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

[mytwopips]

Originally Posted by randont

Good Morning(NOT),


I lost all my gains this week and then some. I won't bother listing all my bad trades. I'm down 10% this week. Money management was followed. Where I screwed up I think is not spending enough time studying the charts before I made my trades. The next day I'd go back and look at them and I don't know HOW I ever read the chart so wrong. That coupled with properly executed trades that went bad. So I hope next week goes better. After this week I'm kinda hesitant to fund my account so soon though.

Read your signature.

"Death is nothing; but to live defeated and inglorious is to die daily."-Napoleon Bonaparte "

Can't win them all.

Have a nice weekend.

[dpaterso]

Good (Saturday) morning all!!!

Before I start (to all of those who have been 'concerned' as to why I have not posted this week): I just simply had nothing to say is all i.e. no new 'tweaks' or 'light bulb moments' or anything like that (well up until this morning that is)!!!

I see some 'disturbing' posts here!!! Let me at least TRY to help you out!!!

Now: the very first thing to NOT do is PANICK!!!

I reason we're all down (and yes I'm in exactly the same position as everyone else right now) is mainly because of the NFP's and the effect that those figures have had on stocks and in turn on forex pairs and commodities. There is also concern about credit card companies now (defaults are on the rise). The Dow lost 410 points yesterday (and strangely enough it ALSO closed BELOW the INITIAL VS SAR signal to go long which was given on 23 January 2008). This is important to you BECAUSE currencies like the EUR, GBP, and JPY 'follow' or 'mimic' the movements on the Dow.

Right: please believe me when I say that you have absolutely NOTHING to worry about!!! I have spent MANY MANY hours just sitting and watching charts and I can assure you that this is nothing other than a temporary setback AND THE WORST THING THAT YOU CAN DO RIGHT NOW is to start closing positions early because you're dissapointed in the fact that you're now showing losses and you're worried that these things are not going to turn and you're going to 'wipe out'. Not only is this going to cost you money but it's also going to 'mess with your head'!!! Please trust me on this one i.e. 'been there many times before and got the t-shirts'!!! As long as you are following the systems and (more importantly) following the money management rules you WILL prosper in the end!!! Sometimes in the past four or five months I've been DOWN as much as 50% or more on occasion BUT it never lasts more than a day or two and after that everything turns to big profits. Remember: it's the 'panick buying or selling' that actually contributes to these huge movements so the last thing you want to do is exacerbate the situation. You have to see the past couple of months as a sort of 'culling process' i.e. the market is doing a bit of 'housekeeping' as it were.

Now: if the above does not make you feel any better then my next couple of points SHOULD!!

First: the ECB MAY raise interest rates next month so this is good for the EUR (and good for you if you're long any EUR positions).

Second: there is no way that the US Fed is going to cut interest rates further so now would be a very good time to start looking for USD long positions.

Third: the US is NOT going to 'close down' I assure you!!! It's just simply not going to happen no matter WHAT anyone tells you no matter WHO they are!!! For better or for worse the US Fed has already demonstrated that it will do WHATEVER IT HAS TO to ensure that Wall Street and the US economy does not collapse and they have the power and the resources to ensure that this neither of these things happen.

Fourth: you should be GRATEFUL that things have changed so dramatically this week BECAUSE all it does is present good trading opportunities for next week.

Now to the individual posts:

kaalilaatikko:

GET THOSE INDICATORS OFF YOUR CHARTS my friend!!! You CANNOT trade Wilder's systems AND use other indicators!!! I am STILL sitting in a HUGE loss on AUD/NZD right now BECAUSE instead of following Wilder's systems I 'second guessed' the systems BECAUSE of Stochastics and what I 'felt' was going to happen with Oil and Gold. I will close the position out at BE (or maybe a profit) soon but be that as it may it's cost me money in the sense that I've not been able to make as many trades as usual because I've got margin tied up in this position and of course I'm paying interest on the thing every day. It's a lesson learned and as I've said before: you will NEVER find ANYTHING NOT WILDER on my charts ever again. I really don't care what anyone else says about Stochastics by the way. If you want a FINE example of how misleading Stochastics can be just go and have a look at USD/CAD last year!!! Stochastics were oversold for months on end. Had you started buying because according to Stochastics the price was going to turn I can assure you that you would most certainly have wiped out your account (with or without stop losses)!!! If you REALLY MUST have a 'similar' type indicator on your charts (simply to make you feel better by the way) then please change to Wilder's RSI!!!

