Dale,
Can you briefly summarize what happen to your trading system over the course of time? Did it produce more losing pips than winning pips? Where will you go from here?
Regards,
pip chaser
You’re kidding right??? (Only joking)!!!
Well - if you’ve been following this thread since the beginning then you’ll know what happened with my system!!! Let me put it this way: just about everything I have come up with has worked / is working FOR EVERYBODY ELSE EXCEPT ME!!!
Where will I go to from here? Jail probably!!! (Again - only joking - I hope)!!!
Seriously though - I have learned one thing and that is this:
It does not matter what ‘system’ you have (within reason of course) BUT the ‘trick’ is to ‘stick’ to it ‘no matter what’ and your profitable trades WILL ALWAYS be more than your losers. It’s only when you start trading a certain way, take a loss, and almost immediately start looking for ‘the next best thing’. That’s when the losses start to accumulate. Take Parabolic SAR as a ‘prime’ example. ‘Sticking’ with the indicator WILL result in profits over the long term this fact being verified by backtesting on MT4 and real live trades as detailed on this thread. The ‘trick’ is to ‘stick’ with it, takes the losses ‘like a man’, have the patience to ‘stick the trades out’ without ‘tampering with them’ and make sure you have enough available margin to carry you through when the trades temporarily go against you. It may not be the ‘sniper’ approach to trading but it’s a sure fire way of making money in the long run I’m convinced.
By the way: I see that the Dow, S&P, and Nasdaq have rebounded sharply since my last post. Could we have seen ‘the bottom’???
Oh - and to my ‘old’ friends on this thread:
How is THIS for a ‘radical’ trading strategy:
When you get margin called your open positions are closed at a loss BUT the amount of margin that you used to open the trades is returned to you right??? Well - what if you margin 99.99% of your account at any given time. If the trade goes in your favour then you’ll make an absolute killing and if the trade goes against you you’ll just get margin called (as if you were stopped out)!!! RAD!!!
By the way:
My ‘radical’ trading idea was just that - a ‘radical’ trading idea. Don’t try this at home!!! You will get nailed!!!
(What makes you think I’ve nothing better to do than sit here and post ‘garbage’ while I’m waiting for the ECB and BoE statements tomorrow)??? I TP’d on EUR/GBP by the way - nice profit - rather taken and stay out until the interest rate announcements tomorrow. See - me - learning!!!
sometimes it seems, to just do the opposite of what you think the pair is going to go.
Mostly what i hear is dont let your emotions get involved, easier said than done for most of us.
I have been following this trread for about 3 months now and still not sure what works.
Im stilll on demo until i figure it out.
I’d like to follow ya’ll on this thread but there are just too many posts to weed through them all to find the systems that are working and those that are not. Could someone generate a set of rules for the different systems talked about here?
I think I understand the initial system of following the PSAR and “doing what it does” but as I’ve skimmed through the pages I see talk of Dale’s new system.
Good morning folks!!!
kauaibobby:
Dale here (not Tony). I DID go short EUR/GBP yesterday but took a nice little profit. Thank goodness!!! I see it’s now pushing higher!!!
Actually - this is something I’ve learned (from John F. Carters book) - he says that entry points are a ‘dime-a-dozen’ but the money (profit) is in the exit’s (that’s roughly translated from memory). This single statement (theory) of his has allowed me to able to take small profits from the market (lately) and be satisfied with them and stopped me from wanting to ‘jump off of something high’ because I got out too early. After time (and a lot of losses) I have finally come to realise that if you miss something today you can bet your bottom dollar (nice ‘pun’) that the opportunity will present itself again and you can count on this!!! Fine example: yesterday the Dow touched it’s August 2007 lows and then rebounded sharply. Now in a ‘past life’ (last year) I would have ‘jumped in’ on the rally probably as it neared it’s end. Now - I stayed out and yes, probably missed a very nice profit, but - nothing has changed in the US so you’ll probably find that there were a whole pile of limit buy orders sitting at the August 2007 low and that caused the Dow to rise at that point (interestingly enough it hit a pivot level at exactly the same price as the August 2007 low and then started the rebound). If I’m wrong about this and we have indeed seen the bottom then I missed the trade yesterday BUT I know that in the next couple of days there will be another sharp rally either way. If I’m right of course then even better i.e. maybe the Dow has a lower bottom to come and the lower it gets the higher it’s going to go and that means cheaper lots (current price would cost me $637.05 USD per lot). The long and short of the above could be translated into one word: ‘patience’!!!
daxm:
You HAVE to tread the whole thread!!! It’s not about trading - it’s about my trading life!!! (Only kidding)!!!
