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

[dpaterso]

Good (Saturday) morning all.

Hey 'Father Ted':

NOW I understand!!! I took a look. Very nice!!! I've never heard of them though (not that I'm an expert by any means). They do seem very 'different' or 'designer' (not finding the right word here)!!! I've got to tell you: the powered versions are 'intruiging' and those interiors!!! WOW!!! I have to say though: I'm more your 'Supercar / Learjet' kinda guy!!! I've also 'got my eye' on the odd office tower or two with a Wall Street address (there should be some 'buy one and get one free' promotions coming soon)!!!

Oh well: back to the land of dreams!!!

I was just going through some charts (as usual) this morning and it has AGAIN struck me how 'well' the RTS Levels (Pivot Levels) 'hold' on the weekly timeframe. Even with these 'wild gyrations' in the markets of late the weekly RTS Levels (Pivot Levels) have 'held' (the S&P and the Nasdaq closed RIGHT ON our LSTOP3 or Pivot Level S3 yesterday while during the week they 'sailed through' the daily RTS Levels (Pivot Levels) as if they were not even there)!!! And if you take a look at the SIS on the weekly timeframe as well: 'very few to none' false signals or whipsaws!!! Just and obvservation. Of course: the BIG problem with trading the longer timeframe (even IF you could 'muster up' the patience) is that if you're WRONG on a trade the loss could be HUGE by the time you get a signal to stop and reverse or whatever. The 'flipside' of course is that if you're RIGHT on a trade: the profits can be HUMUNGOUS!!!

I see we're also now AGAIN starting to get some 'promising looking' (possible) VSC(1) entry signals on quite a few forex pairs and, what I'm hoping, is that the signals are NOW being generated AFTER the huge pullbacks in price. Take a look at GBP/JPY and GBP/USD for example. It sure looks like we're going to get a 'confluence' of signals from the VSC(1) and the SIS. Something interesting that I noticed as well: when we got the FIRST VSC(1) entry signals on those two pairs, AC was green BUT it was already ABOVE the zero line and, as we know, these trades only broke even (at best) whereas NOW AC (as well as AO) is BELOW the zero line. Could this be important??? Could this be the VSC(1) / SIS 'magic bullet'??? I know I've mentioned this before and I seem to remember that someone said that you miss too many trades BUT did anyone actually see what happened to those trades??? Did those trades that were taken (and not missed) because AC was green but was ABOVE the zero line actually (eventually) close out at a profit??? I'm not saying I've gone back and analysed trades like that but maybe it's something to look at. I mean: take a look at AUD/USD as another example. We got our VSC(1) entry signal a few days back but look at what happened to the trade (and while you're looking at that please also note where AC was at the time and look NOW where AC is)!!! 'Food for thought'!!!

[kaalilaatikko]

Originally Posted by dpaterso

I see we're also now AGAIN starting to get some 'promising looking' (possible) VSC(1) entry signals on quite a few forex pairs and, what I'm hoping, is that the signals are NOW being generated AFTER the huge pullbacks in price. Take a look at GBP/JPY and GBP/USD for example. It sure looks like we're going to get a 'confluence' of signals from the VSC(1) and the SIS. Something interesting that I noticed as well: when we got the FIRST VSC(1) entry signals on those two pairs, AC was green BUT it was already ABOVE the zero line and, as we know, these trades only broke even (at best) whereas NOW AC (as well as AO) is BELOW the zero line. Could this be important??? Could this be the VSC(1) / SIS 'magic bullet'??? I know I've mentioned this before and I seem to remember that someone said that you miss too many trades BUT did anyone actually see what happened to those trades??? Did those trades that were taken (and not missed) because AC was green but was ABOVE the zero line actually (eventually) close out at a profit??? I'm not saying I've gone back and analysed trades like that but maybe it's something to look at. I mean: take a look at AUD/USD as another example. We got our VSC(1) entry signal a few days back but look at what happened to the trade (and while you're looking at that please also note where AC was at the time and look NOW where AC is)!!! 'Food for thought'!!!