Randon:

I'm not sure what you mean when you say that you read the charts wrong. If you're trading Wilder's systems then there (theoretically) is no need to interpret ANY chart i.e. the systems are 'purely technical' or 'mechanical' if you like. Admittedly I do look for support and resistance levels and the presence or absence of a trend (based on ADX/ADXR and LRC's) but that's about it. (I'm going to send you an email after completing this post so please check your email).

Other than AUD/NZD (which is still open so for the purposes of this statement does not count as yet) I have not closed a single position out at a loss for the past six weeks or so. Sometimes the profit may have only been $5 but that's better than a loss of any kind and I see no reason why others cannot achieve the same. (I am hoping that one or two of my 'clients' who are trading their own accounts will 'jump in' here to 'back me up' by the way AND NOT the ones that have realised their very OWN losses because they 'panicked'. You KNOW who you are)!!!

Again: DO NOT PANICK!!! The reason that 'da big boyz' make money in this business is because they KNOW that people like you and I are GOING to panick and they're there to pick you (us) off one by one!!!

[chirules54]

I know what you are talking about Dale.. I have two open VS trades on my demo account sitting at huge losses right now, usd/nok and usd/sek. I was tempted to close them out today, but you just have to "hang on" and follow the system like a robot. You can't let emotion get in the way of it. Correct me if i'm wrong, but usd/nok follows oil prices and from everything I've read, this surge in oil prices can't go on forever. I know that I've already taken measures to buy less gas and it's a matter of time before people realize that they are tired of paying $4.50 for gas, and demand will go down again.

I have been trying out the TBPS system with the extra parameters i.e. only take trade in direction of LRC's and make sure there is enough room in the LRCs for the price to "run" and while it limits the trades you can make, it seems to be a good idea. I had one winning trade on usd/jpy a few days ago but my current trade is sitting at a loss because of the big drop in the DJIA and what not today. There are several opportunites pending on the next trading day, so we'll see how it works out.

Dale: I got the e-mail from Georgi and hopefully within a week or two my account will be opened, I just emailed my documents so the long part is mailing the stuff all the way to Bulgaria.. looking forward to finally getting it done though.

P.S. It is a friday night here, I apologize for any grammar errors, I'm not sober. lol.

[dpaterso]

Hey,

Thanks for the post. Nice to hear from you (and glad you're enjoying your evening. I did pretty much the same thing last night as a matter of fact)!!!

You are quite correct i.e. about the NOK 'tracking' the price of Oil and I ALSO agree with you i.e. that these prices cannot continue to go up and up forever (at least not without a correction). Also remember (obviously) that the fundamentals of the OTHER currency of the pair play a part too (and like I said: I believe in the United States Dollar)!!!

I wouldn't worry myself too much about pairs that have droppped because of the big drop in the Dow. I watch the Dow ALWAYS and have been doing so since I started and I can tell you that it does not drop this much and not recover either the next day or the next so again: it's just patience and restraint AND MONEY MANAGEMENT that is required and you're 'good to go'!!!

I am 'liking' the LRC's with the RTS more and more every day. I've added some more RTS levels to my RTS (remember: pivots) and the combination I believe is 'lethal'!!! Again: I think it really should work well with the TBPS also (although I've not tried it out yet to be honest). I have had a cursory look and it though and it would certainly seem that if you've just been given a signal to go long by the MF and the price closed in the bottom half of the channel then the trade will hit the TP target 99.999% of the time (yesterdays 'moves' of course not being taken into account). (Of course the opposite applies to a short position i.e. the price has closed in the top half of the channel).

