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

[dpaterso]

Following on from my previous posts here is a small table of instruments to compare:

(All the calculations are based on information taken from the GCI charts. Now I now that most of you are NOT trading at GCI and are only trading forex pairs BUT this is STILL something to be 'factored in' no matter WHAT you're trading).

(EUR/USD is being used as the 'standard' and a 'factor' of 11 is being used as calculated previously for EUR/USD).

(All are Futures Contracts).

Minimum Capital Required:

EUR/USD: $3553 (the 'standard' or 'baseline' used for the calculations below)

Dow: $11715
S&P 500: $6377
Nasdaq 100: $9227
Russell 2000: $8543
Nasdaq 100 Trust: $4158 (These are also known as the 'Nasdaq Powershares 100 QQQQ' and are tradeable at Delta as well)
DAX 30: $34705
Bovespa: $27822
Crude Oil: $11264
Silver: $24750

This is 'but a few'!!! All amounts assume trading these instruments on the daily charts. As you can see: it's EVEN dangerous to trade Crude Oil if you're undercapitalised. It would ALSO seem that the DAX 30 is the most 'dangerous' of 'the lot'!!!

Can you SEE how easy it is to overtrade depending on the instrument(s) being traded???

'Be careful out there'!!!

Regards,

Dale (forexbrokersonline.net).

Edit:

One FINAL thought here: to be EXTRA 'safe' one should consider that above figures as MARGIN AVAILABLE at the time of taking the trade and NOT TOTAL CAPITAL!!! BIG DIFFERENCE!!! I mean to say: based on our money management rules we should be able to have betwee 8 and 10 positions open at any one time. However: if you were trading the Bovespa or DAX 30 (as example) then between 8 and 10 concurrent positions being open would be ludicrous once again!!!

Now you know why and can understand that the more capital you have in this business the more you can make. Although the minimum capital (margin) requirement to trade the Bovespa or the DAX is relatively high (especially when compared to EUR/USD): it's not impossible to make (or lose of course) between $500 and $2000 per day on a single trade!!! THAT is the difference!!! I mean: a simple BIG TIME 'strategy' would be to ensure that you have $30 000 available and ONLY trade the Bovespa Index!!! You'd make FAR more over a period I believe than you would trading 8 forex pairs (with less capital of course).

[Bocajunior]

Dale,

A great series of posts there about money management.

I totally agree with what your saying about considering ATR and the price per pip movement before deciding whether an instrument can be be traded or not. You can also consider the same factors when deciding lot sizes on any particular instrument ( if the broker offers various lot sizes).

Another way you can use this IMHO is similar to what you are saying about trading the 1 hour TF. Lets say you want to trade the DAX for example.. From your table this requires the greatest amount of usable margin to trade it safely on the daily. You could trade it.... BUT,, and I do mean BUT..a stop must be set that if it is hit, the loss is only x% of your total capital. So for example, if the stop is hit, you lose 1-2% of your balance. I believe this method is still acceptable. Obviously, on instruments that require the largest capital by your method, will have to have far closer stops in place using the method I have just outlined.

But regardless,, your statement is correct. All instruments, price per pip movement and expected range/volatility must be consisered carefully before opening any position.

Cheers

[majosh]

Fabulous trading Dale ! Don`t go getting too clever now..just keep doing what you were doing last week..certainly works for you...and me

[chdorry]

Wow, just catching up on the last couple of weeks in the threads (been away on business travel in Europe - Germany, Switzerland and UK) and I can see some great developments. I remember awhile ago posting to the effect that I try to make my positions "comparable" in a price per pip movement in the majors, and Dale has once again gone in another direction with some great insight into money management.

One key item worth noting - I read somewhere that *ALL* technical indicators work, but 99% of them won't work for *YOU*. By that I think folks need to be clear that Dale is providing great information and guidelines that work great for him personally, and are generic enough to apply to any sized account, *BUT* some folks might need to reduce the margin themselves based on their trading personality (ie amount of risk varies by person).

