Trading Systems in 'New Concepts In Technical Trading Systems' by J. Welles Wilder

[midulster]

Hi Dale and chirules54,

Sorry I'm a bit slow in catching up with you folks.

I'm working on the SI at the moment and I still have a concern over the value of Limit in the equation when not working on the commodity example. I know in both this thread and the ParaSAR you've experimented with a pip size multiplier but I dont think its just as simple as that. It seems the Limit of 3.00 is the maximum that his example commodity can move in a day (though it appears to move further than this on days 28 and 45) and i'm guessing we need to get a figure which simulates this idea of the maximum likely move.

I have a couple of ideas - perhaps using a multipler of ATR or using a distribution curve to identify where the vast majority of ranges lie and cut off before we get to the extreme outliers.

I wont get a chance to look at this again until later this weekend but I'll let you know as soon as I have any more information.

[dpaterso]

Good (Saturday) Morning Folks,

Sorry I have not posted this week (it's been a 'helluva week' trading wise but ALSO NOT TO MENTION everytime I have TRIED to post this week the site is either VERY slow OR I get those 'pesky' 'Page Not Found' errors. Is anyone else experiencing this?).

When I say 'helluva week' I don't mean it's been a 'good week' either i.e. lot's of bad trades and not many good ones unfortaunately. Not losing but not making either (which to me is the same thing as losing)!!! Even Soybeans decided to 'f*ck' with me yesterday afternoon!!!

OK: issue by issue:

midulster:

As you have correctly noted the 'limit' is the 'limit up' or 'limit down' imposed by the various exchanges on the various commodities and you're also quite right when you say that in his examples the prices move WAY past the '3.00 limit' in the example formula. To be honest with you: I cannot see where this makes any difference at all though (but if you figure it out then please let me know because maybe I just did not 'get it') i.e. if you either simply remove the 'limit' from the equation or use it as in the example I dont' see the difference in the result. In MY spreadsheets (and automated indicators) I have included the 'limit' of '3.00' but divide the the end result of the equation by my 'PIPFactor' to get a an ASI specific to a instrument. If you don't do this your 'Trailing Index SAR' becomes meaningless e.g. if you simply use the 'standard' equation for Silver you'll end up with a 'Trailing Index SAR' that when calculated (as 60 points plus or minus the ASI depending on direction) will never EVER get 'hit' or give a stop and reverse signal (not in your lifetime or mine) but the same calculation for Soybeans works perfectly. Like I said: I have included the 'limit' of '3.00' and used my 'PIPFactor' but if you EXCLUDE the 'limit' altogether you STILL need a 'PIPFactor' and it makes absolutely no difference to the way the ASI is 'plotted' i.e. it makes NO difference to the 'shape' of the ASI when 'plotted' as in indicator or using a chart to 'draw' or 'plot' the ASI in Excel. As a matter of fact if you remove the 'limit' AS WELL as the '50' multiplier the 'plotted' ASI is exactly the same i.e. only the resulting values become smaller. Anyway: like I said earlier: maybe I have just not 'got it' and believe me when I tell you I have tried so if you come up with an explanation I'd be real glad to hear it because this HAS been 'bugging me' now for a very long time and I'm STILL not convinced that I've got it right and, like I said, I have spent WEEKS 'playing around' with the formula and what I'm using is the best that I can come up with.

chirules54:

Firstly about GCI:

They are prepared to let any of my 'clients' open an account with whatever amount of money they like AS LONG AS I open a seperate account with the $2 000 minimum that they require (sort of like a 'deposit' account). This is so that they can 'comply' with the / their regulations i.e. as long as the new accounts are 'associated' with a 'main' account ('associated' by way of an IB Agreement i.e. not necessarily a 'managed account') that has a minimum balance of $2 000 then they're 'compliant'. I'm prepared to do this BUT I need some more clients to justify this 'action' i.e. the $2 000 will be 'dead money' i.e. it cannot be traded or anything like that SO if you can 'hang on' a month or so (I'm assuming that by then I'll have some more GCI clients waiting to open accounts) then I'll do the necessary. They cannot / will not use my live trading account as this 'deposit' or 'compliancy' account for the simple reason that (obviously) I trade on this account (and I suppose they're 'worried' that based on my past performance my live account balance could at any time drop below $2 000 and who can blame them for being worried about this although it CERTAINLY is not my intention to 'end up' like that again I can assure you)!!!