I just had a glance at my list a couple of weeks ago and summed how it looked now. The numbers look horrible. If you had entered all those signals without getting out soon, you'd be in deep sheet now. I took some of them + some CFDs, and maybe I need not say more. Most of the positions are still open, but my margins are now all up to the rule limits. Now I can do nothing but wait.

There is maybe only GBP/USD that would have made some proper profit. And as far as the proper AC signal is concerned, please look at the corresponding column in the table. Most of those pairs had a proper AC in place. But practically everything just turned against us here. I think this may be the worst kind of timing to test VSC1.

 
PAIR            ENTRY                   AC date SIS date   How did it go in pips?
 
Last week's signals
AUD/CAD Long    0.88255                 10.9.   19.9.      -400 (not fired)
AUD/JPY Long    90.473                  8.9.    19.9.      -800 (not fired)
AUD/NZD Long    1.21714                 -       22.9.?     -500 (fired)
AUD/USD Long    0.84151                 9.9.    19.9.      -600 (fired)
CAD/JPY Long    19.9. - retrace?        18.9.   19.9.      already retraced 450
EUR/JPY Long    156.197                 8.9.    12.9.      -1000 (not fired)
EUR/USD Long    15.9. - retrace?        12.9.   12.9.      already retraced 600
(GBP/CAD skipped) 
GBP/JPY Long    198.198                 8.9.    12.9.      -1000 (not fired)
GBP/USD Long    15.9. - retrace?        8.9.    12.9.      +500 with proper exit
NZD/JPY Long    74.789                  17.9.   18.9.      -400 (not fired)
USD/BGN Short   15.9. - retrace?        12.9.   12.9.      already retraced 500
USD/CAD Short   19.9. - retrace?        ?       18.9.      already retraced 300
USD/DKK Short   15.9. - retrace?        12.9.   12.9.      already retraced 1500
USD/NOK Short   15.&19.9. - 5.64255     12.9.   19.9.      -4000
USD/RUB Short   15.9. - retrace?        10.9.   16.9.      +2000 OR already retraced 3500
USD/SEK Short   15.&18.9. - 6.57454     12.9.   18.9.      -4500
 
Last week's candidates
USD/ZAR Short   about 7.8               16.9.   19.9.      -3000
EUR/AUD Short   1.7227                  19.9.   19.9.      -500 (not fired)
USD/RON Short   2.50669                 11.9.   19.9.      -2500 (fired)
 
New signals
AUD/CHF Long    0.9281                  19.9.   19.9.      -500 (fired)
CHF/JPY Long    18.9. - retrace?        12.9.   18.9.      already retraced 500
EUR/CAD Long    retro? or going short?                     300 short
EUR/NOK Short   18.9. - 8.26362         19.9.   19.9.      -300 (fired)
EUR/SEK Short   9.49957                 18.9.   19.9.      -2000 (not fired)
GBP/AUD Short   2.18305                 19.9.   19.9.      -900 (fired)
GBP/NOK Short   10.3778                 18.9.   19.9.      -2800 (fired)
GBP/NZD Short   18.9. - 2.66723         18.9.   19.9.      +300 with proper exit
GBP/ZAR Short                           17.9.   22.9.?     (tough)
NZD/CAD Long    0.73046                 10.9.   18.9.      -100 (not fired)
NZD/USD Long    18.9. - 0.68415         12.9.   18.9.      -200 (fired)

[dpaterso]

A very good Monday morning all!!!

