i traded it live but i used a the nightingale theory. and it was very positive for me but very risky.
I’ve read several pages on this thread but have not yet come across what happened and why this strategy was dismissed as a viable way to trade. Can anybody tell me what went wrong?
I believe that the median stop loss has been too much for each reversal and eventually the person runs out of margin to work with. Would it make a difference if the stop loss is at least half the valuve of the current sar dot value? Would this prevent many problems?
why don’t you just back test the system yourself? if your back testing proves it works then start trading. you have to put in the hard work to get the results you want. you should back test any of the “Holy Grails” that you might want to start trading.
I think this works, but I think to make it less risky then you should only trade from the first 3-4 dots. Watching the waves of the sar, it’s only reasonable halfway through, then the other half is reversing. So after the first 3-4 dots, tighten the stop closer, or perhaps using a trailing stop from this point on will be successful.
Hi,
I never thought I’d see THIS thread being resurrected AGAIN!!! LOL!!! (In case you’re wondering: I started it in 2007). Has anybody bothered to read the disclaimer [B]IN BOLD[/B] that I added to the very first post on this thread after a good deal of time had passed since it had been started??? I would suggest that you do so before continuing.
There are about two or three threads that I started at or around that same time (after trading and losing a lot of money for about a year before that trading this and other trading systems and BELIEVING, after one or two good trades, that I’d found that ‘elusive’ ‘Holy Grail of trading system’). Please understand that when these threads were started: I, like many, thought that ‘I knew it all’ and everybody ELSE was just ‘over complicating’ things. Well guess who was right??? Here’s a hint: it wasn’t me!!! LOL!!! What I’m saying is that there is a lot of useful information on this thread insofar as the PSYCHOLOGY of trading is concerned but, for the most part, all the contributors on this thread were all still ‘wet behind the ears (myself included)’.
The above being said: I’ve ‘stuck’ with J. Welles Wilder’s Trading Systems as detailed in his book ‘New Concepts In Technical Trading Systems’ (details of Parabolic SAR were first published in this book in 1978). After many years of making a veritable ‘study’ of Wilder’s work: ‘all is not what it seems’ as the book itself would have you believe. Wilder’s book is written in such a way that it you ‘miss’ or ‘skip over’ JUST ONE SENTENCE OR COMMENT you’ve missed a crucial bit of information that will have a direct impact of the success or failure of his trading systems. In other words: there is no ‘flannelling’ in his book. It’s PURELY technical, short, and ‘to the point’.
So to answer your question: yes it is possible to make money trading ONLY Parabolic SAR BUT the caveat being that you need to understand it FULLY. Most sites / forums / trading systems would have you believe that you just simply ‘follow the dots’ and stop and reverse when the indicator reverses. Not so my good friends. Parabolic SAR is one of those ‘indicators’ (actually I hesitate to call it an ‘indicator’ because it ACTUALLY is the integral part of Wilder’ 'Parabolic Time / Price System and not just simply an ‘indicator’ with all manner of ‘lagging components’ included the calculations. As with all of Wilder’s systems, with the possible exceptions of ADX and RSI which are, for all intent and purposes, ‘indicators’ BUT form part of actual trading systems, the same applies to Parabolic SAR. In other words: they’re not just PURELY 'indicator’s to be used on their own).
I’ve continued my work / study of Wilder’s work and he is without a doubt the finest market technician even born. His trading systems were not developed using computer models (such as Bill Williams’ trading sytems for example which are ‘curve fitted’ and ‘optimised’) and that is why Wilder’s trading systems have, and always will, ‘stand the test of time’.
I have forums ‘dedicated’ to Wilder’s trading systems and I train and ‘mentor’ on them (I hate the word ‘mentor’ but it’s ‘in vogue’) and they can be found here: Technical Trading Systems at TechTraderCentral - Home. Why my own forums??? Because I do not believe that there is money to be made trading spot FOREX (or should I say there is no money to be made trading Wilder’s trading systems on spot FOREX anyway i.e. Wilder was, he’s now retired, an equitiy futures and commodities trader and his systems were designed for the trading of equity futures and commodities. All you have to ask yourself is: do you wish to make money and does it matter how you make that money or do you want to trade spot FOREX just because everyone else is and it’s ‘the flavour of the decade’. If it’s the latter: I cannot help you. If you’re interested in trading and making money: then I’ll do all I can to help you).