As far as the (your) Volatility System trades are concerned I need to ask you something: looking at your current trades what do you THINK would have happened had you used a 'constant' value of LESS than '2.8' i.e. used something like '1.0'??? I'll tell you why I ask. I've spent some time this week looking at the Volatility System again and (as I said previously) what worries me is the fact that it 'adjusts' the SAR point depending on volatility and unless you have PLENTY of margin I still believe that this can 'catch you in the tail' if you're not careful. The system is designed to keep you in the trade for as long as possible but he is assuming that we, like him, have LOADS of margin and are able to 'ride out' the inevitable 'dips' along the way which sometimes can be quite 'stellar' (just look at the Dow yesterday for example)!!! The Volatility System really is just a 'break out' system and it is using a 'factor' of '2.8 times or 3.00 times the 7 day ATR' to determine whether the instrument has 'broken out' or not. The 7 day ATR is ALREADY a HUGE range in itself i.e. WITHOUT then still multiplying it by a constant I believe. What I'm saying is that if you changed the 'constant' to '1.0' in which case the ARC then is effectively the ATR value then you're going to get a lot more trades and the price does not have to move so much in order for you to stop and reverse if the trade is 'bad'. I have no way of backtesting this 'modification' so your opinion would be appreciated. I know that the ideas of the ARC is to avoid 'whipsaws' BUT this is a 'double edged sword' i.e. in order to avoid 'whipsaws' you need LOADS of capital and LOADS of time on your hands.

NOW!!! The Swing Index!!! Hmmmmm!!!