Before I 'start' I'd like to tell you about my weekend:

Last week I promised myself that 'if it was the last thing I did on this earth' I would spend some quality time with my son so, came Friday last week, I 'shut up shop' (it was not easy at the time) and we pitched a tent in our front garden and basically 'camped out' until Sunday morning. HIS rule for the weekend: 'NO TECHNOLOGY'!!! FANTASTIC is all I can say. For MONTHS on end I've sat in this chair from Sunday night until Friday night and then had to spend most of the weekend resting (recovering???). This morning: I feel rejuvenated like never before!!! The reason I'm telling you this: sometimes you DO NEED to 'get away' from this and there IS 'more to life' than this!!! 'BALANCE' is 'the key' I think. So when you feel that NOTHING is 'going your way' and the market is 'against you': STEP AWAY!!! You're not going to lose anything by doing this and can ONLY gain!!! These past few weeks have NOT been easy I'll tell you: not for me, not for you, and not for the very best of 'seasoned' traders. I've spent some time taking a look at some other threads around here and I'll tell you that the prevailing conditions are resulting in more than one account 'wipe out'!!! But we're still here and 'alive and kicking' and that has to mean something!!! Something good!!! So 'hang in there' if you can: we WILL truimph in the end!!!

kaalilaatikko:

I have to agree with you. As I said above: these are 'trying times' for us no question. I have NO doubt AT ALL about our trading systems under 'normal market conditions' but the prevailing market conditions are pushing MANY a trading system and trader 'to the limit'!!! The good thing: I strongly believe that any signals we get from here on are going to be reliable ones.

Now ON WITH BUSINESS!!!

Now let me say THIS: JUST BECAUSE I took 'time out' did NOT mean that I could stop THINKING about this business!!! I spent a great deal of time thinking about all sorts of things and the most 'pressing issue' for me is 'where to call the bottom' of these markets if not for any other reason than just to prove that, using a combination of technicals and 'the old man's' 'Delta Phenomenon', it would INDEED be possible to 'call the bottom'.

To see what I've come up with take a look at the chart in the attached WinZip file.

(Before I go on: I KNOW that there are many, myself included 'once upon a time', that 'dismiss' a lot of this stuff as 'mumbo jumbo', but, let's see what happens)!!!

Now on the attached daily chart of the Dow:

I plotted the 'Intermediate Term Delta' or 'ITD'. This tells me that the Dow, 'no matter what', is STILL going down (as I posted in a previous post). The questions are, of course, 'for how long' and 'how low'. I added the monthy Pivot (RTS) Levels onto the chart. At this point I started to see where the ITD intersected with the monthly Pivot (RTS) Levels. Then I decided to add a Fibonacci Fan using the extreme points WITHIN the relevant ITD periods. At first: the extreme HIGH point was a few days later than where it is on the chart now (which oddly enough was the beginning of the first ITD period that concerns us now). The Fibonacci Fan ALMOST 'fitted' but not quite. Then I realised that ITD MUST take into account Saturday's and Sunday's (which I do not have on the charts) so I 'played around' a bit with the Fibonacci Fan and, after offsetting it slightly i.e. to the previous HIGH point, got it to fit 'perfectly' with the price action. NOW I have THREE different levels that intersect at roughly the same points. Last night I had another thought: 'Black Monday' (Monday, October 19th, 1987)!!! I added THAT line to the chart (Monday, October 20th, 2008 because this is the first Monday closest to the anniversary of 'Black Monday' this year). (I know from past experience that for SOME reason or other the Dow 'tanks' on each and every anniversary of 'Black Monday'). Now look at those points of intersection and, while you're doing that, take a look at the headlines on Bloomberg.com or Bloomberg TV noting the 'current state of affairs' this morning!!! It's NO LONGER hard to believe that the Dow can go as low as 9000 this month!!! NO LONGER!!! We could see the Dow at 9837 or even as low as 9566 somewhere around October 14th AND THAT is not 'the bottom' either!!! Moving on from there to the next ITD the Dow has EVEN FURTHER to go. Could we see 9200 and below by Novermber 13th??? I believe so!!! I believe we're not going to see ANY 'light at the end of this tunnel' until at least December 12th!!! Take a look and LET ME KNOW WHAT YOU THINK (if you're interested in this type of thing of course)!!!

[dpaterso]

Right!!! I've got it!!! And I hereby commit myself!!!

Take a look at the attached chart of the Dow (as I type, BY THE WAY, the Dow is at 9787).