I DID INDEED want to start an equities futures and commodities forum on BabyPips (as you can see from my posts I’ve been around a LONG time) but there was no interest shown hence my own forums. I’m not trying to ‘steal’ members. I just know how I make money and I hate to see new trader after new trader join this, and other forums, get ‘bombarded’ with more information than they know what to do with, get information overload, in some cases are given some of the most RIDICULOUS advice I’ve ever seen in my life (although that’s a bit harsh because in the beginning of my trading career I ALSO ‘fell’ for such ridiculous advice so don’t go blaming yourself i.e. it happens to all of us when starting out unfortunately normally at a huge cost both financially and personally).
Some will no doubt ‘flame’ me (as usual) because of my ‘equity futures and commodities vs. spot FOREX trading’ comments). Frankly: I don’t care anymore. Finally, after three years of MORE studying of Wilder’s work, and trading equitiy futures and commodities, I’m able to ‘pay my way’ and make a living. So: no it not due to spot FOREX. If you’re a successful spot FOREX trader: then ‘kudos to you’ (from what I gather there are a few around here). But you have MANY ‘odds’ stacked against you which you do NOT have when trading equity futures and commodities. Basically, and with spot FOREX trading, you’re pretty much ‘fu*ked’ before you start and only a select few will ‘make it’.
There are just some very basic rules that need to be followed be it equity futures and commodities trading or spot FOREX trading, a decent trading system, and you’re ‘good to go’. There are hundreds, if not thousands of trading systems detailed on this and other forums. MOST of which are some new trader’s ‘design’ or ‘claim to fame’ or their just trying to ‘prove that they can do it on their own’ (I was ‘guilty’ of doing this too). To those that have ‘got it right’: once again ‘kudos to you’ and well done. But me: I’ve learned the hard way to follow trading systems developed by the ‘old timers’ that INDEED are either very wealthy and either have their own investment companies or have retired with millions of dollars. Of ALL of the trading systems detailed WORLDWIDE: after a long period of time and study you’ll find that 'there are only so many ways to skin a cat (only so many ways to trade the markets, any market, i.e. it’s just the systems that are ‘named’ differently by their developers).
No offence to anyone (and I’m not going to get into a ‘flaming exercises’ here with anyone either so don’t bother trying to start one with me because you’ll be wasting your time). After this past weekends ‘issues’: I’m not wasting my time (and bandwidth) on ‘cr*p’.
So there you have it. If you want to make money consistently I can and am willing to help you (and there’s no ‘catch’ or charges either). I just know what this business can ‘do’ to a person if you allow it to and fortunately I’ve been able to ‘stick with it by hook or by crook’ without having to ‘give up’. No: I’m not ‘trader of the decade’ but I have had a rather ‘accelerated learning curve’ given that I’ve been able to sit at this desk, in front of my trading platforms, LITERALLY 24/7 for almost six years without having to have had a ‘day job’. It’s ‘my life’. Now and then I STILL make mistakes but I don’t LOSE money anymore and, as noted, am able to ‘pay my way’. Am I going to be a BILLIONAIRE in another two or three year’s time??? No. Not unless somebody ‘dumped’ a million dollars of capital into my account. But I’ll get there one way or the other even if it has to take a little longer.
In closing (I’ll bet you’re all glad to hear that statement being made) and more to the point of this thread: Wilder’s Parabolic Time / Price System is not his '‘greatest offering’ by his OWN admission. You cannot ‘beat’ his Swing Index System over time. (By the way: the copyright on his book has long since run out so it’s available as a download on my forums now).
Whichever ‘direction’ you intend to take: I really do wish you ‘good trading’.
Regards,
Dale.
