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

[Bocajunior]

Originally Posted by kaalilaatikko

Craig & Dale, thanks for your DMS analysis! I'd like to add my interpretation about entering DMS. It's true that in my example I wasn't having a position at the time of +DI/-DI crossing. But I don't think that changes this kind of a situation essentially.

The Extreme Point Rule (let me call it "EPR" here) defines the reverse point which should be used for both entry and exit. Here I can imagine having a virtual long position and not reversing it to a real short position until EPR is completely filled. So Dale's stop rule could also have been applied on Jul. 11th, and it would have got cancelled.

But then there is also the possibility to consider retro DMS trading. If you don't apply EPR when you don't have an earlier position open, and you didn't open the new position right after the signal, then the price would have been in a favourable level for several days. But if you apply EPR in every case, then there is no place for a retro trade here yet.

I'm now inclined to the following principles for the initial (and any other) entry of DMS:
- Wait until EPR is filled, even if you don't have an earlier position.
- Rank the trade as either a "good" or "bad" one based on the indicators on the date of EPR (ADX, AC and possible others). Don't take a "bad" trade.
- Enter by placing a stop 'a couple of ticks' below (on short) / above (on long) EPR
- Use TP once AC turns against the trade.

J.

Hello Everyone,
Sorry I haven't posted for a while as my internet connection time has been limited to say the least. I have been trying to keep up with the goings ons.

I have to agree Kaalilaatikko (That's a hell of a nickname by the way) regarding the EPR (Extreme point rule). Regardless of if you are currently in the market or not, you have to wait for the EPR to be broken after a DMI crossover in the direction you want to take the trade. That is the way I interperet it. Am I correct? The only small issue that I am still unsure about on this is, when Wilder says the EPR must be broken, is he referring to a close or the EP is broken intraday? Apologies as I dont have the book with me at present.

Happy trading all
Boca

[Bocajunior]

Originally Posted by chdorry

So another note to self - check, double check and check your entries again. Just went through all my open orders (day orders) and have verified them against the charts.

Hello chdorry,

Thanks for posting your trials and tribulations of going live. It's making good reading and I wish you every success. Stick with the systems and try to not to get too emotional and make impulse trades. Easy to say,, but harder to practice.

Your story reminds me of some mistakes I made when I first went live in Nov07. Two times I opened positions with an extra zero at the end of my lot sizes, hence I was in over my head 10x above my money management rules. One of these, I had to close for a big loss, luckily, the other one had bounced back to a break even level when I discovered what I had done. Always good to double check.

Best Regards
Boca

[Bocajunior]

Ragarding the above, I took a look through John F Carters book again the other day and in Chapter 3 there are some tips and tricks for making your computer run smoothly.

Suggestions he makes are to download and install:-
CCleaner
Ad aware
Spybot Search & Destroy.

I just installed the last 2 on that list today.

Has anybody else noticed that babypips site sometimes seems to take for ever to load up a page. One other thing that is really getting my goat is that "Freshpips" ad that keeps on appearing at the bottom of the screen. Even though I click on "dont show again", every new page it just keeps on coming back. A real pain.

Over

[dpaterso]

Good (Wednesday) morning all!!!

Well I never!!! Boca is alive and well and 'speaks' to us!!! (I was just wondering about you yesterday funnily enough)!!!

I just want to share something with you all here as a few people seem to be 'battling' with this.

As you all know I'm waiting for AUD/NZD to 'turn' right??? Now: if you see this post in time take a look at the daily chart. As I type this post it's plain to see that it has in fact turned right??? WRONG!!! And this is the point of the post. There isn't a 'new trader on the block' that would not have 'jumped in' on this short trade the moment they saw what was happening to the price (and what has BEEN happening to the price for the past three days). Hell: after ALL my past 'mess ups' and 'hefty kicks in the you know where' EVEN I am tempted. HOWEVER: there is NO SIGNAL WHATSOEVER FROM ANY SYSTEM IN 'THE BOOK' being given to go short this pair at present. I've had a short position on this pair since 2 May 2008 (and yes: I know all the reasons why so don't go reminding me) so for me it would 'seem' even MORE like a good 'idea' to 'sell back' my lots at this point. BUT NO!!! Wait for the signal!!! This is the most difficult thing to do I know but I assure you that being able to 'hold' when required is yet another contributing factor to success.