Now I do not (as a rule) use 'Mid' Pivot (RTS) Levels. I DO know, however, that the Dow 'respects' these levels. So: I decided to add some 'Mid' Pivot (RTS) Levels (only the lower ones). JUST LOOK 'what I got'!!! A point of intersection between ITD ('Intermediate Term Delta'), one of the Fibonacci Fan levels, and a 'Mid' Monthly Pivot (RTS) Level!!! And that level: 9147!!! The Dow will close at or around 9147 on 14 October 2008. The sad part: THAT IS NOT EVEN THE BOTTOM!!! (I can only calculate THE bottom after the close of the month)!!!

Now again: if ANY of you think that this does NOT affect your forex trading then I'd STRONGLY suggest you take a look at GBP/JPY today (as well as all the USD/??? pairs and 'commdolls')!!!

Have fun (and ALL comments and input are, of course, very welcome)!!!

And I'd like to add something that occurred to me today:

You know: we are all VERY quick to 'spit blood' and feel like 'idiots' for 'missing a trade'. Well let me tell you this: give yourself a 'pat on the back' for taking the decision to 'stay out' of the market. THAT is JUST AS GOOD as taking that 'stellar' trade!!! It's a 'stellar' trade in and of itself that decision!!!

[tymen1]

Dale has asked me to make a comment on his last post.

I read thro the material carefully and also the material in the previous post of his.

This is all very interesting, but I also think that fundamentals also apply here.
That big bail out of the stock market is going to play a part.

I understand the stock market because 90% of my funds are in there.

These lines on the chart (attachments) look like a Gann fan.

This, and Elliot waves comes loosely under the term "prophets".

Now I understand that the success rate for prophets is only about 17%.

So it remains to be seen where all this is going to go.
I think the Dow is more likely to go up from hereon.

I will totally agree, however, with that decision to stay out of the market.
Not trading is a position, and one which is to be respected.

[dpaterso]

Good (Tuesday) morning all!!!

Hey Tymen,

Thanks for your comments which are, as always, much appreciated.

As you say: we shall see. At this point everything appears to be 'falling into its Delta place' though. I believe that we will indeed see a short term bounce (for two or three days) but after that it's 'dive dive dive'. This short term bounce will, in all probability, be the result of emergency interest rate cuts this week but (to loosely quote one of the well known investers, Soros I THINK): 'Then what are they going to do'!!!

Later.

[dpaterso]

I just discovered something interesting (for those of you that are interested in Fibonacci anyway):

The 'age old problem' with drawing Fibonacci Lines I believe to be this: 'where to start and where to stop'.

Well take a look at this:

Using the ASI (our SIS): use your last HSP and your last LSP as your reference points!!! It appears to work perfectly every time!!!

[Bocajunior]

Evening all, Evening Dale,

Quite a week it's been hasn't it with watching the financial meltdown unfold in front of our eyes on CNBC/ Bloomberg etc. For the record I have taken a break form live trading until I think things start to stabilize. Having said that, I am still going over and over various books and material, re-reading my Steve Nison Candlestick book and I then discovered Tymens excellent thread on candlestick trading which has been quite a read. I have also been playing around on shorter term trading on the GCI demo which has been a bit of fun.

One thing that has occured to me with this credit crunch or whatever its been called is this:- It really has opened my eyes to the fact that all of us should really take matters into our own hands to secure our financial future. I mean the banks cant be trusted and either can pension funds or whatever. No,, if we can master these trading skills whether that is on FOREX or CFDs Commodities or whatever, we can be the masters of our own destiny. This has made me more determined than ever to continue and battle on through all of this.

Ok, rant over for now. Hope everyone is keeping well
Cheers
Boca

[Ray_1]

I agreed. This crisis had taught us that not even those major financial institutions are safe from crisis, even power countries like US and Europe are facing trouble. I learnt that we must really plan for rainy days even when everything is doing well. This week, I have also start to slow down in my live trading and spent more time reading books and reviewing my trading strategy.

[kaalilaatikko]

Congratulations, everybody! 1000 posts in the thread. Does this mean that the thread now gets a promotion