Hi “Dale”,
Could you “explain” what are these “odds” stacked against us in “spot forex”? It is “quite” concerning “to” me that a rep from “a” forex broker feels that “there” is no “money to be made” in spot for"ex".
“Thanks” “.”
Also, every time you did ‘this’, I paused to emphasise that word in my mind as I’m reading ‘you’, and by the ‘end’ it began to ‘get’, ‘ridiculous’. No offence intended, it was also funny, but just drawing your attention to it.
I’ve completed BabyPips School, and do not feel at all overwhelmed by information. From what I see, new traders problems typically revolve around being/acting stupid. So let’s put that aside… are you saying that brokers have successfully tipped the odds against traders, to the degree that anybody who wins in the long term represents a statistical anomaly? That in fact it is precisely the same set up as a casino?
Hi Jake,
Nice to ‘meet’ you!!! LOL!!!
Let’s start with my writing or posting ‘style’ (what with all the exclamation marks, CAPITALISATION, etc.). Your frankness is appreciated and no offence taken. Believe it or not: this subject has been discussed before. Some have said it’s ‘painful’ and ‘difficult’ to read while others have said that it’s ‘just my style which I’ve become known for’. I think it came about because I try, as best I can, to convey a message, or my thoughts, as if I were actually speaking to somebody. Well that and when I first started in this business and first started posting on forums to learn (BabyPips being the first after to trying to ‘battle it out on my own’ for about a year or two before that): I found that when I asked a question that most of the time I received a sort of ‘one-liner’ answer to a post or a query and was then even MORE confused because not only was I trying to find something out that didn’t understand but now I had to decipher this ‘one-liner’ IN ADDITION which inevitably meant that I’d have to ask my question again and felt like a total idiot for doing it (this also being a reason for my LONG but DETAILED posts which, I know, many find ‘inane’, but at least I know, or should I say that I believe, that when I explain something it’s ‘crystal clear’ and ‘leaves nothing to the imagination’)!!! LOL!!! At one stage I DID INDEED ‘take it down a notch’ insofar as my ‘style’ is concerned (would you believe I even subscribed to a forum where the correct use of the English language, the correct use of the apostrophe, grammar, etc. were the topics and I had some of the very kind members critique my writing style and they too said that it was ‘overdone’). The result??? After a few posts people were wondering if I’d died and an impostor was posting as me!!! LOL!!! Anyway: for the purposes of this reply, to you anyway, I’ll indeed try to ‘contain’ my ‘style’!!! LOL!!!
And before I continue: please (everyone else) let this not become yet another ‘flaming session’ because of my ‘take’ on the trading of equity futures and commodities vs. spot FOREX trading. In case you’re not aware Jake: this ‘take’ has gotten me in a ‘deep water’ here (this being a FOREX Forum) which is understandable I GUESS. At one stage I asked if there would be any interest in opening ‘one little forum’ where the trading of equity futures and commodities could be di cussed but was pretty much ‘shot down in flames’ hence my own forums on the subject. But I still ‘hang around’ here because it’s sort of like ‘home’ really but I no longer post about particular FOREX trades or FOREX pairs or anything like that i.e. I post (here) more on the basics of trading. Believe it nor not: ‘trading is trading’. There are a few basic rules that if broken will guarantee failure no matter what market you’re trading (be it equity futures and commodities or spot FOREX) and those are the subjects I sort of ‘stick to’ here now.
I can understand why you find it ‘concerning’ that a broker representative of a broker that offers spot FOREX trading feels that there is no money to be made in spot FOREX trading. Bear the following in mind (before I get to the ‘nitty gritty’): Deltastock offers not only spot FOREX pairs for trading but also CFDs on individual stocks, stock index futures, commodity futures, from just about every exchange or country on the planet. And those are what I trade.
Now for the ‘nitty gritty’!!! LOL!!!
