I am re-reading the book, and I am not sure I understand the following correctly. It’s in page 52, last paragraph.
But we enter short on the third day as we break down again. This trade has no five-day condition so there is no opportunity for the rejection rule to come into play. So we get short and use the last-bar technique as our initial stop loss. We never get stopped out so we shift from using the last bar to the 20-day high near the beginning of November when the 20-day high finally moves to below the level of the last bar. But before that, we get another breakdown in the middle of October.
There is a five-day condition in place so there is a potential rejection rule. However, prices slam lower and the rejection rule is never triggered. But it does cause a new lower last bar, which could become our new stop loss but I prefer to use the 20-day high.
Does it mean that there are 2 trades here (the first opened at the beginning of October, and the second in the middle of October)? Or it is just one trade, and if the channel goes flat for more than 5 bars and then breakdown, we need to use the rejection rule as if a new trade is just opened?
As I read it it is just the one trade, but with the 5 days flat on the channel the breaking of that brings the rejection rule back into play on the original trade, and the new, better break out price.
I’d then have a Trend Analysis trade entry, or stop movement to this new level, with the new break out keeping with Smith’s closest stop philosophy.
I hope everyone else is making lots of pips on all the /JPY trades and the EUR/GBP at the moment
I’m up a stack of pips with yen pairs and most euro pairs, also up on WTI, I’m also on most of the us, eu indices, got bishop on jp225, up a stack on asx200, up 27% equity, massive turn around after being down a couple of months ago after starting 38%
You are not trying to unravel the deep mysteries of the universe, you are not trying to be right, you are not trying to prove your theories are correct.
All you are doing is jumping on the moves that other people are making and grabbing pips.
Smith’s systems allow you to see if a trade exists in a pair in a few seconds.
If one does come into existence then it takes me about 90seconds to place it, and if it is already there it takes about 30 seconds to calculate a stop move.
Great trade! I don’t trade smith systems and methods, but the long term view of the strats are reinforcing my own adaptation to long term view of the market.
I would love to see your stats also I’m working in another trend following system but the more I look, the more I know that longer time frames works better (for me!)
Since starting Smiths system’s (and a few of my own - for better and worse, mainly worse) I’ve had a daily percentage gain of 0.27% straight, or 0.18% compounding.
Monthly gains (excluding this month - as its unfinished) are 7.73% straight, and 5.92% compounding.
Not exactly ‘killing it’, but more than enough to show me that is works and will in a few years be a very valuable income source.
medisoft,
The longer time frames don’t seem to be very popular here at BP - other than with those whom have been around the longest, and have the best success rates - maybe there is something in that…
I’m glad you are getting some consistent return, I’m in draw again, I had a stellar couple of months in dec and jan but this month hasn’t been great for me, I got smashed first two weeks of this month with the yen, mainly because reentry after a bishop, and not following the system! greed got me and i was punished accordindly. however, in the 15 weeks prior to 1st feb, my return was 23%, so that’s about 80% annualized for the year give or take. if I had have followed the system on a few losses they’d have been profits, but I guess it’s all a learning experience!
5.92% compounding is nothing to sneeze at, over 10 years in theory will turn 10k into just short of 10m.
His channel method gives me better results than the Conqueror.
With approx equal trades (184 vs 156) I average 7.55 pips gain per trade with Conqueror against 65.31 pips for Channel.
These numbers were much closer before the very choppy trading in Oct/Nov where the Conqueror got lots of entries that made losses, against very few trades that managed to break the 55 day channel.
I suspect in 12 months they will get closer again, but his channel system is still more profitable.
I’ve read through Smith’s book and through your thread (it’s actually what made me read the book).
I am a little confused when it comes to the Bishop. It seems like a lot of people are saying that the ADX is not what should be used (since it’s only one line) and you should be using the DMI.
I looked at the ADX and DMI on some NetDania charts and they’re similar in appearance but with different values. I looked at the ADX in MT4, but apparently some people have posted that it isn’t the correct method of computation…
Long and short of things, should it be the ADX (with one line) or the DMI (with 2) that is used for the bishop?
I don’t catch very well the 5 day condition. In an upbreak I need to see that the close of 5 bars to be lower lows or not to have higher highs? Can you post an example of a trade that has the rejection rule active?
Here is a AUD/CAD chart with the breakouts numbered from left to right. Could have picked a better one - just grabbed the 1st, no Bishop signal here, nor much in the way of profit!
When the rejection rule is in play, and you are using a last bar stop Smith say you can take a 3% position. I calculate to ensure if I do take the larger trade that I have the last bar stop tighter than 1%
55 day channel flat or heading towards the market price in the 5 preceding days. ADX rising. Enter trade. 3rd day closes below breakout price, Rejection rule. Re-enter on 5th day after initial breakout. No rejection rule in play. ADX doesn’t get high enough to give a Bishop, so take a slight loss when trade hits 20 day channel.
Enter trade. Rejection rule out.
Enter trade, rejection rule in play but not activated.
Continue trade from 3, but rejection rule has come back into play, and we exit for a profit
ADX dropping, so we do not enter. I entered a few days later when it came up using Conqueror.
ADX flat or rising so we enter. Rejection rule takes us out.
Enter and rejection rule out for minuscule loss
Rejection rule
Enter. Rejection rule not triggered so we are long.
ADX dropping when we hit the 55 channel again, so we won’t enter here, however the rejection rule (as I understand it) is still used to exit us from the trade.
We enter the trade short. Rejection rule in play, but not activated
We are still short. Rejection rule comes back into play, again not activated. We exit for a loss in late October
We enter long, and rejection rule exit
Enter long again, rejection rule active, but does not get used, so we take a loss
Enter short, rejection rule out
Enter long. Rejection rule.
Hopefully you understood some of that Seems as clear as mud here…
I’m working in another trend following system but the more I look, the more I know that longer time frames works better (for me!)
Seems as clear as mud here…