I'll tell you what my problem is (or rather what my problem has 'become' i.e. when I first started out using the SI System it could 'do no wrong' BUT it has 'failed me' often during the past two weeks) and here is the problem: too many times lately the SI System has given me a signal to place a stop order (either because the price has passed an LSP or a HSP or the TISAR has signalled a stop and reverse). SO: I've placed the orders (just like before) 'a couple of ticks above or below' the signal bar and more often than not (in the past two weeks) the orders have been executed and no sooner has that happened and the price has done an 'about turn' and 'route marched' my positions into 'nice big fat jucy losses'!!! The 'fix' that I tried out this week basically involved not 'waiting for the close' i.e. THE MOMENT that you got a stop and reverse signal based on the TISAR i.e. when the ASI had moved plus or minus 60 points on itself I placed market orders and then used the LSP or HSP (as per the system) as my stop loss value. This seemed to work very well BUT it's risky and to be honest I'm not happy with the 'method' i.e. it's too 'loose' for want of a better desciption or rather it does not 'hang together' nicely. To make things worse you would not be able to trade my 'fix' if you were using Excel to plot the ASI i.e. you have to have the ASI being updated 'on the fly' so that the moment the TISAR gives a signal you can place a market order. The only other way is to 'calculate' the relationship between the movement of the ASI and the instrument being traded as a 'factor' of the ASI and price AND I have tried working this out but it's different for each instrument AND it seems to change on a daily basis i.e. a couple of points movement of the ASI in relation to the price today may not necessarily be the same as the same couple of points movement of the ASI in relation to the price tomorrow (although I'm not 100% sure of this right now i.e. if there IS a way of working out an 'ASI price factor' for each instrument then you would be able to place orders as before knowing what the price must be in order for the TISAR to be 'hit'). Another thing that I have noticed is that it keeps you out of 'FANTASMIC' trades as well. Again, as an example, look at the Dow this week. This is what WOULD have happened if you were following the system 'to the letter': you would have placed an order on Monday to go long; the order would have been executed on Tuesday (and a profit was made); on Wednesday you got a TISAR stop and reverse signal and the subsequent order placed was executed on Thurday sometime and then on Thursday the price direction reversed and wiped out all your profits thus far; and then (thank goodness) your TISAR stop and reverse order was not executed on Friday and you missed the entire move down on Friday. Basically: a ranging market if there ever was one. Now what I'm saying is this: had you been trading the TISAR (that's actually what your'e trading now by doing it this way i.e. the Swing Points are of no consequence anymore) you would have 'caught' ALL these moves from what I can see (I did not trade it on the Dow but have just been 'following' the 'theory' although I did use my 'fix' on a couple of pairs with 'OK' results i.e. profits on moves that I would have missed out on). Take a look and tell me what you think. If you're going to 'stick' to the system as it was designed then we HAVE to come up with some sort of 'failsafe' method of placing your orders far away enough so that they only get hit if it is a 'sure' move OR you have to introduce stop losses or something like that because this system will ALSO 'kill you slowly but surely' if the market is ranging and I'm afraid to say that even the ADX / ADXR offers very little or NO protection against this from what I can see. The only other idea that I have 'come up with' (this morning actually i.e. I 'dreamed' about it last night would you believe) is to use the Volatility System with a constant of '1.0' (as I described earlier) and ONLY take SI System trades when the Volatility System is giving you an SAR signal in the same direction. Check all of this out and post your ideas. I'm not prepared to keep taking loss after loss (no matter how small) and the last two weeks are starting to 'f*ck' with my 280%/100% gains and this is 'not on'!!! Bascially what I'm saying is this: EVEN the SI System needs a 'filter' of sorts i.e. in todays markets, with the volatility that we are experiencing, and the 'data on tap by the second' that we have nowadays, even a system as good and as well thought out as the SI System is susceptible to 'whipsaws' BIG TIME and we need to find a solution for this OTHER than waiting for a trend to develop because, as we know, the market only trends a very small percentage of the time. Now while Wilder MAY have had 'gazillions' of USD to be able to take 'knock after knock' UNTIL a trend developed my name is not Wilder and I don't have his resources behind me so I CANNOT take 'knock after knock' until a trend develops!!!

This IS the purpose of this thread and now that some of us are all 'on the same page' maybe we can feed these systems some 'steroids' and get them better suited to todays markets. We have a good 'basis' i.e. there is no doubt about it that Wilder's systems are 'top notch' and very well thought out but some 'tweaking' is really necessary for todays markets (and this time it's not me 'tweaking' for the sake of it i.e. these are real problems and issues and problems and issues which, if addressed, may very well result in some 'holy grail systems' of sorts).

[chirules54]

Hi Dale,

I was about to go to bed (3am local here) but I figured I would make a quick post before I get offline.

First of all, that sounds like good news with gci, thanks a lot for dealing with that stuff, I really appreciate it, I just need to save up for another month or two because I want to start with $1,000 before I "graduate" from forex to trading the "good stuff" (I'm sure you would agree )