I’m not saying that it’s NOT possible to make money trading spot FOREX. To the best of my knowledge (or belief anyway) there are indeed a FEW profitable spot FOREX traders right here on these forums. I’m DEFINITELY not one of them. I also don’t believe that Brokers have ‘tipped the odds’ against spot FOREX traders either (well: that’s another whole topic i.e. there are probably a handful of decent spot FOREX Brokers around who will NOT ‘mess’ with your trades or ‘pull every trick in the book’ to ENSURE that THEY end up with YOUR losses in their bank account). But let’s leave those ‘Bucketshop Brokers’ out of the picture for now and assume that we’re in a ‘perfect world’ and you’re trading with a reputable broker for the purposes of this discussion.
There is no centralised exchange for spot FOREX and spot FOREX trading is not regulated nor monitored. Because the spot FOREX market is so ‘disjointed’ or ‘fragmented’ it would be impossible to regulate or monitor the spot FOREX market as a whole. While the BROKERS may be regulated: it’s the market I’m talking about. That’s two different things. Another, probably better way of explaining this, is to take the Dow Jones Industrial Average for example. At any given point in time, no matter where in the world you are, the Dow will be trading at ‘X’ price and every trader that is trading the Dow, whether it be a floor trader, retail electronic trader (like you and I), or an Institutional ‘player’: everyone will be seeing the same price and the same movement in price and the same chart patterns and will be getting the same indicator readings and will be seeing the same swing points (the list is endless but I’m sure the point is clear). For all of these reasons: it’s a lot easier to gauge market sentiment and what the next move is likely to be and why. That’s if you trade using the fundamentals (which I don’t). If you’re trading purely mechanically with a good technical trading system: it doesn’t matter at WHICH broker you trade that system the results with be ‘as near as damnit’ the same. Not so with spot FOREX. And I’ve proved this WAY beyond any reasonable doubt (actually I’m glad you brought this up because there’s even an UPDATE on this particular issue which I’ve not bothered to post about). Some examples / reasons are given below.
A few years back myself and two ‘BabyPips Friends’ took a simple EMA crossover system (a MetaTrader EA). Me in South Africa (obviously), the other in Italy, and the other in Finland. At the same time, on the same timeframes, at the same broker (demo accounts), we ran the system through MetaTrader’s Strategy Tester (with no optimisation). Each time we tested the system we got SIMILAR results (not EXACTLY the same results but not identical results either which one would expect. Alright: the differences in results were small and, the only explanation for this, could be the ‘modelling quality’ shown by MetaTrader on each ‘run’ although WHY it should differ is anybodies guess). This was, let’s call it, ‘Test 1’. Then we chose different brokers in different timezones and opened demo accounts with them. Performing the same ‘Test 1’ but this time with three different brokers in three different timezones: the results started to differ slightly more on the 1-hour and shorter timeframes. On the 4-hour and daily timeframes: the results were SPECTACULARLY different. Why??? Because now not only were we contending with inconsistent 'modelling quality but also with different opening and closing times (and therefore price ranges) of bars due to the different timezones and brokers. And always was there a difference in the overall result (at one broker on one timeframe the system generated a profit while at another broker on the same timeframe the system generated a loss and so on and so forth). Bear in mind (obviously) that we were very careful to ensure that we were testing the same PERIOD (dates). So ALREADY: we’d proved that the SAME system, but traded at different brokers, in different timezones, could be profitable or could result in an overall loss for the same time period under test. Let’s call this ‘Test 2’. And here comes the ‘kicker’!!! ONE WEEK LATER we did the SAME tests, with the SAME brokers, with the SAME (very simple) trading system, and both ‘Test 1’ and ‘Test 2’ generated DIFFERENT results!!! Now explain THAT one!!! The difference in results because of the different timezones is of course understandable and could be ‘explained away’. But running the same tests, one week later, using the same period, and getting totally different results??? Nah. Something wrong there. If I’m not mistaken: one of us (not me) actually sent an email to MetaQuotes asking how this was possible. They’re still waiting for a reply (which, given that this was a few years ago, I doubt is going to be forthcoming)!!! LOL!!! But whether it be a MetaTrader ‘issue’ or not: the results differed by FAR too much for the differences to be blamed on the trading platform. So ‘long story short’: a trader, at a particular broker, in a particular timezone, with the same trading system, could be profitable while another trader, at another broker, in a another timezone, could be a ‘loser’. That’s a bit concerning wouldn’t you say???