And I think you're 'on the button' when you say there are plenty of trading opportunities coming up. I for one are looking for USD longs right now!!! Take a look at (most of) the USD/??? and ???/USD pairs and note that in most cases there is what appears to be solid resistance at or near to where they moved on Friday (also WOULD YOU BELIEVE with NZD/???)!!! Actually: this just 'backs up' my statement above i.e. where the fundamentals of the OTHER currency in a pair play a part e.g. I'm looking for USD longs on most of the USD/??? pairs now BUT NZD/USD is (technically anyway) (supposedly) close to a bottom. As a matter of fact I think it was Boca that posted earlier sometime saying that he does not watch the commodity associated with the 'commdolls' because it only serves to complicate matters and confuse you and I have to say that I agree with him i.e. trade each pair 'in isolation'. While you obviously CANNOT deny (because of yesterdays moves) that the ???/NOK pairs for example are LARGELY dependant on the price of Oil I would still trade them in isolation. Remember: I was VERY sure that the price of Oil and Gold would drop and that 'feeling' (as well as good 'ol Stochastics) is what got me into this AUD/NZD 'mess'. The facts of the matter are that firstly I was wrong and secondly Gold is no longer 'tracking' the Oil price i.e. it's started to 'lag' and no longer 'mimics' the Oil chart. So: what's the point? Me basing a trade on one pair while looking at what another instrument / pair or commodity is doing has 'backfired' now and in doing so my 'better judgement' was 'clouded' and I ignored signals from 'the man'!!!

Glad to hear about your account too. (I'm going to be sending you an email TOO after posting this message).

[thegeek]

I've been trading with Dale for several months now using real money and following Wilders systems and Dale' indicators. On average with Wilders systems I've been seeing a 15% net gain on capital weekly.

My account doesn't truly reflect such because I have made out of system trades, AUD/NZD was one that I saw and recommended to Dale. He agreed that it looked great, we both jumped in mid April. I started with 3 lot sizes, 1.875% of my account balance being 1 lot, the account balance at the time was 16,583.00 (do the math I was playing with decent sized lots). I was so confident about this trade.

Well the economic reports came out and major news spike the wrong way. I let it ride to a loss showing of 1500.00 and it seemed the news spike was leveling out so I doubled my positions, now 6 lots (I was thinking to make it up on the way back down) Loss currently showing 4500. A few hours later NZ released its jobs numbers (major shock to the market because it was far worse than expected. I doubled up yet again to move the break even mark closer (now 12 lots) current losses showing 9k. At this point I had 22.5% tied to one trade (Brian being stupid).

A new release came out of Australia 2 days later regarding a great economic and jobs forecast that sent AUD/NZD further in the wrong direction. I was now sitting on a 12k loss little margin and panicking. I got frustrated and not being a disciplined trader said the hell with it, I was not going to get margin called. So I closed the position at a 14k Loss. (in retrospect had I held on to the position in 8 more days, AUD/NZD had retraced enough to where I would have only suffered a $2500.00 loss where I would have exited in a much fairer position).

To make a long story short starting with 4500.00 in early February using Wilders methods I parleyed the account to 16.5k. (I blew it getting ****y not following MM rules and trading out of sequence) at the time our MM was 3.5% per position and we were seeing close to 30-35% weekly gain on capital problem is we were not comfortable with the available margin when we had over 8 trades in play.

Since my tax time F*** U*, I have added 2500.00 to the 2500.00 I had remaining because the systems have been working and I will recoup my losses. At present after a 2 week sabbatical and getting over (me), trading for 3 weeks using Wilders systems have rebuilt the account to Over 8500. With Fridays present losses showing I'm still up over 30% on the account in 3 weeks.

It is very apparent to me that we follow the money management rules to the letter never more than 1.875% per position and I try not to exceed more than 20% of the account at any given time. When following these parameters you have the ability to pretty much ride out any storm.

When last week started (Sunday) my balance was $7,179.39 during the course of the trading week, I locked in over $1,000 in profits. When Friday hit and the Dow was tanking, I pulled all profits about 470.00 added to the gains made previously I’m up over $1,470.00. I’m sitting on over 1,100 in losses based on 1.875% money management rules. Even with large losses showing, I’m still up on the week, and up over 2k on a 5179.00 balance 3 weeks ago.

