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

Trading Systems Free Forex Trading Systems
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[B]*****
PLEASE NOTE:

THE INFORMATION CONTAINED IN THIS THREAD HAS BEEN SUPERSEDED BY THE INFORMATION CONTAINED ON THESE FORUMS: Technical Trading Systems at TechTraderCentral - Home. THIS BEING NOTED: THERE IS STILL INVALUABLE INSIGHTS ON THIS THREAD WITH REGARD TO THE TRADING SYSTEMS PRESENTED HERE SO I WOULD NEVERTHELESS URGE YOU TO READ THIS THREAD TOO. CONSIDER THE FORUMS INDICATED ABOVE AS A BRIEF SUMMARY OF THE CONTENTS OF THIS THREAD (ALTHOUGH SOME CHANGES AND DIFFERENT APPROACHES TO TRADING THE TRADING SYSTEMS PRESENTED HERE ARE DETAILED ON THE FORUMS INDICATED ABOVE AND NOT ON THIS THREAD I.E. THE INFORMATION ON THE FORUMS INDICATED ABOVE IS UP-TO-DATE OR RATHER CURRENT INFORMATION). DALE PATERSON. 10/02/2012.

[/B]
This thread has been started to facilitate, and promote, the general discussion of the trading systems and indicators detailed in the book ‘New Concepts In Technical Trading Systems’ by J. Welles Wilder Jnr.

For copyright and ethical reasons this thread will at no time contain actual details of the trading systems or indicators detailed in the book.

The book is available from Amazon or direct from ‘The Delta Society’ (Mr Wilder’s Organisation) or from any other reputable bookstore. However, in an effort to make the book financially more accessible, an arrangement was made with ‘The Delta Society’, Mr Wilder’s Organisation, to supply members of BabyPips with a discount on the book if ordered directly from them. Should you wish to purchase the book direct from them then please email me at [email protected] and I will give you details of the discount offered and the discount code to be used when ordering direct from them (this procedure requested by them as they did not want the discount code to be publicly viewable but to be given only to persons who have actually registered with BabyPips. Neither I, nor BabyPips, have any financial interest in the book, do not receive commission from them based on sales of the book, and are not associated, nor affiliated, with them in any way).

Please also note that it is not the intention of this thread to promote the sale of the book.

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This post contains details of errata found in the book by subscribers to this thread. Note that the errata detailed here have not been confirmed with Mr Wilder himself but are based on the ‘common sense’ principle. Please also note that neither Mr Wilder himself, nor his organisation ‘The Delta Society’, provide support on any of the systems detailed in the book.

[B]‘The Volatility System’[/B]

[U]‘Table 3.4’ and the subsequent calculation of the 7 day ATR, page 23:[/U]

[I](‘daxm’, ‘chirules54’, 18/02/2008).[/I]

In the table the sum of the True Ranges is, correctly, calculated to have a value of 10.00. However in the calculation that follows (and starts with the text ‘Starting Initially, we add the True Ranges for the first seven days and obtain a total of 10.00.’) he uses the a value of 9.90 which is incorrect i.e. the calculation 9.90 / 7 = 1.43 is incorrect and should be 10.00 / 7 = 1.43 which is correct.

[U]‘Daily Work Sheet’ and the calculation of the TR for day 24, page 27:[/U]

[I](‘midulster’, 19/02/2008).[/I]

The result of the calculation of the True Range for day 24 is incorrectly shown as 2.00.

The result of the calculation of the True Range for day 24 should be 1 i.e. True Range is the greatest (ABS value) of:

Todays High - Todays Low (0)
Yesterdays Close - Todays High (1)
Yesterdays Close - Todays Low (1)

[U]‘Daily Work Sheet’ and the calculation of the TR for day 1, page 27[/U]

[I](‘dpaterso’, 16/03/2008).[/I]

This is not so much an error as it is confusing. At first glance it would appear that it’s IMPOSSIBLE to calculate the True Range for day 1 on the the work sheet because you don’t have yesterdays closing value. Remember, however, that IN MOST cases yesterdays close is the same as todays open so I am assuming that this is how he arrived at the True Range figures for day 1 on the work sheet. Be careful if you use Excel to do this though because this theoretically would only apply to the calcuation for day 1 AND NOT the subsequent calculations of the True Range i.e. sometimes there are the ‘gaps’ which you will only notice if you use the values for yesterdays close. You will ‘miss’ the ‘gaps’ if you continue to ‘assume’ that yesterdays close will always be the same as todays open.