I need to refresh my memory with the SI a little tomorrow morning, so I will post about that tomorrow, for now I will concentrate on the volatility system. As you know, I only have one open trade (short aud/jpy) and it is doing well so far (+310 pips). I am also tracking gold, gbp/jpy, and usd/cad. usd/cad has done nothing but range lately so I am staying out of the market looking for a long trade, the sar signal isn't until 1.0100 or so. With gbp/jpy, I again am looking for a long trade, since the trend for the past month or two has been a downtrend from the 227 area, and i didn't want to get in late, although it appears that if I had just entered short 2 weeks ago when I started following the system I would still be in good shape (closed around 200.00 today). Gold, I am also looking for a short entry, because when I started tracking it, it was in the middle of this huge uptrend (which is still obviously ongoing) and I didn't want to get in until I actually got a signal, which appears to be a long way off as far is gold is concerned, I think the sar point right now is 946 or so. Keep in mind that this is with a 2.8 multiplier for the arc point. I tried changing the multiplier to 1, and for the aud/jpy trade it would have got me out several days ago going long again, only for the pair to continue to drop. I must say though, that the current downtrend aud/jpy is in is a bit choppy, it is making its way down but it's not a nice "clean" downtrend where you get 4 or 5 consecutive bear candlesticks, its more like 2 down 1 up, 2 down 1 up if you know what i mean. I played around with the multiplier a bit and I totally agree with you that 2.8 or 3.0 is way too high, especially because right now I am in profit around 300 pips on the trade (which has been open for almost 2 weeks) but the sar point is WAY up there still, if I hit it and reversed to long, it would be a loss of around 230 pips on the trade. In other words, it gets you in late and gets you out late. I think using 1 as the multiplier might give a few too many whipsaws and take you out of slower developing (but still profitable trends) just like a parabolic sar reversal can sometimes. I tried 1.5 and 2, and these seemed to work better with aud/jpy, but I think the best way to test it is somehow program it so it can appear on a graph, then you could "track" each trade by seeing what it really looks like and then fiddle around with the multiplier. I only wish I was more proficient in coding, because once you got it on the charts it would be pretty easy to tweak the multiplier to see what gives you the best entry/exit points, less whipsaws etc. But to summarize everything, YES I believe the multiplier SHOULD be reduced to make the system more reactive and provide more trades, but not all the way down to 1, which I think it a little extreme. Anyway, like I said I feel i need to "read up" a bit more on the SI tomorrow before I give my opinion so I will post that tomorrow..

[dpaterso]

Thanks for the reply.

It's a pleasure (about GCI I mean). I don't know why everything has changed over there but I have to be honest with you: I for one am quite happy because they are now obviously being 'forced' to comply with some or the other laws whereas before I think it was a case of 'anything goes' and this, coupled with their location, was always at the 'back of my mind' although I've never had any problems with them. Like I said: I have no problem doing this for you (and others) but I just need to find some 'others' to 'justify' the 'action' but I'm sure they'll be 'lining up' (I hope so at least) to open accounts at GCI. Just one thing (for anyone that wants to open an account with GCI): you ALSO CANNOT be a citizen nor resident of the USA, the UK, or Quebec (Canada) again for 'compliance' reasons. They WILL allow ME to open an account on YOUR behalf if you live in those countries BUT it then has to be a 'managed account' which, I would imagine, nobody would want to open with me until I can post CONSISTENT trade results with gains in the order of last months 280% (and I'm nowhere near that this month so far)!!! Bear in mind of course that there are other brokers where you can open accounts to trade commodities and metals and the indices etc. etc. etc. i.e. Saxo Bank is one who is supposed to be reliable BUT you need $5 000 to open an account (although at Saxo Bank you can OPEN the account with $5 000 and then immediately withdraw whatever you like after that which you cannot do at GCI - I did check - BUT of course you lose 'all the way' i.e. fees and exchange rate changes and bank charges etc. etc. etc.).

As far as the systems go:

I came up with another 'brainwave' later this morning (while I was out shopping):

Combine the Volatility System with the Swing Index System i.e. use the Volatility System with a 'constant' of '1' and place your Swing Index System orders HERE instead of 'a couple of ticks above or below' the signal bar. While this MAY keep out of some trades it LOOKS like it will keep you out of most of those 'good trade turned bad' things!!! Also: you could even trade BOTH system together i.e. place Swing Index System orders as indicated by the Volatility System and open an additional position if and when the price CLOSED past the Volatility System SAR (as per the original Volatility System).

Anyway: I'll post some charts and things later on today (need to go and have some lunch now)!!!

[dpaterso]

OK, well here is a chart showing what I mean.

