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

[pip huntter]

ok my friend let us not horsing around any more!!!
I personally agree about that we are all here to make money my friend and to help each others. i will read the thread have a good trading day

Akram

[Bocajunior]

Originally Posted by Bocajunior

I think I am going to post the way that I trade the RTS on the thread and put it out there for open comment. The reason that I am doing this is that I think we can say that all of us are trading modified versions of the systems in the book so I think it would be good for us all to pick and take ideas off one another and see what each other are doing.

Feel free to shoot me down,, but in all honesty,, I am open to any suggestions or comments that you all may have.

Ok, as promised but a little bit late, here is how I have been trading the RTS. All comments are welcome. I state now that I am looking to make more modifications to this, mainly to protect against a sudden breakout of the range that has hurt me a couple of times this week and last.

1. RTS levels, ADX/ADXR indicator on chart. Add the LRC (standard delta settings).

2. I'm trading about 24-26 FOREX pairs just now,,mainly majors and their crosses.

3. I compile an excel chart, trade only the last 5 or 6 pairs that have the lowest ADX value (Ideally less than 20, but definetly less than 25.)

4. Set B and S orders at the last RT level inside the LRC. However, I am only setting an order no further out than HBOP or LBOP.

5. If a B order is hit,, then I set TP at S1. If TP is not hit,, I adjust the TP everyday to the new S1 level until it is eventually hit. Rules reversed for Shorts.

6. LRC's: I dont like to see a LRC that is steep in nature.. I want to see good horizontalLRC's,, or only mildly sloping. If LRC is steep,, I will not place orders on that pair.

7. I am using 1% margin per trade.

8. Stops: Ok,, I had not been using any but as I took a bit of a beating on AUD/JPY last week when I was long and it broke out of the range to the downside,, I have decided to add a SL. I look at the height of the trading range,, then place a SL order about 25% below the lowest point of the range.. (rule reversed for shorts) If that is hit, then I'm out and I take the loss and move on.

9. Comments. Ok,, for the first few weeks,, I was taking regular, small profits but when the pair breaks out, as it did with AUD/JPY, I took a big loss. Sometimes I find I can go a few days when no order is hit all,, then in a thirst for action,, I tend to ignore some of the rules and place some orders. This habbit needs to be stamped out.

I'm hoping my SL rule will nip these losses in the bud or at least limit them when the pair breaks out of the range.

Another comment,, i notice sometimes,, just by looking at the daily candle chart,, I can SEE a horizontal range better than any indicator is telling me,.. e.g,, I see a nice horizontal range,, but the ADX is still above 25,,so I will place B and S orders on these pairs that I think have the look as it were.

That's it for now.
Anyone out there,, feel free to comment, and if you are trading this system, I would lespecially like to hear about your "tweaks" from the book.

Thanks all
Boca

[kaalilaatikko]

Boca, thanks for your interesting post!
I learned from Dale to place the order outside the LCR, not inside. Your trade should yield more trades, but are you doing this on purpose differently than Dale? Does your way seem to produce better results?

This use of SLs is a problem that has bothered me as well. I've just closed a "negative stellar" RTS trade in loss (GBP/USD, which was a failure in the first place) (Dale might say no-no here for RTS closing, but at least for that pair the loss would have kept growing). But a SL would have made that loss much smaller. Have you already made any checking against old data about how your SL rule would perform?

I use margins that are comparable to yours, and I'm feeling more comfortable now than when I used bigger ones. My profits and losses are smaller, but on the other hand it is possible to open more trades then. The number of forex pairs is limited, but this opens more possibilities towards CFDs as well. I have my first SIS CFD trade open, and it is on small but steady profit right now.

- The */ZAR VS/AC+SIS trades seem to have been a success. I had been doing rather poorly lately, but these have now taken me back towards BE.

J.

[dpaterso]

Good (Saturday) morning everyone!!!

Boca and kaalilaatikko:

I am absolutely ASTOUNDED!!! (Only kidding)!!! But you DO make some EXCELLENT points there is no question.

As a FINE example:

Even although I am moving away from trading forex pairs and want to be trading only stocks and commodities I do monitor the forex pairs for those sort of 'gift horses in the mouth cannot go wrong forex trades'. ONE that I was 'eyeing' WAS of course GBP/USD. On Thursday morning I set a 'limit order day buy' at LSTOP2 (I think it was) and THANK GOODNESS it was cancelled that night (being only valid for a day) otherwise (as I'm sure I don't have to tell you) I'd have been 'in a world of sh*t' of that trade!!! The reaon I'm telling you this is because the idea of settings stop losses with the RTS is, I'd NOW agree, a very good idea. OK: YOU KNOW I don't take losses anymore so instead of a stop loss I'd place an 'Enron' (ask Craig) order at the same place that you would place a stop loss.