[B]‘The Swing Index System’[/B]

[U]‘Daily Work Sheet’ on page 105:[/U]

[I](‘dpaterso’, 18/02/2008).[/I]

The calculation of the SI for date (day) 4 is incorrect. The current value is 15. After having recalculated this Daily Work Sheet many times I have found the correct value to be 24 and not 15. Unfortuanately this error is compounded due to the fact that the ASI is calculated using the SI values so all ASI values calculated on, or after, date (day) 4 will be incorrect unless you use his (erroneous) value of 15. However, in order to check that the results obtained for the remainder of your own calculations are correct, once you have completed your own calculations, substitute your correct value of 24 with his (erroneous) value of 15 and the results obtained for the remainder of your calculations should be in agreement with the results of the calculations in the book.

Should you find additional errata in the book then please send details of such errata to me at [email protected] and I will post such details here. Please do not post errata in the thread as this will inevitably lead to duplication and the possibility exists that such errata may never appear here making it more difficult to track and document the same.

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Errata updated on 16/03/2008 [I](‘dpaterso’, 16/03/2008).[/I]

This space has been reserved for ‘Forum Announcements’. Should you have an announcement or comment that you would like to have appear here then please send details of such announcement or comment to me at [email protected] and I will post the same here.

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This post has been intentionally left blank to allow for information to be posted here that it is felt should appear at the beginning of the thread. Should you be of the opinion that this space be utilized for a particular reason then please send details to me at <[email protected]>

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I’m excited to be able to follow this thread “from its inception”.

I hope with a new title (and less initial pages to “catch up” on) we will get more discussion!

May the journey begin! (or continue as the case may be)

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Since this guy started all these indicators… i think should start with his history…i like history…:smiley:

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hey Dale, you got my vote on this new thread idea. let’s keep it clean and focussed. The “parabolic” may not have to die. I came in on that almost a year after its creation and still makes a good read.

i know we shouldn’t talk shop but that Delta site is great stuff. have you digested any of his other books?

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Look forward to following this thread Dale…I’m also a fan of Wilder -

While we’re on the subject, you might find this interview interesting:

Technical Analyst and Trader J. Welles Wilder Interview

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Thanks! That was a nice read.

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OK, well, we’re ‘off’!!!

daxm:

Please see the ‘errata’ post at the beginning of the thread as this will answer your question with regard to the results that you were getting that differed from the book.

vicebet:

I think that the link that dannybly provided is what you were looking for.

fishherb:

Hello. I have ‘The Delta Phenomenon’ but, like all the other systems that I KNOW I have to ‘stay away’ from this is one of them i.e. there is MUCH scope for interpretation and imagination and creativity and systems that allow for this I must, at this stage anyway, stay away from. Wilder ‘swears’ by it though (and who am I to question ‘the man’) and I heard that he paid $1 000 000 to patent / copyright that system so one can only assume that it does have merit but, at this point in time anyway, it would spell disaster for me. I did use it VERY SUCCESFULLY only one time to predict a ‘bounce’ in the Dow but signals that, as I understand, have been given since are just a ‘tad’ to ‘vague’ for me.

dannybly:

Thank you for the link.

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I trust from the silence everyone is frantically reading and calculating away!!!

If not then here’s a good reason to start:

It’s Sunday morning so I’m going through my ‘doings and screwings’ from the beginning of the month up until Friday’s close and here my good friends are the results from the SI System for me:

Forex/CFD/Commodities (‘Main’ Account): 262% gain on capital (heavily weighted in favour or Soybeans I must mention though).