So not trying to knock any of the advice seen here, as its all great, but you do need to take everything with a grain of salt, as some things might not work well or sit well with one person but might be a homerun for another.

[Bocajunior]

Good day all,

A bit quiet on the threads so I guess that's a sign that people are too busy making sh*t loads of money to post.

No,, in all honesty, I hope everyone can come through the other side of this financial crisis. I got to head off to East Timor of all places with work so will catch up when I get back.

All the best
Boca

[Ray_1]

Originally Posted by Bocajunior

Good day all,

A bit quiet on the threads so I guess that's a sign that people are too busy making sh*t loads of money to post.

No,, in all honesty, I hope everyone can come through the other side of this financial crisis. I got to head off to East Timor of all places with work so will catch up when I get back.

All the best
Boca

Yeah Bocajunior, you are right. This week the EURUSD and GBPUSD has been developing a strong down trend. I had been busy shorting both these pairs south. I think dpaterso is also busy counting his profits this week. Hope to see you back here real soon.

[dpaterso]

Good (Friday) evening everyone!!!

Whew!!! WHAT A WEEK (AGAIN)!!!

OK:Things did NOT go so well this week folks!!! Sorry for that!!! As a matter of fact: I'm DOWN on the week (so I'm not 'counting my fortunes' I assure you). Having said that though: I may be 'down' 'moneywise' BUT I'm definitely 'up' 'skillwise'!!! Now I know that may not make sense or be important to anyone but I assure you: read on and you'll see why I STILL deem myself 'better off'!!!

Firstly (as 'majosh' suspected): it's REAL easy to get overconfident when you get results like I did last week!!! And yes: that is ONE of the things that contributed to a 'mess' in what SHOULD have been an AMAZING week!!! Now this is not to say that it's anywhere NEAR as bad as it has been in the past BUT it's really easy to convince yourself that your'e STILL doing everything right UNTIL the market gives you a really nice hefty 'kick in the family jewels' because only then are you forced to 'sit back and take stock' and only then do you realise that you're 'straying from the straight and narrow'!!! Anyway: no reason to worry. I'm (we're) still 'good'!!!

Secondly:I've discovered some 'flaws' in my VCS(1) system this week i.e. it cannot (IRONICALLY) withstand the volatility of these markets. The entries are good but waiting for a close contrary to the VSC(1) to TP has cost me a lot of money this week. I believe THIS is why 'the old man' uses a constant of 3.0 and not 1.0!!! I reckon that in less volatile and 'normal' markets the VSC(1) is a better 'winner' than the 'standard' VS but in these markets: having to wait for a close contrary to the VSC(1) SAR has almost always landed in disaster on any instrument, be it a forex pair or index.

Third:Believe it or not: the 'hero' this week is the SIS!!! It's the only system that has NOT cost me money and resulted in profits (and not bad ones at that). The odd thing is this: I've studied the SIS for well over eighteen or so months and only NOW, THIS WEEK, do I FULLY understand it (yes I know I'm 'slow')!!! Can you believe that!!! I've been trading the Dow, Nasdaq, S&P, Russell, DAX, and Silver on the 1 hour timeframes using the SIS and, as I suspected MONTHS ago, it's 'the one' (again)!!! As I said: ONLY NOW do I FULLY 'grasp' its merits!!! It's a very difficult system to 'stick to' (I constantly have to give myself a 'smack on the hand' and literally talk myself into NOT messing with the trades but it's paid off and will continue to do so from now on)!!!

Now I know there is some good news there (above) and some bad news but hey: 'perfection' does not come easily!!!

