Hey Nick,
Just thought I'd let you know that I spent a good deal of the weekend looking for the reason that Wilder includes the 'limit' of 3.00 (as in the example in the book) and I STILL cannot see WHERE it makes ANY difference so I'm REALLY hoping that you or someone else comes up with something!!!
Over the weekend I tried using various other 'derivates' of the formula e.g. making the 'limit' 1.00 instead of 3.00 and all this manages to accomplish is to keep you out of LOADS of good trades on a stop and reverse signal. I also tried dividing the 50 by the 'limit' and then removing the 'limit' (which is MATHEMATICALLY 'allowable' and 'correct') and the resulting ASI is EXACTLY the same as if you kept the formula 'original'. The ONE THING that STILL worries me about this is the in the book Wilder says that the SI will ALWAYS be between 100 and -100 and this is NOT the case i.e. the ONLY place this seems to be the case is in his example. What I DID do is 'modify' the 'PIPFACTOR' for a pair to the point where the SI DID INDEED fall into this range (on EUR/USD in order for the SI to fall between 100 and -100 the 'PIPFACTOR' has to be 0.001 and not 0.0001 as we would 'normally' use) but again: this has the effect of pushing the TISAR FAR away from the reversal point and thus AGAIN keeping you out of trades. The very strange thing is that EVEN WITH SOYBEANS CURRENTLY the SI falls outside of this 100 / -100 range and the ONLY thing I can possibly think of is that either the 'limit' has changed from back then or it's because the prices are WAY different than the prices quoted back then. By the way: you'll find that adding the 'PIPFACTOR' as we have done has EXACTLY the same effect as reducing the 'limit' and NOT USING a 'PIPFACTOR' i.e. if you make the 'limit' for EUR/USD equal to 0.0003 this is the same as LEAVING the limit at 3.00 and dividing by a 'PIPFACTOR' of 0.0001. See the 'dilemma'.
By the way: I going to be using the SI System on some slightly longer timeframes from today (purely because my little IB business seems to be getting a bit of a 'kickstart' and it will become IMPOSSIBLE to trade managed accounts AS WELL as prepare signals and send them to clients every hour UNLESS I was trading at only ONE broker, ONE account, ONE instrument, and ONE client i.e. 'time' is / will become a limiting factor here).
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