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

[dpaterso]

Hey Tony, by the way:

'How's the Dow'???

You've got to love this man: down most of the day on Friday and then in the last half an hour it rallies 247 points!!! What's up with this man??? It's ALMOST becoming predictable i.e. 1 day up and 1 day down!!! Fortuanately the SI System is keeping me out!!!

[jomni]

I read the Wilder website about the Delta thinggy.
Do you follow that?

[dpaterso]

Hi,

I do have 'The Delta Phenomenon' (the book) but I have only used the 'phenomemon' once or twice (profitably I might add). I cannot really judge it though and, to be honest, it leaves far too much open to interpretation and judgement for my liking (I'm not too good at that), and unless you can afford the annual fees every year (which are not cheap by any stretch of the imagination) to actually get the 'Delta Turning Points' 'given' to you as worked out by Mr Wilder himself, it's not something that I would 'trade' but may use (the book) as a 'guide' or 'confirmation' now and then.

[chirules54]

Dale, I have been calculating some CSI ratings because I plan on trying out the volatility system for awhile.. so far the pairs I have gotten that have the 3 highest csi ratings are usd/zar, gold/usd, and gbp/jpy. I know you haven't traded live with the volatility system yet but I was just wondering what you thought about these pairs and if you would trade any different ones. Also, I was able to get better results calculating the CSI by converting all numbers by their "pip factor" as you stated for the swing index. For example I get a CSI of 1.067 for gbp/jpy, and it has a "pip factor" of 0.01 so I divide by that to get 106.7. eur/usd has a CSI of .006477 divided by the pipfactor of .0001 equals 64.77.

[fischerb]

hi Dale

ordered the book 2 weeks back!!what's with the US postal service? do they know where Cape Town is???did you wait just as long for yours?

Chewing my nails to the bone waiting for this thing...

[dpaterso]

Hello folks, I was getting worried that the thread had 'stalled' before it's even really begun!!!

chirules54:

You are quite right (in my opinion) in that you have found that you have to use the 'pipfactor' so that you're comparing 'apples with apples'.

As far as the instruments or pairs go:

I have seen that Gold (as always lately) is high on the CSI (and if you have a look at the charts it's real easy to see why). I am having a very serious 'issue' with USD/ZAR i.e. Gold is going up in leaps and bounds but the ZAR is weakening against USD, GBP, and EUR and this does not 'fit' so I'd be very careful. The reason I'm wary is because last year I lost a 'sh*tpile' on Gold at one point and I remember seeing exactly the same thing happening at the time and it was not long after I was out of margin that Gold reversed and started it's 'march' on to where it is today. In other words: at the moment there is 'divergence' between the ZAR and Gold and this should not be UNLESS there are a lot of people (institutions???) going long ???/ZAR because they are (pretty???) sure that Gold is going to correct and then the ZAR is going to 'fall through it's own ar*e'. Look: I'm not expert on fundamental analysis as you know but I do know that I saw the same thing happening last year. Coeincidence??? I don't have the answer.

GBP/JPY: always volatile, high yielder, no problem I dont' think.

The Volatility System: all I can say is (again) be careful i.e. you need LOADS of margin and a very strong stomach to use that system from what I can see. Either that or you need to get your leverage lowered i.e. from 200:1 down to something like 50:1!!! Even with the SI System you need 'big ones' sometimes i.e. although the system is right a very high percentage of the time sometimes the previous HSP or LSP is FAR away from your entry point and you need to be able to control you 'fear' when the trade is going against you for a day or two (which I'll be honest I'm not handling too well at the moment i.e. I'm making money but I'm taking profits early and on 99% of the trades where I've done this my profits would have been quadrupled had I left the trades alone and stuck with the system).

fischerb:

That sounds about right!!! Things take FOREVER to get here (unless you pay DHL for 'door to door' which normally costs about ten times the value of the item)!!!

[chirules54]

Thanks for the input Dale... My broker oanda has a max leverage of 50:1 already and I'm not going to trade huge lots so I think I will be ok hopefully. For now I think I'm going to go gold and gbp/jpy for sure with the volatility system. Neither one is close to an entry yet though, and I'm using 2.8 for the sar multiplier too. I've also been looking at usd/cad, it has a pretty high csi too and has had a pretty good adxr for the past few months. I know it is a "comdoll" but since it follows oil prices to some extent I guess it would be similar to trading oil, but I don't know. I live in the northwest U.S. and I visit canada often so I have sort of an "affinity" for the currency I guess.. you gotta love a country that has kids playing hockey on a frozen lake on their 5 dollar bill
Still doing extremely well with the TBP system though, after a week that started out pretty poorly it has turned around and the last two days it has worked great.. probably due to the massive weakness of the usd lately.. all-time lows against the eur and chf... crazy.

[dpaterso]

Hi (sorry to be using this space for this message. I will delete it it again when finished).