I'll give you another example:

On my 'comm account' I'm long USD/RUB. This trade was opened based on the RTS when AT THE TIME ADX was below 20. WHEN I GOT A SIGNAL FROM THE SIS I 'dumped' all my lots except one lot (which as you know effectively does not realise the loss and keeps the position open the idea being that if the price continues to go against you a larger potential loss is averted and your free margin is protected). Again: just looking at the pair this morning it has rebounded somewhat right so why not just 'buy back' my 'dumped' lots now and have done with it??? WRONG AGAIN!!! AGAIN: NO SIGNAL IS BEING GIVEN BY ANY OF THE SYSTEMS IN 'THE BOOK' that indicates that the pair has INDEED rebounded!!!

Now while it IS true that in both of the scenarios above I COULD be wrong and the price of both pairs will continue in my favour thus costing be valuable pips. THE POINT IS THIS: I WANT TO BE MORE THAN 50% 'SURE' that these are INDEED either valid breakouts or valid reversals and the only way of ensuring this is to WAIT for the confirmation signals and NOT to just 'jump in' on a 'whim and a prayer'!!!

[chdorry]

Hey Dale,

Looks like the markets are *finally* lining up with your AUD/NZD short tonight. While its still too early to make a final call on it, the charts are shaping up nicely for a DI cross (+DI moving below -DI) which means we can all short it this evening :-)

Boca - Thanks for the encouragement. So far I've managed to keep my cool. Of course I have the occasional "panic attack" where seeing the negative values makes me want to start closing out all positions, but so far its been just a fleeting thought.

Right now I'm sitting in 4 positions (2 RTS entry based, 1 DMS and 1 SIS) and 3 of them are going against me, but the tides will turn and they will move back my way given some time. Of course 3 of them are newly opened, so I have to "wait'em out" for a bit. The SIS position is a couple of days old, and is the one that worries me the most at this point. I'll probably continue following it with DMS and use that to make a SAR at the appropriate time.

The way I see it, you *can* jump into the DMS system at any time with any pair, the only thing is that *if* you get in late (which I did using SIS entry) per the DMS system, the first trade prior to the DI reversal will not be as profitable as it could have been had you gotten in earlier.

In any event, its 4AM, my TPs are set so I'm going to get some sleep. Will be back in a few hours to check on things.

Best of luck to all.

[Bocajunior]

Originally Posted by dpaterso

Good (Wednesday) morning all!!!

Well I never!!! Boca is alive and well and 'speaks' to us!!! (I was just wondering about you yesterday funnily enough)!!!

I just want to share something with you all here as a few people seem to be 'battling' with this.

As you all know I'm waiting for AUD/NZD to 'turn' right??? Now: if you see this post in time take a look at the daily chart. As I type this post it's plain to see that it has in fact turned right??? WRONG!!!

Hello Dale,
No problem my friend. I'm still alive. Just working and living on the road the last few months makes it hard to keep up. But I'm commited to the thread and the systems. Have no fear.

Yes, it's well documented the pain and suffering we've had on AUDNZD. The DMS does not show a signal, yet, but if it could cross to today if the price continues downwards, so if that extreme price is broken tomorrow, there could be a signal short. A lot of "ifs" and "buts" there, but it is possible.

A know it is a bit off topic but there was a short signal on this on Carters LOHP system, which I took on my demo, as I am still testing this system. I have already lost on the last short signal on this pair, but I see this as part and parcel of trading.. You win and you lose some,, hopefully winning more.

Boca

[Bocajunior]

Originally Posted by chdorry

Hey Dale,

Looks like the markets are *finally* lining up with your AUD/NZD short tonight. While its still too early to make a final call on it, the charts are shaping up nicely for a DI cross (+DI moving below -DI) which means we can all short it this evening :-)

Boca - Thanks for the encouragement. So far I've managed to keep my cool. Of course I have the occasional "panic attack" where seeing the negative values makes me want to start closing out all positions, but so far its been just a fleeting thought.