(I have put the chart on my business website for clarity i.e. babypips tends to 'compress' the size of the charts when you upload them and for this chart I needed all the space I could get so that you could see what I'm 'going on about'. You need to download it first and then use an image viewer to view it full size i.e. just clicking on the link and viewing it in your browser makes it look worse than ever. The chart is in a .PNG format and if you can't download it or view it then let me know and I'll make another plan for you).

http://www.forexbrokersonline.net/ch...volatility.PNG

It is a chart of GBP/USD as at the close on Friday. Now this is what I was saying. Especially because of what MAY happen with the interest rates in the USA next week I can guarantee you that if you placed a stop order 'a couple of ticks below the low of the signal bar' (the book says to use '5') the order would get executed and not too long after that the price would probably turn and you would then only stop and reverse at the close on Monday which is going to cost you LOADS of pips if this happens. If, on the other hand, you place your order using the value as indicated by the Volatility System (using a 'constant' of '1' and not '3' or '2.8') then MAYBE (HOPEFULLY) the only time your order will get executed is if there is INDEED a 'proper' downward movement. Also: if the price CLOSES BELOW the Volatility System SAR (again in this example using a 'constant' of '1') then you could open another position based on the Volatility System alone.

Now to explain my 'fix': look at the chart and you'll see that the price went up on Thursday and turned down on Friday and now you're only placing a stop order to go short as indicated by the Trailing Index SAR at the close on Friday (for Sunday) SO you've missed the WHOLE of Fridays's downward move. IF, on the other hand, you'd placed a market order THE MOMENT the ASI moved back on itself by 60 points on Friday you would have caught THE ENTIRE MOVE. That's the 'fix'. Why I say it does not 'hang together' nicely is because WHAT IF the price retraces enough to cause the ASI to move 60 points back on itself but then sometime later in the day the price turns and starts to move up again (and passes your opening price) i.e. at what point do you take a loss or stop and reverse??? The 'concept' of the Trailing Index SAR in the Swing Index System 'assumes' that 99% of the time the price will never reach your SAR order and it will turn and continue in the direction of the trend as before. Problem: this MAY have been the case when the book was written but more often than not the SAR IS IN FACT 'HIT' AND THEN the price turns costing you LOADS!!!

Take a look see and give us all some ideas. I've tried EVERYTHING including using a MA of the sum of the shadows of the bars as well as various other combinations of Wilders calculations and the order is either placed too far or too close i.e. it's the 'sweet spot' that we need here.

[dpaterso]

Hey!!! What's happening!!! No messages!!! (Do you people know that I work my ar*e off on this sh*t)!!!

Anyway: FURTHER to my previous post I have spent YET MORE time looking at the Volatility System and the Swing Index System and it's fascinating just how many 'combinations' of the two systems COULD produce fantastic results I think.

For one:

Using a 'constant' of '1' for the Volatility System and using IT together with the Swing Index System seems to produce good results but you have choices:

1 - If the Swing Index System is giving you a signal to stop and reverse as per the Trailing Index SAR you place an order as per the Swing Index System signal BUT USING the value of the SAR as dictated by the Volatility System for your order value.

2 - If the Swing Index System is giving you a signal to stop and reverse as per the Trailing Index SAR you wait for a CLOSE below the value of the SAR as dictated by the Volatillity System (this seems to be the 'better' of the choices).

3 - If the Swing Index System is giving you a signal to stop and reverse as per the Trailing Index SAR you place a market order as soon as the price penetrates the Volatility System's SAR. Once this happens you set a stop loss (in keeping with the 'normal' stop loss 'rules' i.e. risking no more than 1% - 5% of your capital) so if the price continues in the 'right' direction you're 'good to go' but your potential loss is limited. Instead of placing a stop loss in this 'variation' you could stop and reverse at the same place where you would have placed a stop loss in this example.

