Hi dale
thanks for your contribution!!
you are welcome to participate and join us on our “channel-journey” 
Mike
Greetings fellow DC traders,
I recently created a live account to forward test my DC strategy. It’s simple: buy/sell orders at DC channels and stop is also trailed by DC channels. I use 100 SMA as a direction filter, buy if close > 100 SMA and sell if close < 100 SMA. I use 4h chart, DC period is 20 for JPY pairs and 40 for the rest. My system is on cAlgo and it is trading 12 pairs on a 24/5 schedule . I will turn it off on Dec 20 and resume it on Jan 10. Risk per trade is 1%.
I am convinced (through back testing on both in-sample and out-of-sample data) that DC channel trading has positive edge as long as it is not interfered with. I’m going to have this system running for 2 years to see if my proprietary DC period settings on the pairs is robust or not. After 2 years, I hope to have enough data to draw this conclusion.
Since I have not made 5 posts on the forum, I cannot include link. Just search for kingalpha on myfxbook, you’ll see that I have 3 systems. It’s the trend following one.
I’ve got detailed stats on 4 years back testing for 10 pairs that I would like to share, but I can’t post a link unless I hit 5 post counts in the forum. This is my 2nd post. Is there a way around it without spamming my way there?
Getting the 5 posts up is no problems bro. Lets just talk some talk. Welcome. When did you discover DC’s?
Big thanks to Dale. Good homework.
Got some fresh ideas built more on money and trade management. Been able to recover so far this week. But even a fool can get lucky.
I first heard about the Turtles and DC channels when I first started out in 2013. Recently, I was looking for a suitable stop trailing method that can incorporate both time and volatility (that I can understand). So I looked back into DC channels because of the way the stop is trailed. I discovered that DC channels are very ‘aware’ of price action and volatility due to the way it is constructed. The time component is also a bonus. I got a friend to code up my version of the turtles’ strategy and got involved in some serious back testing.
Initially, I was only interested in how DC channels can minimise losses but then I discovered that it is actually profitable. So here I am, with real money on the line to forward test because we all know that in trading only real performance with real money counts 
So true bro. Back testing, demo testing is a necessary development stage but it all means nothing if it can’t be converted to a real account. Managing multiple trades at once is a new experience to me. You can back test a entry rule. You can back test a exit rule. But you can’t back test a portfolio
Think I’m going to have to reset my test platform and set up a second. One to run the bots on as a control. One to work on trade/money management rules. Frustrating cause I want to put these systems to a live account. Bit more hard work first but.
Best of luck with yours bro.
Bob
Thanks for the kind words Bob.
Now, I noticed that on your test demo account, commission is ~20% of total profits. I see that you are using Global Prime and their commission structure is $7 per lot round turn which is very competitive already. If you don’t mind me asking, what is your goal for DC trading? Are you aiming for growth with minimal risk or are you aiming for high % return? I ask because personally I see paying ~20% of profits in commission a downside if you are aiming for growth.
(4th post, one more to go!)
Hi bob,
can you see which bot is more successful?
Hi
great to have you on board!
So you enter on DCs 20/40 AND trail stops also on these DCs (opposite channel, of course)?
Mike
p.s. now you get your 5th post…if you answer
Hi Mike,
Yes, it’s as simple as that. I don’t want to be creative with something that works perfectly on its own. I must admit though, it is very psychologically difficult to follow.
5th post! Stats coming up
This is some of my back testing results: https://dl.dropboxusercontent.com/u/71788518/stats.xlsx
This paper shows that DC channel trading is most robust among the trend following strategies: https://dl.dropboxusercontent.com/u/71788518/Analysis-of-Trend-Following-Systems.pdf
This is someone’s (unsuccessful) attempt to trade the original Turtles strategy: Program Details
This is my live account tracking my version of DC channel strategy: Trend following System by kingalpha | Myfxbook
Enjoy!
Yes, you are right…why changing a working, profitable system…
did you only backtest DCs 20 and 40 or also others (10, 30, 50, …)?
Thanks for sharing your results…
I am still undecisive which DC version to test longer term in my live account…i might go with various…
I am also tweaking with the type of trail stop, still not fully convinced…another argument to test different versions…
Systematic testing requires a lot of statistical analysis to minimise the risk of (accidentally) seeing false results (kurtosis, propagation of errors … etc). So far I only had time to run 2 tests so far: a baseline with 20 and one variant which is the 40. I do most of the work by hand (no programming skill) so it takes time. I have a small start up managed fund trading for investors so my time is limited.
I find higher DC periods on intraday time frames more suitable as it helps to dampen down the noise. Daily chart or higher are less exposed to randomness and noise.
Arh the great debate. Commission or spread. I’ve used Global Prime just to test them out and… “No Sir, I don’t like it” Read their PDS.
With that said I’ve coughed up 25% of my profit on commission so far. In perspective if we call that cost of goods then from a business model that’s very good. All businesses have cost. But that’s a stat that can be improved with better performance. Also lets compare to paying a larger spread say 1 pip instead of comm. So far I’ve made 272 trades for 644.9 pips. If I cough up just 1 pip per trade extra in spread my cost of gods is now 42%. That’s worst. Many just don’t understand the real cost to trade.