I enter trades using the SI, VS and RT Trade indicators, and exit at the RT levels (auto orders) or when I feel a trade is turning away from profit. I don’t count pips or use them to determine exits; I use no stop losses because I’ve determined they will usually get hit. Most trades fluctuate and may remain red for a few days to a week but they usually come around. If I’ve been sitting in a trade longer than I feel comfortable then I may exit it at BE.

My philosophy is 100 nickels is better than a dollar. Take profits as you see fit, let trades run their course. Over all I’m roughly Break Even on my account after 4 months. Had I not diverged from the systems I’d be well over 22k on a 5k investment. To me the systems work great, be patient and follow proper money management and take profits as you see fit.

Brian

[kaalilaatikko]

Thanks, guys, for your comments! You are correct, when this recent sort of rally started, it was kind of a panic that I first felt - it could have been real money. But the calmer thoughts were like, well, this is now something that I'll face anyway every now and then, and I'll better take this as an example of an experience that must never make me loose my sleep.

So, stripping off the less essential from my previous post, I think that I can still hold on my conclusion to the situation: a new signal was triggered for EURCAD causing a hedging position which I don't want to have, so I got rid of the hedge by closing EURUSD, which was the worst of the open positions. Hadn't EURCAD been signalled, I would not have closed EURUSD. This is one rule that I want to stick to unless proven otherwise: no hedging positions, and if a hedge gets created by a new signal, then break the hedge by closing the worst position.

Originally Posted by dpaterso

GET THOSE INDICATORS OFF YOUR CHARTS my friend!!! You CANNOT trade Wilder's systems AND use other indicators!!! ... I really don't care what anyone else says about Stochastics by the way. If you want a FINE example of how misleading Stochastics can be just go and have a look at USD/CAD last year!!! Stochastics were oversold for months on end. Had you started buying because according to Stochastics the price was going to turn I can assure you that you would most certainly have wiped out your account (with or without stop losses)!!! If you REALLY MUST have a 'similar' type indicator on your charts (simply to make you feel better by the way) then please change to Wilder's RSI!!!

Please don't worry, Dale. I will now not open a single position outside VS signals. (Well... I'm still not too consistent about timing, but I hope I'll learn that as well.) The other indicators were left on the display from my earlier studies of different indicators and methods. I've just left the multi-stochastics indicator to see if there is any correlation with it and possible indications for optimal exit, which I haven't seen any so far. I personally vote for those that think that the best trends are seen when in oversold or overbought areas, so I would not think about buying when stochastics - or RSI - enters an oversold area. It's just too early. And possibly too late for selling.

Brian: Thanks for your "testimony", strengthening for its part my decision that I will invest real money in this.

There are just a number of steps still to go. I want to have enough demo trading experience about trading with VS - in progress. I want to read Wilder's book - I got an announcement just yesterday that the book is already in the customs. I want to open a live account, probably at Delta - need to go through all the bureaucracy there first, finding a certified translating agency to translate my documents and so on. I'm itching to get over all of these initiation rites.

chirules54: "... tired of paying $4.50 for gas ..."
Multiply that by 2.5 and you get the price it costs in my country

J.

[randont]

Here's a summary of this past week and what I did wrong and right.
Right:
-Money Management Rules. Most trades 1.8% a few 3% nothing more than that.
-First part of the week I followed the systems well
Wrong:
-Panicked on bad trades and stop reversed only to have them go against me, again.
-To quick to find and place trades. I've been painting this week and we're on a deadline so had to hurry. New tenants moving in tuesday.
-Stops not taking into account the spread.
-Above all not taking responsability for my screw ups.
-Taking some SI trades that I didn't feel I understood clearly. Most SI trades are pretty clear to me. I think I'm trying to force them to be trades even though there's no clear HP, LP, and breakout. Like when there's a clear turn around but no HP or LP that's been established and then broken.

Anyway, I think things will go more smooth next week. I'm live now baby!

[dpaterso]

VERY Good (Sunday) morning ALL!!!

It 'makes my heart happy' when I see new posts in the morning!!!