4 - If the Swing Index System is giving you a signal to stop and reverse as per the Trailing Index SAR you place an order as per the Swing Index System signal BUT USING the value of the SAR as dictated by the Volatility System for your order value. You then place a stop and reverse order at the 'normal' place where you would have placed the order as per the Swing Index System. In other words if your order that was placed at the Volatility System's SAR is executed but the price 'turns' then you're assuming that if the price 'turns' to the point where the 'normal' Swing Index System order would have been placed then it's going to continue to move in that direction i.e. it's 'bounced'. This would be a 'counter Swing Index' trade.

Using the Volatility System on its own you also have some 'creative' options here:

As one example:

Instead of waiting for the close above or below the Volatility System's SAR you place a market order THE MOMENT the Volatility System's SAR has been penetrated setting a stop loss order or a stop and reverse order 'a couple of ticks' the OTHER SIDE of the Volatility System's SAR.

These are but a few 'variations' that I have come up with.

Take a look at them and 'play around'. There are even more variations.

While you're doing this you need to bear this in mind:

In my experience of using the Swing Index System it is either 'right' or 'wrong'. In other words: most of the time if a Swing Index stop order is executed and the price does not 'turn' within a 'short' while then the trade is 'good' but if the price hits the order and 'turns' almost immediately the 'chances' are that the price is going to continue going in the 'wrong' direction. There very often does not seem to be a 'middle of the road' i.e. very seldom will the price hit a Swing Index stop order, retrace, and then start going in the 'right' direction again and CLOSE in the right direction. I must just mention that I had a very similar problem with Bill Williams' 'Trading Chaos' system using fractals. The same thing kept happening: you were supposed to place an order 'a couple of ticks above or below the signal bar' (the signal bar being the bar where the last 'valid' fractal was being shown). Almost 99% of the time the order would get executed and the price would 'turn'. I stopped using the system for this reason (well this was ONE of the reasons) and only this year has it become apparent to me that a fractal actually represents support and resistance so what you're actually doing is placing an order right at the point of support or resistance and in most cases the order was executed and the price 'bounced' off the support or resistance point and then from that moment on your trade was 'doomed'. I've been 'analysing' those very same 'Chaos Theory' trades and if instead of going 'with the system' you traded 'against it' you'd be 'right' a lot more times than you'd be 'wrong'. The alternative was to NOT place an order 'a couple of ticks above or below the signal bar' but rather to wait for a CLOSE above or below the signal bar AND THEN place your order.

I know I'm 'moving around' here (from one system to another) but this is NOT me 'up to my usual antics'!!! All of this is 'food for thought'. As I have said before: all of Wilder's trading systems are 'ingenious' I think BUT they definitely need a 'tweak' or two a) to work in todays markets and b) to work with / on forex pairs. The main problem with the Swing Index System is where to place your orders i.e. you have to be CERTAIN that you're not placing orders right on a support or resistance line and this is the 'key to the kingdom' with the Swing Index System. I'm 'surmising' that the Volatility System is actually 'giving' you the support or resistance values (with a 'constant' of '1'). As a matter of fact it's 'uncanny' how sometimes the Volatility System SAR value is EXACTLY on a previous support or resistance line SO you MAY even have to place orders 'a couple of ticks' above or below the Volatility System SAR!!! Another 'variation'!!!

Edit:

One OTHER thing you could 'throw' into the 'mix' is pivots. I've noticed that a lot of the time the 'bounce' of a Swing Index System stop order normally happens when the stop order is placed at, or near, some or the other pivot point i.e. it makes NO sense whatsoever to place a Swing Index stop order to go short when the instrument has just traded close to, or is at, it's monthly S3 level!!! Of course you have to know how to CORRECTLY use pivots (something which I'm still not too 'comfortable' with) and even after doing extensive reading on the subject there does not seem to be a 'hard and fast' method of interpreting or trading pivots so if anyone KNOWS if there actually IS a 'hard and fast' method of using pivots then please let us know!!!

[dpaterso]

OK - well - it's official!!!