Forex/CFD (‘Account 1’): 30% gain on capital (only forex traded on this account so far).

Forex/CFD (‘Account 2’): -5% loss on capital (main reason for loss is that I did not stop and reverse as indicated by the system on a particular trade i.e. was not concentrating on a particular trade that went bad otherwise % gain on capital would have been similar to Forex/CFD ‘Account 1’ as detailed above. Loss was a single trade on the Dow. ‘Refused’ to take such a big initial loss, held on to the position ‘hoping’, system was telling me to stop and reverse, price went down far enough to cover said loss AND still make a profit).

The profits detailed above were made IN SPITE of the fact that I got ‘cold feet’ on some of the trades and ‘bailed’ early. Almost ALL of these trades carried on to ‘new heights’ or ‘new depths’ meaning that the profit figures as detailed above would have been even better,

Lessons to learned:

1 -The SI System does work (well).

2 - Concentrate on what you’re doing ALWAYS.

3 - Never second guess the system.

4 - Always stop and reverse as indicated by the system EVEN IF it means taking a loss i.e. do not ‘simply point blank refuse’ to stop and reverse because it would result in a loss and you ‘think’ the position is going to turn around and the system is wrong. The resulting profit made on the stop and reverse position always exceeds the loss taken at the initial stop and reverse point.

5 - Never close positions early because you’re in a profit and ‘don’t think you could live with yourself if you did not take that amount of profit now’.

All the above will, in time, become very clear and more meaningful to you I promise.

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Good results Dale,

Are Soya beans and other commodities available on Delta? I saw only Silver and Gold.

I sent you an email earlier regarding code for discount for Wilder’s book. Did you get it?

Thanks and Regards

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Hello Boca,

No, I’m afraid not, but I’ve been meaning to ask them (Delta) if they have any intention of adding a few commodities like Soybeans, Coffee, etc. etc. etc. Delta only offers Gold, Silver, and Oil as you have quite rightly noted.

I will check my email right now after posting this message.

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dpaterso, thanks for all your hard work. When the psar is below the current candles of course you buy and vice versa. This is for daily charts. Lets say you buy and the next candle goes down so much that it touches or even goes below the psar, does the psar then move from a buy to a sell? In other words the psar once it is plotted, it can change position right? I was looking at NZD/JPY for Oct 12, 2007 and this is exactly what happened in this example. I was wondering if the psar could change position at any during current daily chart if it moves so much against the previous trend. What would you do? thanks

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Hi Dale

Waiting for the book now and hope they dont take years to ship it to SA. Difficult trying to “decode” what you guys are talking about when you dont have the darn book! :frowning:

cheers

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Hello,

ozzy007:

Parabolic SAR can ‘theoretically’ change, or rather, give different conflicting signals in the same day. Strictly speaking, if you look at the book, it won’t happen until the next day (on the daily charts) i.e. you’ll only get a Parabolic SAR dot indicating a stop and reverse the next day (or should I say you would only ‘act’ the next day). The reason I say ‘theoretically’ is because, obviously, the original ‘work’ was done using ‘manual handrawn’ charts and, from what I gather, Wilder would only have known at the close of the day that it was indeed time to stop and reverse. Nowadays you will find that, with some brokers, if Parabolic SAR is penetrated and you ‘refresh’ the chart a new Parabolic SAR dot will appear ‘as if by magic’. In ‘the old thread’ I don’t think we ever really agreed on this i.e. do you stop and reverse immediately when Parabolic SAR is penetrated or do you wait until the next day i.e. do you wait for a new daily bar to appear for confirmation? As many times as I saw Parabolic SAR get penetrated and then the price retraced I saw Parabolic SAR get pentrated and the price continued on in that direction. No clear answer on this one. What I CAN tell you is that if you have the book (which I am assuming is the case) the systems in the book are FAR better to trade i.e. trade the systems and use Parabolic SAR for confirmation if you must. Like I said in ‘the old thread’: Parabolic SAR, as great an indicator as I think it is, ‘is what it is’ and I, and a lot of other good people, spent a lot of time trying to improve it’s ‘efficiency’ and ‘accuracy’ and I can’t honestly tell you that it was worth the time and effort in the long run. Also remember that Parabolic SAR is an ‘indicator’ whereas the systems detailed in the book are actual ‘trading systems’.