If you are going to use Parabolic SAR to trade then nothing has changed at all i.e. go long or short as indicated by Parabolic SAR and move your stops are per Parabolic SAR and that’s it. I tried throwing everything from moving averages to other indicators to the ‘kitchen sink’ at it but the more you throw at it the bigger your dissapointment is when the trade goes against you and believe you me this can finish you off!!! Over time ‘pure’ Parabolic SAR WILL make a (very nice) profit BUT what you have to ask yourself is this: does trading this way ‘suit’ your personality? Another realisation that has come to me (the hard way) is that NO - trading with Parabolic SAR DOES NOT suit MY personality - no matter how ‘foolproof’ it may be in the long run. I am one of those people who just has to be trading all day and all night in some form or another and no matter how I have tried to fight against who and what I am - who and what I am has won (I am going to turn 43 years old this year - it’s just too late to get an ‘extreme makeover - personality edition’ now). Now that does not mean that I have given up on Parabolic SAR - not by a long shot - I still think that’s it’s the one indicator that you actually CAN rely on in the long run. As I have said in a previous post I have a major problem with the way that Parabolic SAR is presented to everyone in their trading platforms i.e. they’re all wrong and this is a major cause of concern for me and I am working on my own Parabolic SAR formula that will CORRECTLY calculate and plot Parabolic SAR as per J. Welles Wilder’s original work and I’m convinced that this will make all the difference to the profitability of the indicator. At the moment, while I am doing this, I am trading some of Wilder’s other systems and these are working ‘as regular as clockwork’ for me and suit who I am i.e. lot’s of action, small amounts of profit every day, always have positions open or orders waiting to be executed etc. etc. etc. and this is working for me. Now and then I’ll ‘take a chance’ like I did yesterday on EUR/GBP (based on Stochs and RSI) but only when I’m almost 1000% sure of what I’m doing OR I’m 1000% happy to take the loss if I’m wrong.
Wow - that was a great post (even if I have to say so myself)!!!
Keep in touch.
I’m looking forward to the impact of the ECB and BoE statements today (again - ‘in a previous life’ - I’d already have had open positions based on my ‘gut feel’ of what’s going to happen - but my ‘gut feel’ has always been wrong - so - I’m staying out until I see what’s headed and where. I no longer mind missing those few pips if I’m out of the market at the time of the statements because I know that the direction of the pairs about an hour after the statements is what is going to count NOT the quick ‘spike’ that happens at the time of the announcements that COULD nett you a great number of pips BUT could also result in a substantial loss as well).
By the way - I have written come nice indicators for Delta Stock’s platform - including Pivot Points and Keltner Channels (and some more channels). If you’re trading with Delta and want them let me know and I’ll post them here for download (although you will have to be careful because whatever I send to you will overwrite any custom indicators or changes that you may have already made yourself to your platform. The only other way to do it is to manually enter what I have done into your platform).
You know,
Every now and then a ‘gem’ comes along:
Now I know that the RSI and Bollinger Bands need to be ‘modified’ so that they can be overlayed on each other BUT I really like the entry points that are given by RSI overlayed on Bollinger Bands. From what I can see this seems to ‘filter out’ very nicely your Parabolic SAR entry points and seems to make those initial huge stops less likely to be taken out.
I’m certainly going to spend some time on this.
What do you people think of the links posted?
Thanks for the update Dale. I’d still suggest that you make a summary post and put it as a sticky post on the front page. I sure hate to have you have to repeat yourself with each noob who comes into this forum.
