[dpaterso]

Hi Nick.

As far as the SI System goes you've 'got it down 1000%'. That's EXACTLY it. One thing that you will notice, however, is that the Trailing Index SAR is normally ALWAYS the closest SAR (definitely on forex pairs anyway) so don't get worried that you're always finding this. At first I thought it was a mistake on my part BUT I think it's got a lot AGAIN to do with the difference in quoted prices i.e. the 'PIPFACTOR'. As a matter of fact a lot of the time with forex pairs I find that I'm REALLY just trading the Trailing Index SAR not the Swing Points i.e. the Trailing Index SAR normally gives you a signal to stop and reverse LONG before a HSP or LSP is giving the signal. EXACTLY why this is I am not sure. You COULD trade the system WITHOUT USING the Trailing Index SAR i.e. ONLY trade the HSP's and LSP's BUT from what I've seen this keeps you out of LOADS and LOADS of highly profitable trades. On the other hand on the daily timeframe the HSP's and the LSP's are the more 'sure' signals. I really think it's got to do with the volatility that our market(s) has / have nowadays and the fact that things 'happen faster' than they did in 1978. It's the only explanation I can think of.

Also: that 'business' of placing an order 'a few ticks above or below the high or the low' does not work very well (not in todays markets anyway) (he uses 5 ticks or points or pips). I use 2 x the spread instead and this seems to work FAR better i.e. it 'adjusts' itself particular to the instrument being traded. In other words: it would suicidal to place an order 5 pips above or below the high or the low on a pair like GBP/ZAR for instance (the spread is 500 pips) because the order WILL ALWAYS get executed false entry or not. EUR/USD would be 6 pips normally. I'm certainly not advocating that you trade something like GBP/ZAR UNLESS you've got a LOT of money but suffice to say the system will work. Also: as I have stated previously: this system appears to generate FAR GREATER profits on the 1 hour timeframe (that's the minimum I reckon i.e. I tried 30 minutes and far too much 'market noise' so no point in testing anything less). I also use an additional little 'trick' for order placement i.e. I have a 7 period EMA of the (H+L+C)/3 (one of HIS 'favourite' formulae by the looks of things) and when I'm unsure about the entry then I check to see if the price has CLOSED above or below this EMA AND ONLY THEN will I place an order at 2 x the spread away from the high or the low. Yes, again, like every other 'addition' to any system, it keeps you out of some 'magnificent' trades BUT it also keeps you out of most bad ones (this is pretty much an 'offshoot' of that 'little system' that I described ealier to you AND if you use BOTH together you can add to positions as well i.e. if you're ALREADY in a SI System trade you add to your current position based on signals from the 'little system' that I described). Again: don't get me wrong i.e. the SI System works perfectly in its 'original' form BUT we are here to MAXIMISE profits are we not???

AND BY THE WAY: Capital mangement EVEN WITH THIS SYSTEM is crucial to your success. I have become EVEN MORE conservative than Wilder i.e. he says to NEVER MARGIN more than 60% of your capital at any one time (I now stick to 30%) and he says to NOT EVER margin more than 15% of your capital on a single instrument (position???) and I stick as close to 7.5% as I can get. You cannot BELIEVE the 'piece of mind' this gives you when you're trading. No stress and no possibility of overtrading etc. Remember that there WILL BE drawdowns with this system LIKE ANY OTHER AND you are not really using 'stops' AS SUCH with this system either i.e. your SAR points are actually your stops and sometimes these CAN be very far away (based on the HSP's and the LSP's anyway i.e. the Trailing Index SAR is normally VERY close as he quite correctly states in the book).

TBP System:

I never thought about it but I agree with you wholeheartedly BECAUSE if you're in a profit now and your TP has not been hit during the day then the TP is going to move almost always against you i.e. your TP today IF HIT would have generated MORE profit than leaving the same position open with a lower TP the next day which is normally what the system will give you (sometimes holding on to the position and adjusting the TP for the next day may even result in a loss).