Now to this end: I have indeed made many aware of the 'RTS/LRC/Pivot Level with Stop Loss' 'system' and if you are 'hell bent' on using stop losses or my 'Enron' 'system' then I believe it has merit i.e. you place your RTS buy or sell order at an RTS level (in MY case I'd ONLY use the RTS level OUTSIDE of the LRC but this is a personal choice of course and NEVER NEVER B1 or S1 as an entry point no matter whether B1 or S1 is inside or outstide the LRC) and your stop loss (or in MY case my 'Enron' order) at the next lowest or highest RTS level.

Boca:

Nothing wrong with wanting to see 'flat' LRC's or just 'looking' at the chart for an apparent range because I agree with you that sometimes ADX is wrong and would keep you out of a 'stirling' trade (as a matter of fact I no longer even HAVE ADX on my charts but use the VHF instead which I'm finding far more accurate and definitely quicker to 'respond').

The point really is this: I believe that you're BOTH 'on the right track' and should have no problems from here on in with the RTS. I'm VERY pleased to see that you're both adhering strictly (and even MORE conservatively) to your money management rules. As I also sure I dont' have to tell you: if NOTHING else your money management rules are BY FAR the most important rules to NOT be broken!!!

kaalilaatikko:

I'm pleased to hear about the ???/ZAR trades. I took profit on them this week so I'm out of the trades (much to my disgust to be honest because they just kept on climbing) but this was really only done because I preferred to use that margin for stocks (and to be honest the only reason I got INTO those trades in the FIRST place was to prove a point to YOU)!!! But I'm happy that they are working out for you. Just please watch Gold though i.e. the moment Gold starts to rise (which it eventually will and you just have to trust my 'instincts' on this) then those pairs will start to drop again so it MAY NOT be a good idea to wait for a VSTOPS exit but that's up to to you of course. Put it this way: the moment you get a VSTOPS ENTRY to go long of Gold I'd say that would be a good time to TP on the ???/ZAR pairs whether indicated to do so or not by the VSTOPS (as a matter of fact EVEN THAT may be too late and maybe you should be looking at setting stop losses right now that would in effect be locking in profits). The 'problem' with those pairs is that they really normally trade within a wide range (GBP/ZAR is never really more than 15 for any extended period of time, USD/ZAR is never really more than 8 for any extended period of time, and EUR/ZAR is a bit 'odd' here because it's normally around 10 or so so it's already quite high in my opinion). Just some ideas for you to keep your profits.

Regarding forex pairs: I am indeed 'eyeing' AUD/USD for a long position when I get a signal (will use the 'AC Red' and VSTOPS same as I did on the ???/ZAR pairs for an entry) and STILL GBP/USD. Although I've been 'banging on' of late saying to NOT short the USD I personally believe this USD rally is 'just a tad' overdone and there is bound to be a retractment very soon (take a look at ANY USD/??? pair and you'll see what I mean). Of late I do not seem to be able to go wrong on any stock I 'pick' so this will be my main focus from now on (but if the truth be told it's really only so that I can 'have a life' and have 'set working hours' because this 24/7 thing with forex pairs really is just too tiring to sustain because of my time zone and yes: I DO LIKE the 'pizazz' associated with trading stocks on the NYSE). I'm telling you this just so that you know that it's got NOTHING AT ALL to do with whether or not these systems work with forex pairs or not i.e. since we've all 'tweaked' them for forex pairs they work equally well across the board i.e. for ANY tradeable instrument be it a forex pair, a stock, or a commodity.

I have also gone through your fantastic post about the ASI swing points. To be honest though: it's a 'tad' too complicated for me!!! I am trading the SIS like this (and I believe it's what the book 'tells me' to do with the possible exeception that I'm not worrying TOO much about the 'significant' swing points i.e. to me a HSP or LSP is indeed an HSP or LSP and I'm not really too concerned whether or not they're 'significant'. I will place a stop order whenever I have a 'defined' HSP or LSP and leave it there until I get another HSP or LSP at which point I'll move the order. The only time I'll wait for a close to place an order is when it's the Trailing Index SAR that's giving me a signal to place an order. So far this is working very well (or should I say that so far I see that this is highly profitable i.e. of late the only system I'm actually trading with is the VSTOPS on stocks BUT having said that sometimes I'm already in a VSTOPS trade that BECOMES a valid SIS trade which of course always make me feel more confident with the trade and I MAY use the SIS HSP or LSP to lock in profits because these points are ALWAYS closer to the price than the VSTOPS STOP or SAR. If I am forced to TP in this instance and the price has not yet closed contrary to the VSTOPS STOP or SAR then I'll re-enter the trade in the same direction after the close if the price has retraced far enough for my 'liking').

