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

[chirules54]

Hi Dale. To answer your question, yes my short VS trade with gold is still open. On AUD/JPY the price finally closed above the SAR point a few days ago and I actually reversed to long. I know I said I was going to quit with aud/jpy, but I think this time I am going to use the di+/di- cross to get out, just to see how it goes. I have to say also, just looking at my daily charts, AUD/JPY seems to trend very nicely, at least in the last year or so. Right now the trade is around break-even. I also still have my long usd/cad trade open, which after being down as much as 150 pips or so is now starting to come back, it's only down about 35 pips now. USD/CAD has been ranging lately, it probably isn't the best instrument to be in, but when I entered the trade the adx was quite good, so I'm going to hang on to it and see what happens. I think what I'm going to do is maybe follow one or two instruments for each system, that way I don't have to worry about lot sizes and the "weighting issue" like before when I was using the TBP system with 10 pairs. Here's my preliminary choices... let me know what you think..

TBP system: Gold and EUR/JPY
Volatility: AUD/JPY and USD/CAD
SI: GBP/JPY and Gold

[Bocajunior]

Morning all,

Thanks for that PDF file Dale. Very interesting.

I was on Delta again last night and this morning and I did eventually find a way to get the instruments set up the way I wanted. More about that when I see you on YM. Thanks for all your help though.

Ok, lets talk about ADXR. As I understand it, but please correct me if I am wrong, the ADXR (as outlined by the man in the book) is:-

ADXR = (ADX(14) today + ADX(14) 14 days ago) / 2

Correct Edmundo?? That's what I thought it was anyway.


so....

You are suggesting, if I understand you correctly, is to calculate ADXR like so:-

ADXR = (ADX(7) today + ADX(7) 14 days ago / 2

I got that right?? Just checking we are on the same page here. I have put and ADX(14) and an ADX(7) on my charts and I can see the difference.

Best Regards
Boca

[Bocajunior]

All,

There is another thing I have noticed about this indicator.

On my OANDA platform, the ADX value always seems to be a good bit lower than what it is on my other platforms (DELTA, GCI and MT4). The difference is considerable in some cases so I would just be careful (Chirules) if you are using OANDA to get the ADX and ADXR. It is just an observation but I have not figured out why it is the case.

Regards
Boca

[dpaterso]

Hey folks (I'm feeling ALMOST 'human' again Boca)!!!

Nick:

All sounds good to me. However: I'd like you to try using the ADXR(7) to 'pick' pairs to trade. It's working well for me I can tell you (by the way Boca: as I suspected the losses this morning are back in profit would you believe). Just take a look. Remember that with all (these) systems you need movement and it would appear that this is what ADX/ADXR/CSI 'guarantee'.

And seeing that you brought up ADX/+DI/-DI I want you all to take a look at something in the book (on page 47 at the bottom i.e. 'the Extreme Point Rule'). Read it and then tell me how many people do you think are trading using ADX/+DI/ -DI incorrectly??? The point I'm trying to make here (for those of you who may be following this thread without the book) is that you CANNOT just 'pick an indicator' and start trading off of it unless you've 'done your homework'!!! I've always thought that trading using ADX/+DI/-DI was a waste of time BUT add 'the Extreme Point Rule' into the 'mix' and suddenly you have another trading 'system' that actually works!!!

Boca:

I answered (at least) this question for you on YM i.e. ADXR(7) i.e. no '14's' but all '7's' (and it was a 'stretch' at the time let me tell ya)!!!

Seeing that you enjoyed my .PDF so much I thought I'd attach another one. I've 'removed' the ADXR(14) column because I'm happy to 'standardise' on ADXR(7) and I've replaced it with the entry signal being given to me by the SI System (either new entry points or stop and reverse signals). Again: check the charts and you'll see just how 'powerful' the use of ADXR can be i.e. compare the highest ranking pair to the lowest ranking pair and you'll see where very clearly where there is PLENTY of movement and where there is NO movement (range bound).

(And on the subject of the SI System: I don't think you can beat this system!!! At one point yesterday there were HUGE profits showing and then HUGE losses and as I type the HUGE losses have turned to profit again and I reckon I'll get back to the HUGE profits that were showing yesterday and maybe then some by the close today. There is not another system in the WORLD that I personally know of that would NOT have stopped you out yesterday for some 'spectacular' losses. What it HAS ONCE AGAIN demonstrated to me is the importance of NOT overtrading your account and sticking to (at very least) Wilder's money management rules)!!!

[Bocajunior]

Evening all!

Friday night here so almost time for a few Gin and Tonics! .

Glad the SI system has swung back in your favour Dale. And thanks again for the latest PDF table.

On another note, I see Delta is up and running again and I think I'm slowly getting the hang of it now. At least all the instruments that are there and the charting. All good.

We spoke on messenger about the TBP system before. Doing it rightly or wrongly, I have had 4 trades and 3 of them hit the profit target. The other one reversed without hitting the target or stop for only a minor loss. I have 1 more position still open. Looking good so far.

I'm onto the Reaction chapter now in the book so I could be on the SI next week.

Best Regards
Boca

[Bocajunior]

Originally Posted by dpaterso

And seeing that you brought up ADX/+DI/-DI I want you all to take a look at something in the book (on page 47 at the bottom i.e. 'the Extreme Point Rule'). Read it and then tell me how many people do you think are trading using ADX/+DI/ -DI incorrectly??? The point I'm trying to make here (for those of you who may be following this thread without the book) is that you CANNOT just 'pick an indicator' and start trading off of it unless you've 'done your homework'!!! I've always thought that trading using ADX/+DI/-DI was a waste of time BUT add 'the Extreme Point Rule' into the 'mix' and suddenly you have another trading 'system' that actually works!!!

