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

[randont]

"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. "

I would think you'd want to close out the BEST trade showing the most profit. That way you could let your others have time to show a profit.

[dpaterso]

Good (Monday) morning everyone!!!

Randon:

I hope things work out for you from today. We need to 'get in touch' again soon (like today again if possible) i.e. there are a few things we did not cover yesterday and I don't want you to miss some 'stellar' trades because of it and there are a few 'stellar' trades setting up right now).

kaalilaatikko:

MAN you ask some difficult questions!!!

AUD/NZD!!!

Why am I still in that trade??? It's a very good question. You've probably 'hit the nail on the 'head' i.e. I let the potential loss grow to a point where I just cannot bring myself to close it I suppose. I would say that is the MAIN reason for me still being the in the trade to be 'brutally' honest. Not good!!! Very bad actually!!! In 'mitigation' however I also don't see any reason for exiting it at a loss NOW. I've been constantly reading all sorts of analyst comments and technical analysis for this pair and it would appear to me (based on that information) that the 'top' is near. I've also been able to trade 'as if it were not there' (thanks to sound money management) so even if I DO realise the loss neither I nor my clients will be 'down' and will as a matter of fact still be showing decent %tage gains 'as if nothing had happened'. This as I said is ONLY due to sound money management. Had I been 'up to my old antics' of last year this position would have wiped me out!!! There a number of OTHER reasons why this trade is not concerning me TOO much. NOTHING goes STRAIGHT up and STRAIGHT down and anything that goes up that quickly also must correct at some point. The moment that other traders who are now probably sitting with HUGE profits on the move up start thinking to themselves 'well it LOOKS like this thing is not going to go up any further so we'd better take our profits' then the pair will correct and I'll be only to happy to 'prey' on their 'fear and greed' to break even on the position!!! Fundamentally the pair is set to go higher in the long term but not before a correction and this is what I'm 'holding out' for. Let me say this though: no matter WHAT reasons I come up with for still being in this trade I SHOULD NEVER HAVE BEEN IN THIS TRADE IN THIS DIRECTION IN THE FIRST PLACE at least not after all of Wilder's systems gave me a signal to stop and reverse!!! Yes: on this particular pair on this particular trade I would have probably had to stop and reverse about three times thus far incurring a loss each time but I don't think the sum total of those losses would be anywhere near the current loss on the position AND it would not have tied up so much margin for so long AND I would ALSO not have been paying interest every day!!! The 'long and short of it' is this: even although I'm sure that I'll either break even or make a small profit on this position it is NOT something I'll ever repeat again nor be proud of doing (things like this make me feel that I've let myself AND everyone else here on the forum down because on this position I've not 'practiced what I preach'). There is a very good and hard lesson here. NEVER base trades on what you 'feel or 'think'. 'Feeling' and 'thinking' are very different from having an 'opinion based on some or the other factual information'. I think (hope) that 'clear it up' for you!!!

With the VS I agree with Randon to be honest i.e. close the VS trades that are in a profit if other good opportunities arise (IF you're not going to 'follow the trades through'). But also let me qualify this statement by saying that this should ONLY be applied to the VS because of its design. 'Conventional wisdom' says to 'cut your losses and let your winners run'!!! (Pretty rich coming from me right now huh)!!!

There is nothing wrong at all with your posts in English (very good actually). I just was not aware of what the problem might be with Delta (until now of course).

[brendonvdh]

Hi Dale and co

Just dropping in to say I am still following your thread and would like to offer another thank you to you all for your ongoing contributions here. I continue to learn loads from your conversations even through I don't know the details of the indiviual systems. I am still tempted to follow these systems but still need to learn more before I think I am ready to truly understand them.

Update on my trading I opened a live account with Oanda with $485 and current NAV is $610 after 5 weeks trading. So not bad I guess but I still do not feel comfortable that I have any 'working system' but the point is to learn and I think I am doing that. To be honest a lot of the time I simply follow the signals that are provided my Oanda.

I was also short the AUD/NZD but got SL out at 1.24 one of my worst trades yet!! I hope it turns for you.

I am currently short USD/ZAR @ 7.80 (still like this pair) and getting burned as it has just bust through 8. I am holding till the interest rate announcement tomorrow and if that does not help turn it back down I am out. Go agrresive Tito please. 150bps would be great 4 me!

More general news I am coming back to SA for good on the 24th of July, fighting my way through the wave of emmigrants and negative sentiment to get back in. Tough decision to make coming home but I haven't found a better place yet.

Keep well
Brendon

[kaalilaatikko]

Gentlemen,

It seems that you've been quite correct about the recent quick movements and how they tend to correct. Since that I haven't closed nor opened any positions, but just continued my studies about VS. I discovered Delta's API, and it was relatively easy to use for getting data for the pairs they offer. And what made me even happier, I was able to automate data retrieval, so I can now get all the data for all my VS pairs in a couple of seconds.

