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

[dpaterso]

Hi Tony, and thanks for that (I was actually hoping that you would see my post and comment).

As far as the trade in question is concerned it really was not an 'overtrade' i.e. the lot cost $50 which is nowhere even REMOTELY NEAR what my available capital / margin was and only a small fraction of Wilder's 'no more than 15% on any single commodity' rule i.e. I'm NOT overtrading for my account size not by any means ('been there, done it, got the t-shirt' as they say and, of course, have the losses to prove it)!!! It really was just the fact that I could not, for some or the other reason, take the loss and I really don't have an answer and I know that if I don't get over this 'mindset' I'm going to land up in the same 'sh*t' as last time. I DO think it had a lot to do with the fact that up until then, on two of my accounts, I'd had a 100% success rate with the system and perceived my taking this loss as a 'blemish' or 'bad omen'. I know this sounds ABSOLUTELY CRAZY but, like I said, I HAVE to control this 'mindset' from NOW otherwise we all know what the content of my future posts is going to be!!!

What I fail to understand is that since the beginning of the month up until this past Monday I have trusted the SI System IMPLICITLY and it has not let me down so WHY did I start to 'second guess' it all of a sudden? I don't have the answer. I KNOW with ANY system there HAS to be losses in order to come out profitable at the end but WHY, ALL OF A SUDDEN, KNOWING ALL OF THIS, did I start my 'sh*t' again? I mean to say: at this point, in SPITE of these 'issues', I'm still around 280% up on the capital amount deposited at the beginning of the month when I started trading the SI System on the account in question (can't give you the exact figure because although I could log in to this account earlier this morning I cannot log in now as I type for some reason) so I should be 'extatic' but I'm not as I feel that I have let myself down. I'm 'beating myself up' over the answer to this question in the hope that something 'sinks in' before tomorrow because I know that I cannot 'fu*k up' again. This is it. Maybe this mindset is a big part of the problem. I don't know. Comments welcome of course (and appreciated).

Edit:

One thing that comes to mind is that maybe I should get the leverage reduced on this (my main) account (currently 200:1) but, of course, this is a 'double edged sword' i.e. I'd NEVER be showing results on this account like I am with a lesser margin percentage. This actually 'came to light' yesterday when I was trading the Bovespa i.e. currently on a $50 lot your profit / loss changes in increments of $100's of USD at a time (it only gets updated every couple of seconds or so or when there has been a certain percentage change in price by the looks of things but fortuanately seems to follow the Dow so I should open with a 'bang' on Monday but it's still seems very risky). Ironically I started trading this yesterday to 'cover' the Silver trade which 'paid off' this time round but is not 'sustainable' I know.

[georgeh777@bellsouth.net]

Dale, I've never seen the ASI indicator until last night.. Hey what you are doing here is great. It also reflects about what every trader has or is going through. Taking profits early and letting losers run. If anyone has not, or is not doing that they are not telling the truth...

I did a look over on GBP/CHF and using the ASI it reveals a lack of any trend and choppy sideways action. Granted this pair has been in a downward move and seems to be basing. It just is risky IMO to play long or short as per the daily chart until price moves out on sideways range.

[georgeh777@bellsouth.net]

Here is a chart open for study

[dpaterso]

Hello,

Thanks for response and compliments and they are much appreciated.

I don't know if you're new here or not or if you know my WHOLE story but if you're interested and have the time then read the 'Parabolic SAR - that's all!!!' thread and 'all will be revealed'!!! The point is that I have a trading system that really actually works and I am failing IT not the other way round and I HAVE TO STOP THIS FROM HAPPENING!!! NOW!!!

I was in fact referring the the CSI (or 'Commodity Selection Index') in my previous post BUT you are quite right i.e. even the ASI is showing you that GBP/CHF has been stuck in a range for while. Remember though that the ASI is showing you what's BEEN happening not what IS happening so it's easy to see NOW that GBP/CHF is 'rangebound' but this would not have been that evident a week or two ago from the ASI. The CSI on the other hand already had a very low value a week or two ago when compared to all the other tradeable instruments so, according to Wilder and the CSI, I would not have / should not have been taking entries on this instrument at the time i.e. there were MANY other instruments (forex pairs, indices as always, commodities, metals, and oil) that had a MUCH higher CSI number (a good example being something like EUR/SEK) at the time (and still do) and it is on THESE instruments where the profit lies not on something 'stuck in the mud' and that's why I say: the CSI is the 'key to the kingdom' with Wilder's systems without a doubt. It is for this reason I'm sure that the last paragraph in the book (which is the last paragraph in the CSI section strangely enough) is in BOLD but I cannot understand why there is / was not more emphasis put on the CSI (or maybe there is / was but I did not perceive it as such). Even 'my favourite': the Dow has a low CSI rating at the moment for obvious reasons i.e. LOADS of volatility but ZERO directional movement whereas (for example) the Brazilian Bovespa has LOADS of volatility AND directional movement.