Hey Tony,
Just as well I ‘ALMOST’ margined 99.99% of my accounts on EUR/GBP shorts yesterday!!! It’s at 0.7554 as I type (I TP at somewhere around 0.7480 or something like that yesterday. Talk about ‘dodging the bullet’)!!! I’m learning!!! So much for RSI and Stochastics (although if the truth be told all it means is that the longer they stay where they are the harder the pair is going to fall). Interestingly enough I did not notice yesterday that ADX is still (stronly) on its way up. Just wait until that ADX line makes a turn!!! It’s strange (lovely) how all of Wilder’s indicator just seem to compliment each other!!! (OK - Stochastics is not his but ‘added insurance’ is all)!!!
Look at IcyCloud’s system here on Babypips…it looks great:
http://forums.babypips.com/free-forex-trading-systems/8433-icycloud-trading-system.html#post30139
I think that it’s important that the FIRST PSAR reversal dot must be outside the Bollinger bands. It doesn’t matter about the later ones. However if the FIRST PSAR reversal dot is inside the Bollinger bands, then do not reverse.
Barry
Dear BarryPips,
I downloaded this indicator and used it in my MT4 but it exactly covers the old version which I use to use.I mean no difference with the regular one.
I was wondering should I change any parameters or something?
Thanks
Mike
Hi Mike1349:
Yes, there are three parameters that you can change when you put the indicator on the chart. When you first select the indicator to put on the chart, a window will open. Look through the tabs on that window to find the parameters to make the changes.
Look at my post about three earlier than this one where I recommend the IcyCloud system here on Babypips. It looks good to me.
Barry
sar is great but when the price is ranging, it’s mostly useless. so what do you do when the pair is ranging? follow the dot or do something else?
I’ve spent a few hours reading through this thread, lots of great info and research. As many others have already stated the simple use of the SAR seems to be effective, but the required discipline required to follow a single indicator obediently is pretty tough. Also, it seems that a conclusion has been made that this system works great in trending markets, and poor in ranging markets. I’ve also been looking for ways to avoid the “whipsaws” where you get 2 or 3 dots in one direction, and then another reversal which continues the original trend. Maybe it’s just me, but one of the indicators that seemed to help a decent amount when I was backtesting is the RSI (relative strength index). If you look at a daily chart, you can see that on a “true” reversal, where the SAR dots change direction and a good trend results, the RSI usually crosses through the 50 mark. On a lot of of the false trends, the RSI never goes through 50, and stays above or below it. If someone could explain to me how to take a screenshot of my chart and post it, I could show some examples. dpaterso, I think it’s great that you have invested so much time with this thread, it actually inspired me to get back into trading more. I am currently in college and don’t have a lot of money to trade with but I’ve decided that I’m going to save a few hundred dollars and get back into it, with caution of course… don’t want to lose what I can’t afford to… :o
edit… I was reading back a few pages on the thread and there was a discussion about editing the parameters for SAR so it is better suited for different currency pairs. I use Oanda and I know I can change several numbers for the SAR settings, I was just wondering if anyone has had good results tweaking the settings at all…
Hello folks,
walkonwallstreet:
You’re quite right!!! What to do with this indicator in a ranging market??? Stay away!!! That’s the long and short of it. You need another indicator like Wilder’s ADX to tell you whether or not the market is ranging i.e. ADX is below 20 or has good directional movement i.e. ADX is above 20 (although there is a lot more to ADX than ‘meets the eye’ all of which is explained in ‘New Concepts In Technical Trading Systems’ by Mr Wilder. Personally, I don’t find ADX being too reliable with forex pairs but it works perfectly on CFD’s, Commodites, Metals, and, of course, the Indices. Somewhere (on another forex forum) someone suggested using ADX on the Weekly (or greater) timeframes with Parabolic SAR on the daily timeframe and this does seem to have some merit.