Lastly: ALSO for the first time, did I find out that the Dow, Nasdaq, and S&P DO in fact have 'limits' imposed. I know because today, for the first time in COUNTLESS years, the Dow, Nasdaq, and S&P Futures all traded to 'limit down' before the NYSE opened!!! Again: NOW I know what the significance of the 'limit' is in the SIS!!! Excluding the limit does not affect the 'plot' or 'shape' of the ASI UNLESS you do trade to that 'limit' at which time tha ASI plots 'flat' which means that from that from that point onward you cannot use that HSP or LSP!!! I've got to tell you: 'the old man' did not make his fortune by 'guessing' the market!!! The SIS has to be the most 'precise' and 'intricate' trading system around and I'll tell you: after this week I don't think I'm even going to bother with anything else!!!

Anyway: have a great weekend. I'm about to 'crack a bottle' while I wait for some of my positions to 'wind down' (as a matter of fact I'm waiting patiently to see where the Dow closes today as that is important right now)!!!

Later (probably tomorrow)!!!

[kaalilaatikko]

Has anybody installed Delta's new version of the platform? Have you found it working well? I haven't tried that yet.

[chdorry]

Originally Posted by kaalilaatikko

Has anybody installed Delta's new version of the platform? Have you found it working well? I haven't tried that yet.

J - I'm personally afraid to. Last time I upgraded platforms, I had problems with charts that had me "flying blind" for a bit. As of now I'm up over 10% on the month (including taking a 2 week trading vacation), so I don't want to risk it at this point.

Couple of other noteworthy items:
1 - Have NO open positions and was looking at charts. While doing so I noticed my account balance fluctuating in a range of about 25 cents (moves a penny or two at a time) - Anyone else seen this? I have an email in to customer service to inquire.

2 - If anyone uses conditional orders (after you place a limit or stop order, right click on it and you can set conditional orders) I can make you aware of an "issue" I had. I was looking to trade a pair into some resistance, so I had set a stop order, and then wanted an automatic stop and take profit (limit) set up if/when the order hit. So I did the conditional order, and boy did I get a surprise. First off the trade executed, didn't go my way, hit the stop order I set in the conditional order (cost me about $10). From there things turned and it ran up to the resistance (my TP) and continued on. Of course my limit order also hit at that point, and resulted in another $10 loss (I noticed this shortly after it hit). So take note - if you're using conditional orders to set a stop and take profit (limit), you need to use the One Cancels Other (OCO) option - if you set a stop (stop loss) and a limit (take profit) tied to a stop/limit order, both of them become active orders when the stop/limit order executes

Guess its a small price to learn not to try to scalp some pips when heading into resistance :-)

Would be interested in anyone's input on the new version of the platform, specifically what it does to your charts, etc.

[chdorry]

Originally Posted by chdorry

J - Couple of other noteworthy items:
1 - Have NO open positions and was looking at charts. While doing so I noticed my account balance fluctuating in a range of about 25 cents (moves a penny or two at a time) - Anyone else seen this? I have an email in to customer service to inquire.

Here's the response back from Customer Service. Again, my "fluctuations are small" like they state in the email, but might be worth keeping an eye on.
--------------------------------------------------------------
I can assure you that these minor fluctuations are no cause for alarm. They are due to the fact, that the amount of the profit or loss for a certain trade transaction is always measured in the quoted currency. When the quoted currency is different from your base currency, the amount of the profit or loss must be calculated to your account by reevaluating it to the base currency. Our platform has been built to calculate this amount at the exchange rate at midnight Eastern European Time. This is the closest official exchange rate.
Until then, minor fluctuations occur, due to the differences in the exchange rates between your base currency and the currency in which your profit and loss is. Like I said, these fluctuations are very small, usually resulting to an additional tiny profit or loss.
All account transactions are included in the daily account statement, which is prepared on the next business day.
I believe that all European brokers have this fluctuation. Unless you offer only Forex trading, it is inevitable. At Deltastock we reevaluate your profits at the closing price on midnight of every trading day, while most of the other European brokers do not convert your profits into your base currency for the whole duration of your account.
Best Regards,

Delta Customer Service