Anyway: that's my first post for the weekend (I'm SURE there will be others)!!!

[kaalilaatikko]

Unfortunately I did not have the guts to hold on the */ZAR trades. The profits were more than twice the margins, and USD/ZAR made the biggest profit I've made so far. Maybe with more trading experience and a stronger account would have helped me to keep them longer. But profit is profit anyway, and 5% increase in the account balance in one day is the best day I have had so far. These were my first ZAR trades, so maybe it's easier to overcome the big spreads next time.

Dale:

(and to be honest the only reason I got INTO those trades in the FIRST place was to prove a point to YOU)!!!

Point proven! And you couldn't have found a better way to prove it!

Here are some new signals for Monday. Some of these should be considered ranging, however, so don't take these as any recommendations as such.

SIS (I like SIS signals in that there is no fiddling with any parameters):
NZD/CAD S
GBP/CHF L (*)
EUR/CAD S (*)
CHF/JPY S
GBP/NOK L
EUR/JPY S
EUR/RON L

(*) there is also the first green/red AC below/above zero signalling VSTOP/AC.

VS (parameterization involved, which may impact on the signal date):
USD/ZAR L
AUD/CAD S
CHF/JPY S
CAD/JPY S

This time I don't do any further public evaluation on these, but leave it as an excercise for the reader.

There is one new rule I've made myself when entering trades. I will not enter such trades for which there is a high-impact news expected on the day the trade should be opened.

I also try to avoid days when the previus day has had a big change in price, as these tend to retrace. I'm also starting to see support lines better, just closed yesterday one VS position (GBP/CHF) with minimal profit, but it was too close to the support in my opinion. Now the same pair has given a SIS signal, maybe I skip it.

J.

[chdorry]

Originally Posted by kaalilaatikko

SIS (I like SIS signals in that there is no fiddling with any parameters):
NZD/CAD S

Thank J for the excellent analysis again.

All - I'd recommend anyone who is considering taking this trade (NZDCAD), take a look at the chart. NZD was showing major weakness on Thursday night (Eastern US Time) and when I woke up in the morning, it had made a STRONG move positive. So if you look at NZD/CAD for instance, the low Friday was .73747 and the close was .75133. This can be seen across all NZD/??? pairs (was low then bounced back) and all ???/NZD had a nice run up and then all turned down strong.

While I'm not saying to ignore this trade (ultimate responsibility relies with the individual), I personally wouldn't take it unless I was going to either set a stop or have time to be able to check it frequently for the next day or two. Just my opinion, your mileage may vary.

[dpaterso]

Good (Sunday) morning 'you two' (and everyone else)!!!

My input:

(I'm not going to comment on the SIS trades because as you say kaalilaatikko: there is little or no 'fiddling' involved and by now everyone should 'have this down'.

As you know: the VSTOPS has become my 'de facto' 'standard trading system' now (with a little help from the other systems and indicators).

Now an example of a VSTOPS trade that I would NOT take IN SPITE of the fact that we have INDEED have a close contrary to the SAR: USD/ZAR!!!

The price movement past the VS/VSTOPS SAR is too 'extreme' for me. Also: I happen to know (purely from living here) that the ZAR has (for years) traded (roughly) between 7 and 8. In other words: I believe that if you went long NOW as per the VS/VSTOPS you don't have enough 'room' for the VS SAR or the VSTOPS STOP to move to the point where you're going to be in profit by the time you are signalled to SAR with the VS or TP with the VSTOPS. The only way I'd enter this trade NOW is to wait for a retraction in price to, or below, the VS/VSTOPS SAR and then I'd go long again. GBP/ZAR and EUR/ZAR I'd have no problem going long again NOW but also be aware of the fact that they trade in a wide range as well i.e. GBP/ZAR normally between 14.50 and 15.50 and EUR/ZAR normally between 10 and 12 (movements out of those ranges really are 'extraordinary' and don't last too long). I guess you COULD say that this is 'knowing' the pair (but it's the only one I sort of 'know').