I just watched the price of GBP/USD move PAST a Swing Index stop and reverse order (to go short as per the Trailing Index SAR signal from Friday), go down to within ONE SINGLE PIP from where the Volatility System's SAR is (using a 'constant' of '1'), move right back up to where it opened, then 'spike' back down to it's low, and then move back up again!!! Had you (I) had an order placed there it would be a nice 'loser' right now. On the other hand I've just watched some other trades (three actually) moving 'furiously' in the right direction and the difference: the Swing Index had given a stop and reverse signal AND the price had CLOSED below the Volatility System's SAR (again using the 'constant' of '1'). At this point it seems that the Volatility System (using a 'constant' of '1') sure is a good 'filter' for the Swing Index (or visa versa). Time will (of course) tell but if nothing else I hope my posts will promote discussion.

[chirules54]

Wow.. looks like you have been busy Dale. As for me, final exams start tomorrow morning so I'm afraid I will be busy until wednesday night, but after that I will have a week off to play around with the systems. I'm actually doing pretty well again, as my short usd/jpy trade is working out nicely (down to 96.50 as we speak) and my volatility system trade with aud/jpy is also doing much better (+660 pips now)!!! I've decided that for future use of the volatility system I'm going to reduce the multiplier to 1.5 I think.. I really want to sink my teeth into the SI and all of these combinations you are discovering, but arrggghh, I have to wait until wednesday. I need to get back to the textbooks, but I'll be joining you in "the quest" pretty soon.

[dpaterso]

Good (Monday) Morning All!!!

chirules54:

Good luck with your exams. As I said before: you're doing the right thing. And, if there is one thing I've learned, there is ALWAYS an opportunity to 'get into the market' so you'll not miss anything (as a matter of fact I reckon by the middle of this week you'll be able to 'get in' at a better time than now because things REALLY don't look good out there especially for stocks). By the way: for those of you who don't know: JP Morgan is buying Bear Stearns for $2 per share. Bear Stearns closed on Friday at around $30 per share. I'll tell you this my friends: it's a market like this that will give us 'tales to tell' in a couple of years time. I was not around in 1929 BUT I'm around now and those of us that can 'stay in the game' in a market like this will be looking back in a couple of months saying 'man it's easy to make money like this'!!! Not since I've been trading has the market really been 'normal' and I reckon 'if you can make it here (now) you can make it anywhere'!!!

By the way: it 'dawned' on me yesterday just WHY I like Wilder's work so much: HE COMPLICATES THINGS which is 'right up my alley'!!! For those of you who have NOT worked it out yet: the Volatility System's SAR is the highest or lowest close during the past uptrend or downtrend plus or minus the previous days ATR(7) multiplied by the 'constant'!!! Most of the calculation in the book really is HOW to calculate the TR and the ATR BUT most of us already HAVE the ATR (indicator) so 'do the math'!!!

[dpaterso]

For those of you who saw my previous post where I 'loosely solved' Wilder's Delta Phenomenon for the Dow (about a week or two ago) I thought you might like to have a look at what's happened since then!!! Looks like 'Wilder strikes again'!!!

Now (once again) if my 'loose interpretation' of the Delta Phenomenon is correct the Dow STILL has a ways to go down (believe it or not) BUT the good news MAY be that from around 21 March 2008 the Dow should 'turn' and 'rally strong' for a good few days (maybe even for a week or two). If the market 'inverts' however then you can look at the Dow going WELL below 10 000 my friends i.e. NYSE 'disaster'!!!

(There is a 'full size' version here with the Volatility System and ASI added but NO comments):

http://www.forexbrokersonline.net/ch..._full_size.PNG

(Oh and I have contacted The Delta Society to ask them if they could give babypips members a discount on the book 'The Delta Phenomenon' like they did with 'New Concepts In Technical Trading Systems'. I received a reply saying that it would not be a problem and I am now just awaiting the 'discount code' and will post details here). (This is for those of you who MAY be interested in 'The Delta Phenomenon' of course).