Right now I'm sitting in 4 positions (2 RTS entry based, 1 DMS and 1 SIS) and 3 of them are going against me, but the tides will turn and they will move back my way given some time. Of course 3 of them are newly opened, so I have to "wait'em out" for a bit. The SIS position is a couple of days old, and is the one that worries me the most at this point. I'll probably continue following it with DMS and use that to make a SAR at the appropriate time.

The way I see it, you *can* jump into the DMS system at any time with any pair, the only thing is that *if* you get in late (which I did using SIS entry) per the DMS system, the first trade prior to the DI reversal will not be as profitable as it could have been had you gotten in earlier.

In any event, its 4AM, my TPs are set so I'm going to get some sleep. Will be back in a few hours to check on things.

Best of luck to all.

No problems Chdorry. I'm still learning the ropes as I go as well, so 'm far from being a proffesional dishing out the advice. But we'll make it with discipline and hard work.

I also have 4 RTS positions open at the moment and each one is showing a loss right now. But I am sticking with it. My last 3 positions on this system were winners, so we'll see how it goes.

Cheers
Boca

[AkramMohsen]

hey boca nice to hear from u back well hello dale and hello every body here as well!!

well as for the computer issues that every body is facing guys i switched to mac and if the truth to be told here u will never face any problems apart from how to run any file that has the extension of exe into mac but this is possible u can do such a thing with no fear i am enjoying it big time!! and i do have a peace of mind .

Akram

[chdorry]

Originally Posted by Bocajunior

I also have 4 RTS positions open at the moment and each one is showing a loss right now. But I am sticking with it. My last 3 positions on this system were winners, so we'll see how it goes.

Hey Boca, hopefully those 4 turned. I had two open last night, and I'm kicking myself over it this morning. One is showing a profit, and the other is down a bit. Of course, had I read the entry point *CORRECTLY* it would be showing a profit. In any event, I'm planning to hold these and try to ride them to the S1 exit point. And to boot, I had orders in for more RTS that I cancelled last night (it was late when the bad entry hit and seeing a loss made me leery of letting the others hit too). Needless to say had I actually left them be each would be up about 50 pips now as well.

Of course (you can ask Dale on this one), yet again this morning I was looking at a drawdown (nothing major) and "swore off" the RTS system. Now of course, I'll be doing the same hunting for RTS trades but will be EXTRA careful to make sure I don't mess up the typing.

And sorry Dale, but I had to mention this - your last post you stated:
"WHEN I GOT A SIGNAL FROM THE SIS I 'dumped' all my lots except one lot (which as you know effectively does not realise the loss and keeps the position open the idea being that if the price continues to go against you a larger potential loss is averted and your free margin is protected)."

While I'm no accounting expert, I didn't see it in the book, is that the "Enron System" of trading? Sounds like cooking the books to me my friend :-)
Of course, I'm sure I'll contemplate that when the time comes where I get a SAR on DMS and I'm in a losing position. As of this time I think I'd just take the loss and move on, but we shall see when we get there...

Anyway, I am getting to the point where checking my positions first thing in the morning isn't really a good thing, since they always seem to be down a little early and then climb as the day progresses (mostly during the US/London overlap).

[chdorry]

Hi All,

As I'm looking at a few potential DMS trades this evening (the signal for Dale's AUDNZD may have *finally* come - I for one hope he can work his way out of it so we can hear about something else for a change Ok, so I really hope he gets out of it as its been a boat anchor on his account, besides the story is already legendary around this thread).

Anyway, I was thinking if there is any type of correlation between the "DI factor" as I'll call it. Here's my thinking of the DI factor, its the sum of the absolute value of the differences between DI values on the day before and day after the DI cross (ie day before and day confirming DMS entry).

For example if +DI goes from 5 to 10 and -DI goes from 7 to 6, the "DI factor" would be ABS (5-7) + ABS (10-6) = 6. My thinking is the magnitude of the changes in this particular factor will be directly related to how far the DI values have moved, and a higher "DI factor" *might* correlate to a better signal. While I can't say for sure on this, I'm planning to look at some charts as well as track this some as I get into some DI trades.

Would be interested in anyone else's thoughts on this.

Thanks.
Craig