Anyway, be that as it may, you can have a 1000% successful trading system or method but if you can't follow it through it will STILL NOT WORK FOR YOU!!! (Hey, that rhymes, can I have it???)!!!

[dpaterso]

Sorry,

I must have been typing my repsonse to you while you were posting your chart so I only saw your chart now.

Like I said: it's easy to see it now BUT even when using Stochs you must remember that you are now seeing a range that has been forming for some time now. Put it this way: chop off about fourteen days from BOTH indicators and you then really have no way of telling whether the pair is becoming 'rangebound' or not. Wilder's CSI on the other hand may also not tell you this but WILL attempt to 'put you onto' instruments that, when compared to all the other tradeable instruments at that moment in time, have a far higher chance of NOT being 'rangebound' when compared to each other. In other words: the CSI is giving you the instruments which, at a given moment in time, have far more movement in one direction or another than other instruments and he says to only trade the top nine or ten on the CSI scale (I assume margin and risk tolerance permitting) which is TOTALLY different from trading everything and anything where you have an entry signal according to the SI System (which is what I, up until now, have been doing).

[georgeh777@bellsouth.net]

Yep hind sight is 20/20 as we all know. I'll quiet down as I'm not familiar with Wilders book. I do look at price for any confirmation and a transition from down to up must put in a HL. I've lost much cash trying to pick bottoms and tops. I'll look into this ASI and see if I can learn more about it.

I have been a member here before last year and forgot my password and login name. I've done a search and have located it. I think I'll need to use that name from here on out. Nice thread you have here...

thanks

[ozzy007]

Finally received the book today. I had been wanting to read it but now i think i will have some time for it. I know i will learn something and hopefully i can apply the info for my benefit.

[dpaterso]

Hello,

georgeh777@bellsouth.net:

PLEASE don't 'quiet down': I (everyone) appreciates your input. With OR without 'the book' EVERYBODY'S input is appreciated. What is your 'new' login name going to be? Please post.

ozzy007:

Welcome to 'the club'!!! Please post your thoughts on 'the book'.

Actually: while we're on the subject of 'the book' I was quite 'pis*ed off' last week because I was looking for some more books by 'the man' and found that Amazon is selling NCITTS for $49.50 and Mr Wilder is selling it to us for $45. What's up with that??? I think it's time to 'rattle' 'The Delta Society' for a bigger discount for babypips members don't you think?????? Anyway: I found two books by 'the man' that I want to order BUT I fail to understand how 'The Adam Theory of Markets' is SOOOO expensive whilst the other one is SOOOO cheap??? Does anyone have the other books and, if so, what is your opinion of them?

[Bocajunior]

That's my copy of the book ordered.
Thanks for that discount code Dale. Appreciated.
Rgds
Boca

[dpaterso]

Heeey, good stuff (I don't think you'll be dissapointed. At least I hope not)!!!

I'm kinda hoping that we can all start doing some analysis one of these days.

For example:

I'm 'having a theory':

Would it be feasable to say that when an instruments price closes above it's previous HSP or below it's previous LSP (which would both be entry signals) then it has indeed changed direction and when you're being given a signal to stop and reverse because the price has retraced enough so as to give rise to a 60 point drop on the 'Trailing Index SAR' then could this be viewed as 'corrective'??? Thoughts anyone???

Also:

There are one or two things that I HAVE NOT been able to figure out and they're worrying me terribly:

Nowhere in book (for the SI System) are you 'told' when to 'get out'. Your intial ('tentative') entry point is signalled when the price has closed above or below the previous HSP or LSP. From then on you stop and reverse as indicated by the 'Trailing Index SAR'. My problem is this: if you just keep stopping and reversing then your actually trading the 'Trailing Index SAR' and not necessarily the 'swings'. Do you agree with me? Comments?

If you're using the CSI to evaluate the different instruments and let's say that you find 10 instruments that are high on the CSI scale and you are being given entry signals. What then happens if a couple of days later those same 10 instruments are NO LONGER high on the CSI scale. Is THAT a signal to 'get out' OR do you just continue to stop and reverse as per the 'Trailing Index SAR' which (I think) is dangerous for the simple reason that should the CSI rating drop the instruments is then in effect becoming 'rangebound' so to just keep stopping and reversing if the instrument is now trading in a range is just looking to 'feed your broker' as they say in the 'classics'. Agree with me on this one? Ideas? Thoughts? Solutions?

Try as I might I don't seem to come up with answers to the above that satisfy my logic so I'm 'throwing this open' to debate (which, after all, is the reason for this thread in the first place).