I scanned all the new pairs and included the following to my portfolio:

EUR/NOK, parameters 3.0/13
GBP/NOK, 3.0/13
NZD/CHF, 2.7/6
USD/NOK, 2.9/14
USD/RON, 2.6/15
USD/RUB, 2.8/12
USD/SEK, 2.8/14

An interesting collection with lots of volatility. Some remarks about some pairs I accepted and rejected:

EUR/NOK
Great peaks, great drawdowns, without SLs or TPs almost a sure loss. However, the drawdowns are not overweighing the peaks, and with careful exiting this might give good yields.

NZD/CHF 2.7 6
This one I might follow almost exactly from signal to signal, except TPs at 1000p, which are rare. Steady, small profit.

USD/RON 2.6 15
Little data available, but seems like a promising pair. 1 year, 7 trades,
3 of which resulted above +1000, and 4 peaked over 1000p. Total over 5000 pips. Let's give this a try.

USD/RUB 2.8 12
Little data available, a bit like GBBNOK. Looks promising though.


EUR/RON
Little data available. Comparable behaviour to EUR/NOK. Not convincing enough.

EUR/ZAR 2.9 14
USD/ZAR 3.0 12
Huge peaks. Correspondingly huge drawdowns, for which reason I ignore these ones.

GBP/ZAR 3.0 7
Otherwise like GBPNOK, but much bigger drawdowns, for which reason I ignore this one.

USD/NOK 2.9 14
USD/SEK 2.8 14
Quite like GBP/NOK. USD/SEK seems to trend quite long, so a trailing SL might be much better than TP. Not for me right now.


After seeing this kind of a set of pairs, I also had another look with fresh eyes on GBP/JPY, which I rejected a while ago. It resembled a lot at least the ZAR pairs, and I still view it too risky at least for my small experience.

I also got an idea for filtering the trades a bit. I have read about Ingot's rainbows elsewhere here in Babypips, and they simply are a big set of MAs stacked in the chart. It seems for me like it would be much more probable to enter a big trend when the long MAs are nicely aligned and trending and the signal is to the same direction (and I don't think this would be in contradiction with Ingot's ideas). On the other hand, if you trade against this long-term MA trend, the candles seem to have much more unpredictable behaviour and faster moves back and forth. I have no finer data to back this up, but I think I'll try to enter only those trades that follow a nice long-term MA trend.

If I use this filtering together with lowering my trade size a bit from what I so far have calculated, I might able to define such money management rules where I would not need to restrict the maximum number of open positions, at least most of the time.

And having this many pairs to follow, there should be at least a couple of new signals every week on the average to analyse and select. 3 so far in this month.

Edit: I started to calculate money management for the different pairs, and it has clearly shown me that all pips are indeed not created equal. I initially thought to scale the pairs so that the price of a pip would be roughly the same for all pairs. The pairs in my first set just happened to match this nicely. In this perspective my comment about "huge pip differences" might hold. But I came to a conclusion that it is better to scale the size of the trade and let the pip price vary.

J.

[midulster]

Hi,

I've been comparing Metatrader indicators for ADX/ADXR against the calculations in the book and I haven't been able to find any that give the same results as the book.

I disconnected from the Internet, deleted the history for 1 pair that I dont follow, USDNOK, and then imported the data from the book. Note that I just set the open each day to the same as the high as the open isnt used in the calculation. I then added the indicators as shown in the attachment. If you compare with the book you'll see the first ADX(14) isnt even within a country mile of the book. The second WildersDMI does come closer in shape, but it still isnt correct against the book eg Day 20 the book shows +DI at 41, the indicator has it at around 70. Also how can it be calculating ADXR before Day 28?

Does anyone know of any other ADX/ADXR indicators for Metatrader that I can test this way?

Thanks

[sirkeen]

Hello all,

Just finished Mr. Wilder's book, and am slowly making my way through this fantastic thread. (Post #121 of 450+!!)

I have thought about creating excel spreadsheets to mimic Wilder's Daily Worksheets. But after reading a few posts referring to a spreadsheet already posted I figured I should ask if someone has already completed this.

Did I miss the attachement in the first 121 posts, or am I just misunderstanding the posts?

This thread is a fanstastic resource for us 'newbies' and my thanks go to the man himself "Dpaterso" for making such a resource available!

Hopefully, soon I will be able to contribute some useful information to this thread! Until then, I will quietly cower in the corner and let the thread vetrens do their business!!! LOL

Regards
M.

[Bocajunior]

Originally Posted by sirkeen

Hello all,

Just finished Mr. Wilder's book, and am slowly making my way through this fantastic thread. (Post #121 of 450+!!)

I have thought about creating excel spreadsheets to mimic Wilder's Daily Worksheets. But after reading a few posts referring to a spreadsheet already posted I figured I should ask if someone has already completed this.

Did I miss the attachement in the first 121 posts, or am I just misunderstanding the posts?

This thread is a fanstastic resource for us 'newbies' and my thanks go to the man himself "Dpaterso" for making such a resource available!

Hopefully, soon I will be able to contribute some useful information to this thread! Until then, I will quietly cower in the corner and let the thread vetrens do their business!!! LOL

Regards
M.

Hello Sirkeen,

Welcome to the thread. I'm sure you'll enjoy being onboard.

