional fear-based reactions that most of us are prone to in our trading. I've had the privlege of attending one of Profitunity's intimate trading workshops (with 4-8 others) and witnessing Bill's trading first-hand. It was immediately obvious to me that here was a genius at work. I highly recommend this book to any trader who wants to "make winning the path of least resistance." My only criticisms are that this book should have a different title, since it is not a new edition of the first "Trading Chaos" book, and would not replace that seminal work. The new book has entirely different info and deserves its own place in the series. Perhaps "Trading Chaos in the 21st Century" or something like that. I would also like to see more guidance on how to integrate the techniques from the first two volumes with the new approach taken in this book. Clearly they are all compatible, yet forging an integrated system will take some effort on my part. Then again, maybe that's for the best. I know that if I didn't contribute to my own trading system in some way by adding to what Bill has pioneered, then I would feel incomplete. I suspect that many other traders would feel the same way.

This book is not about chaos theory, nor trading chaos, but a trading book with the first 95 pages about trading psychology, primarily Zen and Tao based, and the rest 133 pages of a trading system that comes with "Metastock". As a trading book fan and a Chinese who know Zen and Tao well, I do like the first part of it as food for thought, and definitely not as reading material to sharpen my trading edge. I doubt whether the very vague Zen or Tao approach taken by the author can be well understood and practised by western traders. Furthermore, I agree with a previous reviewer that the "trade with the trend/flow" concept preached by the author contradict a little bit with his own quasi-countertrend system presented in the second part. So, I suggest those who dont have access to Metastock nor Omega Tradestation facilities should give it a pass. It's definitely not a smart way of investing if one puts money on something that does you little good.

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

.

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.

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!

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.