Now for the ‘update’ to which I was referring. My ‘story’ is ‘old’ i.e. I lost a LOT of money in my first few years of trading (spot FOREX). I’ll spare you the ‘gory details’ because details of my ‘spectacular wipe-out’ are all over these forums (the ‘short version’: for about two years I wiped out account after account, then all of a sudden managed to turn $700 into around $15 000 in about six months, trading spot FOREX, then decided to raise more capital, thinking I’d ‘cracked it’, and proceeded to not only lose my own $15 000 but about $80 000 of ‘other peoples money’ in a very short space of time). Alright: my $700 - $15 000 ‘luck’ was because I was overtrading, not managing risk, and really was just lucky to be on the ‘right side’ of the trades. Ironically: overtrading and not managing risk was also, obviously, the reason why I’d ‘lost the farm’ since starting out. Be that as it may: I had no choice but to ‘not so gracefully bow out’ for a good while from trading and had no option but to demo trade. At around the same time I started looking at equity futures and commodities trading (like any ‘newish’ trader: you start looking for any and every reason why you failed, then ‘cracked it’, and then failed again in an even more ‘ugly’ fashion). What I started to find odd is that given the same trading systems and the same broker: my demo trading (actually it was not demo trading but rather PAPER TRADING and I mean that LITERALLY because by this time I’d lost all faith in the like of ‘automated backtesters’ and ‘optimisation’ and ‘curve fitting’) results differed greatly. I was profitable trading equity futures and commodities but not profitable trading spot FOREX. By THIS time though: I’d learnt (the hard way obviously) that if you do not implement risk / money management you’re ‘done for’ and that’s a ‘sure thing’. Count on it!!! Now the reason I say this is an ‘update’ is because at some point in the past I’ve been ‘flamed’ along the lines of ‘just because I cannot make money trading spot FOREX doesn’t mean it cannot be done’ or ‘just because you’re a failed spot FOREX trader don’t try to discourage everyone else’. Stuff like that (comments such as those) appear on at least two or three threads that I remember. Anyway: I then started trading equity futures and commodities and have not looked back since. The ‘update’ is this: about two, maybe three months ago, one of these other FOREX sites were looking for ‘Professional FOREX Traders’ to trade money on behalf of one of THEIR clients (the whole ‘thing’ didn’t quite ‘sit right’ with me but I decided to ‘take a chance’ and contact them and as much told them that I’d be happy to trade equity futures and commodities on behalf of their clients but in my opinion their client, whoever it may have been, was going to have their money lost FOR them if their money was only to be traded on the spot FOREX market and, would you believe, they STILL ‘accepted’ my ‘application’ but insisted it was ‘spot FOREX or nothing’. My personal opinion is that they didn’t even READ the applications but that’s neither here nor there I guess). Anyway: I thought well let me see if all the ‘naysayers’ that made those comments and ‘flamed’ me were right i.e. I simply didn’t know what I was doing at the time (which WAS true) and that I just had ‘psychological issues’ with trading spot FOREX. So as instructed: I opened a demo account with the broker that they would have ‘the chosen traders’ trade their client’s money. They had (I must say) a very well ‘structured approach’ for evaluating each trader’s performance and only the best performers would be given a certain amount of client funds to trade after a three month evaluation period.
[B]THIS IS A RECORD!!! LOL!!! I’ve had to, for the first time, split a post into two parts. In case nobody is aware: there is a limitation of 15000 characters per post (so just bear that in mind in your next post)!!! LOL!!![/B]
[B]Part 2!!! LOL!!!