Brian ('thegeek'):

Thank you for posting and above all thank you for 'telling it like it is'. I cannot add anything more to your post!!! Suffice to say that we've all been there and done things that we KNOW we should not have done!!!

You know (I was saying this to someone the other day): one of the things that absolutely still fascinates me about this business is the fact that we ALL (especially in the beginning) react in EXACTLY THE SAME WAY!!! I was saying that I believe that if you took a million traders from all over the world and put them all into one large room and gave them exactly the same systems and trades they would ALL react in EXACTLY THE SAME WAY when a trade went against them OR when things were 'looking good'. I mean: one would expect that given the fact that all of those traders would have come from different countries and continents, have different belief systems, have different home backgrounds, etc. etc. etc. that they would react differently from each other but I believe it would not be so!!! I think that no matter who you are and no matter where you come from what is at our 'core' is the same 'across the board' and I think that of those one million traders the one's that learn to conquer or control the basic emotions of fear and greed are the ones that will eventually fall into the 'only 10% of traders are successful' statistic that is always bandied about. I don't know of any other business on earth that can 'equalize men' the way THIS business CAN AND DOES!!!

kaalilaatikko:

Please dont' think I was 'dumping' on you about the other indicators (well I was I suppose)!!! It's just that they've never worked for me AND as I have said I am now sitting in a particularly bad trade for NO other reason other than that I allowed Stochastics reinforced my 'belief' that it was going to be a 'stellar' trade and it was all I needed to ignore any and all other signals coming from Wilder's systems!!! Yes: at the beginning of the trade Wilder's systems were ALSO confirming my 'belief' BUT when all of Wilder's systems were SCREAMING at me to stop and reverse I ignored THEM because the message that Stochastics was giving me was 'hold it will turn' and the next day 'hold it will turn'!!! RSI reacted quicker than Stochastics (for what it's worth but I would STILL not base a trade on RSI either UNLESS is was POSSIBLY indicating divergence and EVEN THEN I'd look to the systems themselves for confirmation and NOT the other way around). Actually: if (when) you read the section on RSI in 'the book' it is interesting to note that NOWHERE does Wilder say to enter a trade when RSI crosses below 70 or above 30!!! Ever noticed that everyone??? Wilder only says to look for divergences or he says that support and resistance lines MAY show up on the RSI long before they will show up or become apparent on a bar chart and it can also be used to draw chart patterns and bar formations. Now compare this with any 'online chart manual' or 'indicator help screen' or whatever!!! They will ALL tell you to go short if RSI drops below 70 or go long if RSI moves above 30 OR wait until RSI crosses above or below 50!!! In the book he just says that RSI MAY be 'indicative' of market tops or bottoms or of support and resistance etc. etc. etc. NOWHERE does he say to ACTUALLY trade with it!!! See what I'm trying to say???

As far as your 'hedges' are concerned: for a time I also felt the same way i.e. there was no point in being 'hedged'. I don't believe this any more hence my earlier post of trading each pair in 'isolation'.

I personally cannot wait for you to get your hands on 'the book' either as I think you will find that the content will appeal to your 'highly technical nature'!!!

You will be glad to have opened an account at Delta because you will have access to the commodities and the all the US and EU equities and stock indices (because you are not a US resident). (Of course I'll be glad too let me not tell a lie)!!!

As a matter of interest: why do you need to have your documents translated? Translated into what language? The obvious reason that I ask this question is simply because you're posting in English and Delta's documents are either in English or Bulgarian. (Unless of course you are translating your posts from Finnish to English before posting them in which case I apologise for asking the question).

(By the way: I tried to reply to your email yesterday but the message came back as 'undeliverable' so send me another one because I don't understand why this happened i.e. I just 'replied' to your message so it's not because I entered your email address incorrectly).

Randon:

I never recieved any SMS yesterday BUT I did get your email and I will make a point of being online at 17h00 (my time today) (I've even set my alarm)!!! Let's 'get together' and 'all will be revealed'!!! (You're actually 'getting in' at JUST the right time I reckon i.e. loads of good opportunities coming this week I believe).