chirules54:
Thanks for the kind words. I agree with you (about RSI) which is also one of Wilder’s indicators (and is widely used by EVERYONE - don’t let ANYONE tell you that indicators are useless - this one is not)!!! Again: there is far more to RSI than ‘meets the eye’ but you have (one of) the basic concepts of the indicator. Look: ‘pure’ Parabolic SAR will work in the long run i.e. there is just no question about it. The main problem for me has always been the HUGE initial stops (which cost me dearly in the past) and, of course, what happens when the market is ranging (and then, as I said before, Parabolic SAR IS NOT correctly plotted by most trading platforms). As far as the stops go, however, I have come to realise that the HUGE initial stops are not an issue if your account is big enough to handle the potential loss i.e. the potential loss if stopped out does not exceed your ‘allocated loss percentage’ e.g. 2% of your capital i.e. then these HUGE stops are of little consequence because Parabolic SAR will always turn a profit in the long run BUT you have to be able to ‘see yourself through’ these losses. Now you could say to yourself “OK - instead of using Parabolic SAR’s HUGE initial stop - I’ll limit my loss on entry to my ‘allocated loss percentage’ and, if the trade goes against me, then I’m still ‘safe’”. The problem with this is that this goes against Parabolic SAR’s ‘design’ so most times you end up getting stopped out when you should / would not have been stopped out had you been following Parabolic SAR ‘to the letter’ BUT if you have a small account that one time that Parabolic SAR is wrong will kill you. As far as ‘tweaking’ Parabolic SAR for different currency pairs etc. etc. etc. I know that this has been ‘touched on’ earlier in the thread and I am a firm believer that this should / could be done although I have never really ‘sat down’ and seriously worked on it but I think some work has been done by various people on this subject. Like I said earlier: there are a couple of ‘things’ that I am trying to ‘smooth out’ with Parabolic SAR and as soon as I come up with something ‘worth its salt’ I’ll post (I don’t want to go posting solutions and ideas and then find that I was ‘over excited’ or ‘overzealous’ and in the long run I’ve been wrong - as I have done in the past - although - being honest with myself and you - the reason that I went ‘belly up’ had nothing to do with Parabolic SAR - but rather with the ‘discipline’ involved in following this indicator ‘religously’ as you have quite rightly stated.
how do you read the ADX?
my ADX now is +DI 9.8947 -DI 22.1660
what is that mean? when -DI is above 20 the market is not ranging is that what u mean?
thank you!
You need to read up on this if you are going to use it as there is quite a lot to it. A rising ADX shows a trend often taken as above 20 with above 50 suggesting trend overextension. The position of + and - DI give you trend direction but there is MUCH more to this indicator
Hi,
ADX consists of three lines (not just two) i.e. +DI, -DI, and ADX. It’s when the ADX line is below 20 that the market is (supposedly) in a range. ADX (Average Directional Index) calculates whether the market has directional movement or not i.e. no directional movement equates to ranging. Make sense?
The other two ADX lines i.e. +DI and -DI CAN be used to enter and exit trades i.e. when +DI crosses -DI from below i.e. +DI is moving up and -DI is moving down take a long entry and stay with this entry until they cross in the opposite direction i.e. stop and reverse to go short and so on and so forth OR enter as described here and place your stop at the high or the low of the day then the lines crossed. In this case you would need to determine when to take profit (possibly determined on what I have detailed in the next paragraphs).
The ADX line itself can indicate when a trend is about to start i.e. when the ADX line has been below both +DI and -DI and then starts crossing to the point where it has risen above both of these lines then that should signify the start of a trend. The longer that ADX has been below both of these lines the stronger the ensuing trend should be.
The ADX line itself can also indicate to you that a trend is coming to an end. Normally what you’ll find is that when there is a good strong trend the ADX line is rising (be aware that the ADX line will be rising whether the current trend is an uptrend or a downtrend i.e. it is indicating the STRENGTH of the current trend NOT the DIRECTION of the current trend). When the trend is about to ‘blow off’ ADX will start to level out and turn down. A very strong indication that a trend is about to end is if ADX has been going up, turns down, then turns up again, and, on the next down turn, you can be pretty certain that the trend has come to an end. Wilder says that even if the ADX line turns down and you don’t want to exit the trade then this is a good time to take some profits anyway.
Parabolic SAR and ADX together?
Wilder himself suggests that Parabolic SAR be used in conjunction with ADX i.e. only take long trades when +DI is above -DI and the ADX line is above both of these lines and only take short trades when +DI is below -DI and the ADX line is above both of these lines.