I'd also not be looking short anything AUD/??? right now but I'd be looking for AUD/??? longs. As we all know: I have NOT A CLUE about anything NZD/???!!! Having said THAT though (this is addressed to Craig): you have to include in your trading 'regimen' a 'cursory' glance at the forex calendar(s) on a daily basis. This is as close to the information that I get from Bloomberg on a daily basis as you're going to get on forex pairs (I use Forexfactory's). It will at least give you a 'heads up' as to WHY (using your comments about the movement in NZD of late) a pair is moving.

Also: although I'm always 'banging on' about NEVER shorting the USD I personally believe (not for any good reason other than 'time spent' at this) that this recent USD strength is just a 'tad' overdone. While I have the UTMOST faith in the USA and the NYSE and the USD: let's be honest that NOTHING has changed THAT MUCH in the USA 'overnight' to justify this 'radical' and 'sudden' USD strength so I'd be 'sitting on the sidelines' waiting for retractions 'across the USD board' and then look for my 'longs' again.

Anyway: today I will be 're-setting up' my charts (I do this from time to time to 'clear out' any 'funnies' that may be 'lurking' much the same as you would re-format and re-install a PC from time to time). I have decided to give the ADX ('unsmoothed') 'one last bash' BUT: changing the period to 7 days and ONLY to be able to use the ADXR to give me a 'heads up' as to which pair has the strongest directional movement i.e. I'm not looking to be using it for DMS trades or looking to be using it to determine whether an instrument or pair is trading in a range or trending (I now use the 'original' VHF for this with FAR better results ALTHOUGH as I've mentioned: I'm really only using the VSTOPS and the SIS so this is not REALLY affecting me in any way).

And ALWAYS remember folks: I'm by NO MEANS 'always right' and when I post a post like this I'm by no means 'telling you what to do'. I only post what I WOULD DO as and when situations and / or potential trades arise so please do bear that in mind. OBVIOUSLY: my 'take' must have merit otherwise I'd not be achieving the gains that I am but that STILL does not mean to say that I'm 'always right' (and as A MATTER OF FACT: I have NO idea why Craig has not mentioned this i.e. maybe he does not want to 'boast' but his percentage gain for this past week was higher than mine. I 'rest my case')!!!

[dpaterso]

By the way:

I've been meaning to post this for an absolute AGE now but I keep forgetting (and it's only because I'm 're-setting up' my charts that I remembered):

Delta's 'default' charts have on them RSI(14)/RSI(28) (combined into a single indicator). Now admittedly their 'default' is the 5 minute charts BUT (for interest sake) add RSI(14)/RSI(28) to your daily charts and see what you see. I see that whenever RSI(14) crosses below RSI(28) then it would APPEAR that short trades 'are the order of they day' and whenever RSI(14) crosses above RSI(28) then it would APPEAR that long trades 'are the order of the day'.

I'm not saying that I'm adding this to my charts as 'standard' but just thought that (while I remembered or should I say was 'reminded') I'd 'throw this out' for your 'perusal' and comments.

[dpaterso]

Good (Sunday late) evening.

OK well: as I said I spent most of the day 're-setting up' my charts and I was going to give ADX (well ADX(7)) one last chance to sort of 'prove' itself but from what I can see it's a pure waste of time i.e. ADX(7) is WORSE than ADX(14). With the VHF at defaults I can 'see' the corresponding range or the trend whereas with ADX(7) the total opposite is apparent. All I'm saying is that AT BEST case use ADX(14) (but not for me).

Anyway: have a FANTASTIC and HIGHLY PROFITABLE trading week!!! For the forex traders I can (almost) 'guarantee' that there are some nice long (excuse the pun) long trades coming on AUD/USD and GBP/USD so just watch them carefully. There also appears to be retractments at the open tonight on the ???/ZAR pairs so another possible opportunity to 'get in' again for those (like me) who took profits on those trades already.

[chdorry]

Hi All,

Just a quick heads up as there are now 6 AC/VSTOPs trades that are long on the AUD.

AUDCAD, AUDCHF, AUDJPY, AUDNZD (All Buy)
EURAUD, GBPAUD (Both sell)

Seems things will get interesting as gold has taken another big drop today, which usually pulls AUD down with it. Not sure if we'll see AUD retracement without gold turning back up.

Other than that, it looks pretty quiet at this point for new orders, although we'll see when the close of the candle comes.