Edit:

I just had a thought: if it's OK with Randon we could all 'conference' using YM this afternoon. I've never tried it but it looks like it could be fun. My YM identity is 'fintransdbp' and you would need to 'invite' me to 'be your friend' (or whatever the hell it is that they call it). I am on GMT+2 and will be online at 17h00 my time to help Randon. (It's only really going to be benficial to you if you have 'the book' and at very least a demo account at Deltastock with my 'Wilder indicators' though so just bear this in mind unless of course you just want to 'chat').

By the way:

I have a 'tip' today!!!

When you're looking for RTS trades you may want to look at the weekly charts first, find where ADX and ADXR are below 20 - 25 AND THEN change back to the daily charts and start looking for RTS trades when ADX and ADXR are below 20 - 25 there AS WELL. This appears to ensure that you're not going to get into an RTS trade that is going to breakout AGAINST you. Just a thought.

[Bocajunior]

Good day everyone,

My my, I go away for a bit and when i come back there's a whole list of new ideas popping up. LRC's!! Wow, never heard of them before I read it here. No, only joking Dale, , good to see you're still doing well and keep thinking up new ideas.

As you know, I have been a bit busy with work but i should be home this week so can get back to the trading and get my account ar Delta opened up. Will talk to you soon.

Good week ahead to all.
Boca

[kaalilaatikko]

Hello!

Originally Posted by dpaterso

Please dont' think I was 'dumping' on you about the other indicators (well I was I suppose)!!! It's just that they've never worked for me AND as I have said I am now sitting in a particularly bad trade for NO other reason other than that I allowed Stochastics reinforced my 'belief' that it was going to be a 'stellar' trade and it was all I needed to ignore any and all other signals coming from Wilder's systems!!! Yes: at the beginning of the trade Wilder's systems were ALSO confirming my 'belief' BUT when all of Wilder's systems were SCREAMING at me to stop and reverse I ignored THEM because the message that Stochastics was giving me was 'hold it will turn' and the next day 'hold it will turn'!!! ... NOWHERE does he say to ACTUALLY trade with it!!! See what I'm trying to say???

Excellent points! Just curious: you entered that trade because of wrong speculations, but are there now some reasons keeping you in that trade rather than just taking the loss, albeit a big one apparently?

Originally Posted by dpaterso

As far as your 'hedges' are concerned: for a time I also felt the same way i.e. there was no point in being 'hedged'. I don't believe this any more hence my earlier post of trading each pair in 'isolation'.

I'll take this as a comment from a pro and reconsider my ideas. There is another related issue I have been thinking about, but am not sure about it. I have collected 10 VS pairs I'm interested of, but my money management strategy does not allow having them all open at the same time. I'm quite positive that the best strategy is to exit before the next VS signal, so they all will not need to be open at the same time. But what should I do when there already are the maximum number of positions open, and yet another promising one opens? Should I close the worst one, ignore the new signal, or what? I also have some ideas about dividing a trade in several smaller positions and applying slightly different tactics to all of them, but that needs still some refinement.

Originally Posted by dpaterso

As a matter of interest: why do you need to have your documents translated? Translated into what language? The obvious reason that I ask this question is simply because you're posting in English and Delta's documents are either in English or Bulgarian. (Unless of course you are translating your posts from Finnish to English before posting them in which case I apologise for asking the question).

Delta's site says:

We also require a recent proof of your residential address, issued within the last 6 months. An acceptable form of address proof is one of the following: ...

Certified English translation is required for all Non-English language documents.

So my address proof is non-English, and I need to have it translated to English by a certified translation agency. I'll need to check next which qualifies for a "certified agency", some of them seem to have ISO and EN certificates.

I hope that my posts are readable enough, though I don't feel needing to write them in Finnish first, that would be too time consuming. Though sometimes I feel that a second writing arguably would make them better...

Originally Posted by dpaterso

(By the way: I tried to reply to your email yesterday but the message came back as 'undeliverable' so send me another one because I don't understand why this happened i.e. I just 'replied' to your message so it's not because I entered your email address incorrectly).

I re-emailed you. I have no idea for the reason of the problem. If it still fails, I'll need to try to open another e-mail account.

J.