To the lady from South Africa who sent me a PM:

I tried to reply to you but I keep getting an error message that tells me that you cannot receive private messages.

Either change this option in your User CP or send me an email to dpaterso@forexbrokersonline.net.

[Bocajunior]

Originally Posted by dpaterso

Hello folks, I was getting worried that the thread had 'stalled' before it's even really begun!!!

Hello All,

Thread will be a great one I'm sure Dale. Just looking fwd to getting my hands on a copy of the book and reading it through. Shouldn't be long now.

[dpaterso]

Hello 'Wilder Fans'!!!

Great week last week (due to equities and commodities trading that is i.e. not such great trades on forex pairs) (for me anyway). Great month actually (again thanks to equities and commodities i.e. fell short on forex pairs). For equities and commodities: the SI System 'RULES OK'!!!

In light of the above I got to thinking this morning (happens sometimes) and, in true 'Wilder Style', I've come up with this idea and would like to know if anyone is interested in contributing:

I've spent a great deal of time having a look to see WHY trading forex pairs is not producing the same results as equities and commodities and it's become very apparent to me that it's 'the way they move' that is the problem (not to mention the fact that I still think that trading forex pairs is a 'mugs game'). EVen the SI System gets 'confused' a great deal of the time by forex pairs which results in a lot of stops and reverses according the the TISAR which, inevitably, costs you money.

In true 'Dale Style' I 'slapped' the following (other favourite) indicators onto my forex charts:

Parabolic SAR
RSI
Stochastics
AO (Bill Williams' Awesome Oscillator)
AC (Bill Williams' Accelerator / Decelerator)
MACD

What is very apparent to me is the fact that a lot of the time you will get a valid SI entry but this entry conflicts with most of the other indicators and this got me onto an idea (which I cannot take sole credit for i.e. it was Wilder's CSI that gave rise to the idea):

What if we devised our own 'rating scale' for each of the above indicators and used this rating scale IN ADDITION to the CSI and / or ADX and ADXR (for forex pairs)???

Here's what I mean:

Let's just take RSI for example:

What would be the 'main' RSI signals (in relation ALWAYS to a valid SI System entry)?

In other words:

Let's say that you have just got a valid SI System entry signal to go short.

Firstly not all valid SI System entry signals are 'created equal' i.e. I have found that an entry signal based on a 'swing high' or a 'swing low' is a far stronger signal than an entry signal based on a TISAR entry alone. So: we 'weight' the entry signal to start with i.e. if the SI System entry signal is based on a 'swing high' or a 'swing low' the entry signal is given a 'rating' of '2' and if the entry signal is based on a TISAR then it is given a 'rating' of '1' and if the entry signal is based on both a 'swing high' or a 'swing low' AND a TISAR then the entry signal is given a 'rating' of '3'. Ok so far?

Now (remember that we have just a valid SI System entry signal to go short and let's say it was based on a 'swing low' which would then give the SI System entry signal a 'rating' of '2' as per the above):

Let's look at RSI now:

For a short entry to be 'valid' which RSI 'points' or 'issues' or 'signals' would carry the most 'weight' or have the highest 'rating':

In my opinion they would be (for a short entry):

Is RSI above or below 70?
Has it actually crossed 70 from above?
Is it between 70 and 50?
Has it actually crossed 50?
Is it going down or up now?
Is there divergence?

Now what I'm saying is this:

Each of the above RSI 'issues' would be given a 'rating' and you would do the same with all of the other indicators mentioned above. Once complete the idea is that you would land up with a 'rating' for each pair and using this 'rating' in addition to the CSI and / or ADXR and ADX would WITHOUT A DOUBT give you the VERY BEST entries OF ALL TIME!!!

In other words: even although two or three pairs MAY have a very similar or 'close' CSI and / or ADXR and ADX one of them MAY have FAR BETTER Parabolic SAR, RSI, Stochastics, AO, and AC 'ratings' making IT the BEST choice to trade. I mean to say: even although a pair MAY have a VERY HIGH CSI and / or ADXR and ADX there MAY be a conflict with all or most of the other indicators which is not really helping matters much now is it!!! I mean it does not make sense when you are getting a valid SI System entry signal to go short, the pair has a very high CSI and / or ADXR and ADX, but Stochastics has been in oversold territory for a couple of days and RSI has been below 30 for a couple of days. See my point?

Now I know it may be easy to 'judge' things just by looking at all the other indicators but I 'favour' the 'mathematical' way of 'doing things'. In other words: I could 'code' a single indicator that would 'replace' Parabolic SAR, RSI, Stochastics, AO, and AC and this indicator would be based on the 'ratings' of the other indicators and then combine IT'S value with the CSI and / or the ADXR and / or the ADX value and give you a single indicator with a 'overall rating' value and the pair(s) with THIS highest value should be those 'no brainer' trades!!!

What do you think?

Basically the (your) 'contribution' that I was talking about would be to help me identify the most important 'issues' for each of the indicators and then we compare notes.