I've not looked at the book yet, but I'm fairly sure it says that when the +DI and -DI lines cross, the next time period must pass the extreme point of the day of the cross! Do I get a lolly??!

All the best
Boca

[dpaterso]

Well DONE (at least I THINK that I understand what you're trying to say)!!!

My point is this: before I got to 'grips' with this book I (like GAZILLIONS of others who I can almost guarantee are doing right now) would have based my initial entry and then stop and reverse entries on the +DI/-DI cross alone. Take a good look at any chart you like using any period for ADX that you like and see what the 'danger' of this is??? Without the 'Extreme Point Rule' in place you could conceivably hold on to a single losing position with NO end in sight to the point of disaster!!! And if THAT'S not bad enough look at the profit saved or losses negated by using the ADX line itself (correctly) for an exit as opposed to waiting for the +DI/-DI cross (this being covered on the next page)!!!

Again: one word of warning about the TBP System!!! Only trade 'like for like' pairs e.g. ???/JPY or USD/??? at any given time i.e. pairs where the value per pip movement is approximately the same. The problem is the HUGE stops. If you're trading (for example) EUR/USD and GBP/JPY and EUR/USD hits the TP target and GBP/JPY gets stopped out then you're in a 'world of sh*t' let me tell you.

Edit:

By the way Boca: I read your answer again and I'm NOT convinced of its 'merit'!!! GO READ THE BOOK!!!

(And PLEASE do me a favour: take it easy tonight with the G&T my man. YOU DO NOT want to feel tomorrow like I do today I can ASSURE you)!!!

[dpaterso]

Okay Ladies and Gentlemen and Boys and Girls!!!

I'm out for the week (unless any new orders that were placed last night get hit of course)!!!

Results:

Percentage gain on capital at the beginning of the month: 32.04%

and

Percentage gain on capital at the beginning of the week: 30.08%

Call me a 'chicken' for closing trades early BUT it's Friday AND if I can average around 30% per week from now on then you can't say fairer than that now can you!!! You'll note that (obviously) the gain from last week was not as much as this weeks gain BUT I only started using the ADXR on Tuesday this week and I can tell you that it appears to make ALL the difference!!!

Happy clients!!! Happy me!!! And a BIG 'thank you' to Mr J. Welles Wilder Jnr. and 'you lot'!!!

[dpaterso]

Good (Saturday) Morning All!!!

Hope you're all having a good weekend (how're you feeling today Boca???)!!!

I'm attaching another updated .PDF again for your 'perusal' (I'm not going to keep doing this everyday i.e. by now anyone using any of Wilder's trading systems will see what I'm trying to demonstrate as far as using ADXR to 'filter' entries is concerned).

What I'm STARTING to notice (just by the way) is something that I think starts to 'come over time' i.e. in addition to using ADXR to 'filter' your entries you also have to use a BIT of 'intellect' as opposed to 'blindy' acting on the signals. For example: you'll notice that my third highest rated pair is EUR/GBP and the signal is long. Well: you could not get me to go long EUR/GBP EVEN WITH YOUR MONEY let alone mine!!! In other words it is my 'belief' that this pair HAS to correct soon so what's the point of opening a position JUST because you got a signal to do so and then will probably end up having to stop and reverse not too long afterward for a loss. Of course: let's face it I could be wrong and EUR/GBP might reach parity but I've learned to rather 'err' on the side of caution as opposed to just taking a trade 'because I can' (it's AMAZING how 'cautious' one becomes when your also trading 'other peoples money')!!! And besides: as you've probably noticed the SI System generates LOADS of trades on a daily basis so I can assure you that you'll never be 'out of the market' at any given time. Anyway: more good examples are GBP/BGN and GBP/NOK (I ignore all the ???/ZAR entries i.e. just 'for show') i.e. both short entries BUT I can't see the GBP depreciating forever and if you look at the charts both of these pairs seem to have encountered major resistance on the down side so going short here (again in my opinion) would NOT be 'prudent' just yet I don't think. Also: these examples are a very good reason to NOT trade on Sundays from the open either i.e. the GBP moves down with stocks and the Dow dropped -253 points on Friday and the Dow ALSO just does not KEEP on dropping so all you need is a rally in the Dow on Monday and any short GBP/??? and EUR/??? positions will turn to losses (which by the way is the 'scientific' method I used to close out yesterday at my +30% gain or whatever i.e. I tracked the Dow using Pivot Levels and the moment the Dow got to S2 I closed out and took profit. Yes: in retrospect the Dow proceeded to drop another -100 points to S3 after I closed out so I WOULD have made more BUT I'm LEARNING to accept what I've made graciously i.e. there will ALWAYS be profitable trades with Wilder's systems and, like I said yesterday, +30% on the week / month is nothing to be 'sniffed at')!!!

(By the way: for those of you who MAY be monitoring this thread and do not have 'the book' or understand the SI System DO NOT try and trade these signals that I've posted over the last three days i.e. if you don't know how the SI System works and you try to just 'jump in' based on the information I've posted here I can assure you you'll end up in 'hot water')!!!

[chirules54]

Hi Dale, when you say I should follow the adx(7) to enter trades, do you mean I should keep track of all of the pairs and then only enter trades on the 2 or 3 that have the highest adx values that day? I can see how this would work well on the systems where new trades are opened more frequently (like the SI). So you could have signals to enter trades with the SI on say, 8 pairs, but you only actually take the trades on the ones with the 2 highest adx values that day. Does this make sense and is this what you are basically doing? I looked at that pdf file you posted and that's what it looks like to me, except you have the top 6 instead of the top 2 or 3...