And by the way: no offence to anyone but I don’t think that this thread should spend too much time on Parabolic SAR or ‘The Parabolic Time Price System’ as detailed in the book (which is, essentially, the same thing). Like I said: there is nothing more that I, or anyone else, can tell you about Parabolic SAR that has not been covered in the ‘Parabolic SAR - that’s all!!!’ thread. Believe you me: I’m sure we spent more time ‘dissecting’ Parabolic SAR than Wilder himself did!!!

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Hi folks,

I’ve been asked by one or two people (via email) what the difference is between trading commodities, CFD’s, metals, etc. etc. etc.

I’m going to quote from John F. Carter’s book ‘Mastering The Trade’ because he gives an answer that I don’t think I could possibly improve on (without posting one of my ‘manuscripts’ that is):

[I]"In the end, all charts and all markets are the same. They always have been and they always will be, because all chart patterns depict the same thing - emotional reactions and decisions made by human beings. Even if it is a mechanical system that is making the trades, it was still written by a human. A trader is always trading other traders, no matter what the market.[/I]

[I]Yet each market is made up of different types of traders. What are these traders like? If they are S&P traders, then it’s possible they are wired on Starbucks and are super aggressive. If they are trading bonds, it’s possible they are busy methodically filling in a crossword puzzle in between trades. If they are trading corn, it is possible that they are napping at their desk. Which type of trader would you rather trade against? Compete against? One of the key differences between most successful traders and unsuccessful traders is this: Successful traders are in markets where their personalities shine".[/I]

(I’m sure he does not mind me quoting from his book here as it’s giving the book yet another ‘punt’. It IS a very good book and another one that I believe should be on every traders bookshelf. There is more in this book about trading psychology, how the different markets work, who is losing money and who is making money, and why, than in any of the other books that I have purchased. Although his trading systems, which I think form a ‘smaller’ part of the book, look great and I assume are highly profitable, you need to know that, because of ‘where he is at’, he has certain ‘tools of the trade’ that give him ‘the edge’ that I don’t think we can afford right now. I know I certainly can’t but I’m working toward this goal).

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Actually i do not have the book but it is on my list to read. Regarding your answer i agree it is a difficult thing to figure. gl in your trading

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Hello again,

I can only say that if you want to make money then I suggest you move it to the top of your list. No joking. It’s probably one of the cheapest books to buy (when compared to others) and, if you ask me, it’s worth a ‘gazillion’ times more to you than it costs.

I must just tell you (everyone) that I still find it hard to believe that this book ‘fell out of vogue’. If I’m not mistaken, when it was written, it was THE book on technical trading. I can only surmise that it ‘fell out of vogue’ because newer, supposedly better, techniques and ideas came out and were well advertised. That, coupled with the fact that the systems themselves can be cumbersome to maintain on a daily basis (and the chances of maintaining them on shorter timeframes would be nigh impossible depending on how many instruments you were going to trade), could be another reason. Put it this way: I can identify with the latter because I had the book for a very long time and when I first got it I really thought that the stuff looked ‘old’ and ‘dated’ and the systems just looked too time consuming to use (easy way out???). It was only when I landed up (just about) broke that I really started analysing the systems and programming them into my trading platform(s) and using them and I can tell you that all the late nights and frustration are paying off right now.

Anyway: I’m very keen to see what other people (‘technical gurus???’) have to say about it (Tony???).

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Hi Dale, how’s it been lately? Anyway, I think I am ready to move onto the swing index. The TBP system is still working fairly well, but the past few days have been a little rough with it. I think I am going to concentrate on the volatility system with a few instruments (gold, maybe gbp/jpy) and the swing index. I remember you saying that it had to be tweaked for forex pairs, and something about the “trailing sar” that was giving you some trouble in the past. If you could review this information for me it would be much appreciated…