Regarding the systems and the excel forms, I dont think any were posted on the site but some of the guys did manage to develop them. I myself, was using the Volatility system just by using the worksheet provided in the book. I am no excel genius, but I will take a look and see what I still have.

Dale has coded indicators for some of the systems for Delta and GCI brokers but he will only submit these to you if you open an account at one of these brokers. All of this is very fair, considering all the hard work and effort he has put into it.

Having said all that, ADX and PSAR are available on most broker platforms so if you wanted to follow these systems, you can use these and just apply the knowledge that you learnt in Wilders book.

Hope this post helps you out. Feels good to post again,, I haven't done that for a while.

Dale,
Are you still alive? Not seen you around for a while, Hope all is ok and you haven't over done it on the spicy rum.


Best Regards
Boca

[dpaterso]

Good (Friday) morning all!!!

Great posts (I do 'look in' every day of course).

brendonvdh:

Nice to hear from you again. Also glad you're 'coming home' (maybe we can get together sometime and 'compare notes'). My advice as always: 'BUY THE BOOK'!!! As I've said before: if you take the time to study its even 'nuance' it will pay for itself in the first trade I promise you that!!! Also: while I'm really happy for you that you are 'up' you really do need to be sure that you have a 'reason' for being 'up' i.e. there is nothing worse than making a profit but not knowing for sure whether or not it's 'repeatable' (which I suppose is the same as 'consistent').

kaalilaatikko:

MAN you like analysis and statistics!!! I can neither agree nor disagree with you on anything you've posted because I have not done the 'in depth statistical analysis' that you have done. One thing though: don't get TOO 'stuck' on the VS i.e. there ARE other systems in the book which are just as good.

On the other hand one thing that may be of interest to you is this: Nick (chirules54) and I were having a discussion the other day and between us we came up with an 'addition' to the VS which MAY prevent the huge (inevitable) drawdowns.

Let me explain:

One thing that we all tend to overlook is the fact that ALL of Wilder's trading systems (with the exception of the RTS in 'Reaction Mode' and the TBPS) are breakout systems. Now: the VS gives you a signal when a breakout occurs BUT once you're in the trade you're basically waiting for a breakout in the opposite direction to stop and reverse. Now I don't know what you people thingk BUT from my experience you don't get a breakout in one direction and then immediately thereafter get a breakout in the opposite direction i.e. there is normally always a lengthy period of consolidation at the end of a trend and it's during this period of consolidation where I (we) believe your profits start to get 'eaten away' i.e. if the price starts to trend SLOWLY in the opposite direction but not enough to give you a stop and reverse signal then slowly but surely your profits get 'eaten away'. So: the 'plan' is to add another level to the VS and this level is calculated using exactly the same formula EXCEPT that the 'constant' is smaller. This level is then used as a STOP or TP and NOT as a stop and reverse. I'm currently adding this to my VS indicator at Delta (and should finish today) so I'm keen to see if this manages to 'lock in' profits earlier.

midulster:

Again: sorry I can't help you with your problem. I have had a look at the MT4 that I have installed for demo and testing purposes (Alpari) and the ADX there also looks NOTHING like EITHER Delta's or GCI's. I also have a difference between Delta's ADX and GCI's ADX but I know the REASON for the differences is the different timezones and prices (price movements between brokers are NEVER EXACT).

sirkeen:

Welcome and I hope that 'the book' brings you much success. Good on you for 'springing' the cash to buy it. You won't be sorry.

There is no need to 'cower in the corner'. Feel free to post and ask questions if you have them (although of course it DOES make it a LOT easier to assist if you already have at least a basic knowledge and understanding of the systems).

Are you trading live and do you have a broker?

The only spreadsheets that I have available are for the SIS (the Swing Index System) (and I think those are the ones that are referred to earlier on in the thread i.e. they were removed at the suggestion of one or two subscribers to the thread i.e. unfair to those of us who have purchased the book to make the systems freely available to all and sundry and not to mention the copyright issue) and I'll gladly send you one or two if you drop me an email (dpaterso@forexbrokersonline.net). I know that 'midulster' (above) has spreasheets for calculating the ADX/ADXR but you'd need to contact him for those. I must just tell you this though: using the spreadsheets as a 'learning tool' is a 'must' I reckon but I know from experience that trying to trade with them can be a REAL 'pain in the neck' purely because of the time it takes to maintain them on a daily basis. Just bear this in mind and DON'T give up on these systems because of this (this is what I did and it cost me a lot of money and wasted a lot of time)!!!

Edit:

Heeey Boca!!! Welcome back. Me: I'm good. Just working on the VS indicator and one or two other little 'items' is all.

[Bocajunior]

Hello Dale,

Yes, is good to be back.

I emailed my details and completed application to Delta yesterday so I am hoping to hear back from them soon enough. So far, no reply. I remember you saying it could take a while.

Best Regards
Boca

[dpaterso]

Hello again,

Boca:

They normally take no longer than a day to respond so if they've not contacted you within 24 hours then let me know. Well done.

To all my 'clients':

I've sent updated indicators for Deltastock to your email addresses so please check your email. The update includes the new VS STOP as described in my previous post. Have a look and let me know if you think it has merit.