Personal goals. Well my account isn’t very big and DC isn’t my main strategy. I’m here for the long term. Basically this is my super fund. And I’ve got 20+ years to build it. DC’s is an old love that ForexMike reminded me of and I’m looking to add a couple of strategies to my portfolio to diversify. Demo tests are run at 1% risk to match back testing to keep a controlled environment.
So far all I can say is that the bots are behaving perfectly in line with the logic programmed. Naturally the 1hr charts are producing larger returns but then they are also producing more constant losses.
Unfortunately Dales post just asked more questions than it answered. Nice work Dale lol
It reminds me of the difference of a speculator vs a trader vs a investor. Each has different goals and reasons to play the market. Trading off the 1hr chart is speculating. We care not about the bigger picture. We need to lock in and protect our profits. The simple reality is even at this level, we simply have no idea what the markets will do next. DC is referred to trend following and the motto is let your trade run. Speculating motto is never let a winning trade turn into a losing trade. The two notions contradict. Finding a happy medium between the two is elusive.
What I’m now looking at is time of day and equity stops. So time of day, things like closing all trades before end of day. Looking for that reversal on a Monday. Or at 10am London. For some reason all them British traders like play-lunch just after 10. Then they head of for meetings. And off course market opens/closes and news release.
Then there could be use for an equity stop. When things work for the right reasons, there will be 5 to 8 trades running at the one time. I’m going to start implementing a stop rule that trails a 80% equity once the account is in profit by ‘n’% for every n’ trades. So if there is only 1 trade on I’ll trail the stop a 80% equity once again of 1% has been reached. If I have 5 trades on I’ll trail at 80% once 5% growth has been reached. If I had 8 trades then 8% growth is my target.
Undecided on the 4hr chart. Your results seem to mirror mine. That’s good. I thinking more like Mike, 6, 8, or 12 hour charts might be more productive. Just for no other reasons than the construction of each candle reflects more of the business hours trading is preformed in.
One concept DC traders have to accept is that the same price action forms all timeframes. A break of a larger period on a lower timeframe is nothing more than a break on a shorter period on a higher timframe.
If trend following is the game then Daily charts are as low as you can go.
With that all said and done. Just manually closed out on news
I have been using DNC’s for a while now on the daily chart for my long term trading and also for short term
Daily: 10 & 20 filter being the 200 MA
Intraday 55 DNC
M$M
Hi
i’ve been reading about support and resistance (also watching some videos) the last days…and thinking about how we could use DCs for that kind of trading…
As bill said, as speculators we have to secure profits as soon as possible…we can’t let profits go away again as investors can…
So, i thought about trading breaks of a smaller DC and use a higher DC as TP…
Another idea in sense of SR would be to trade reversals instead of breaks at DCs…has anybody tried that? And if yes, with success?
we could use also the middle band for that…
The shorter price range entry followed by the higher time frame exit is the opposite of the turtle way of thinking which was to get in only after a less frequent move and get out quickly. Thus the turtles would prefer to be flat as long as possible and in the market as little as possible. Whereas doing the opposite would have you in the market more. I personally don’t see any reason to go either way. There will be times when shorter entries with longer exits will perform better than longer entries with shorter exits and vice versa. But the overall long term expectancy is equal as far as I can tell (despite what a back-test tells us).
The trouble with trading short on breaks of the upper bounds of a range and long on breaks of the lower bounds is that winning trades will frequently be smaller than losing trades and big moves that could have been winners are sat out while waiting for entries to get into positions that will only take small profits. It is a cut your losers short and your winners shorter trading system.
-Adrian
The USD/CHF trade I was updating in this thread went nowhere and was a loser. The GBP/JPY trade ended back in early June with a win. And the GBP/USD trade is still hanging in there with a long position on the 4 week channel since early June but it is not yet sitting with a profitable stop. So are there any trades on the 4 week channel that look good?
GBP/AUD broke to the upside of the 4 week channel back on April 30 and has not broken to the downside of the channel since. The stop on that trade is currently 1129 pips higher than the entry. So that is a nice looking trade right now that is contributing to my equity gains.
Another good one is the NZD/USD short since the same time in late April. GBP/CAD and USD/CAD have shown a nice gain on the 4 week channel since May.
Since I opened the Oanda account in April, I have closed only 38 of the 78 trades I have entered. Of those I have closed, just 6 trades were winners. Of the 40 open trades, 22 of them have stops that have been groomed to profit. If I closed all trades today, my account would be worth 44.2% more than it started and the 78 trades would consist of 36 winners (46% wins). But I am not closing anything that doesn’t automatically close via my stops.
On the ten day channels, the theme at the moment seems to be the CAD.
GBP/CAD broke above the ten day range on 6/15 and the bottom of the channel is now 888 pips higher than that entry. USD/CAD and EUR/CAD both also have shown similar moves since that time with the EUR/CAD striking today into highs not seen since last December.
May the goddess of fertility bless your account.
-Adrian