[/B]The end result of MY performance (and read THIS carefully): the SAME trader, using the SAME technical trading systems, adhering to the SAME strict risk / money management rules, having overcome most of the usual ‘psychological barriers’ inherent in this business by this time, admittedly trading with a different broker BUT in the SAME timezone as my broker, was making real decent (real) money trading equity futures and commodities, on his live account, but lost over 10% of the FOREX account within the same period (one month i.e. I gave it up as I felt I’d proved my point ONCE AGAIN and it was now nothing more than a distraction)!!! Now if anybody can explain THAT to me: well I’ll ‘take my hat off to them’ and never broach the subject again. No matter HOW bad the other broker MAY have been: there is no way that the broker could have been instrumental in my losing over 10% of the FOREX demo account while making more than that trading equity futures and commodities using the IDENTICAL trading methodology.
So my conclusion is this (and has been the same since before the ‘update’):
The possibility DOES exist that my trading systems of choice were developed by an equity futures and commodities ONLY trader. But THEN: that proves what I’ve been saying all along ANYWAY (especially after this little ‘update’) and that is that equity futures and commodities ‘move’ differently from spot FOREX. For what REASON: I could not tell you (other than those reasons given above). If anybody can think of another explanation: feel free to ‘chime in’.
I believe that there are some more ‘technical reasons’ for my ‘take’ on this and I have detailed them somewhere in a post somewhere around here and if I can find it I’ll post the link here (as I said: this is not the first time this subject has been brought up and I’m guessing it won’t be the last time either).
My personal opinion (and all of the above aside): I don’t even believe anymore that spot FOREX was ever MEANT to be ‘traded’. In the bigger picture of things: the ‘trading’ of spot FOREX is relatively new. Futures trading started sometime at the end of the 1800’s or the early 1900’s (I forget now when the Dow, for example, was first started but it was a LONG time ago and it’s easy enough to check out). But somebody, at some point, decided that it was a ‘market to be made’ and, well, here we are today.
I’ve been ‘flamed’ for making THIS statement too:
How many FAMOUSLY PROFITABLE spot FOREX traders do you know of??? I can think of ONE and that’s George Soros (and there was another chap who’s name escapes me now). Soros was ‘made’ because of only ONE FAMOUS (INFAMOUS???) trade (which a lot of people don’t realise). Had he not become know as ‘the man who broke the Bank Of England’ by betting HEAVILY against the British Pound I don’t think he’d be as well known as he is today. I’m not saying that he wouldn’t have the money that he’s got today but I’m pretty sure that the money he has today was NOT generated by FOREX profits. Legendary, and wealthy, stock and commodities traders??? I could give you a list of at least ten RIGHT NOW without even having to use Google to check my facts!!!
If trading spot FOREX was ‘the way to riches’ (alright now I’m just ‘rambling on’ as ‘the thoughts come’): why don’t we close down ALL of the Stock Exchanges and everybody could / would trade spot FOREX??? Do you think that the broker / dealers and traders on the exchange floors don’t know about this thing called ‘spot FOREX’??? LOL!!!
You’re quite impressed with the BabyPips School. So am I (with it’s presentation anyway). I think you’re fortunate that it’s not overwhelmed you to be honest. One thing that I DO remember is that somewhere in the school it’s noted that the number one reason for failure of (spot FOREX) traders is being undercapitalised. Roughly translated: this means that you cannot manage your risk e.g. risk only 2% per trade (alright: that depends a lot on the broker, minimum lot size, minimum deposit, stuff like that). But the bottom line is this: the spot FOREX markets (and I blame the brokers for this belive it or not) ‘reel in’ traders with these $5 minimum deposit to open an account and let you trade nano lots. So you lose the $5. Then you deposit $50 (or $500) thinking (falsely) that you failed on the $5 account because you didn’t have enough capital. And so the cycle continues. The point is: it’s the ‘possibility of turning $100 into $1 000 000 in a few months’ and only needing $5 or $100 to do this because of the high leverage possible. Which begs another question: why is it that you can FORGET about trading equity futures and commodities with leverage of anywhere NEAR leverage of 200:1 (on a sidenote I saw an ad the other day which, for me, is a record i.e. the leverage being offered by a broker was 1100:1 on new accounts and don’t ask me who it is because I’m not going to help you to ‘dig your own grave’) i.e. it’s just not offered and is limited to at MOST 20:1 and more often than not 10:1. So: in order to trade equity futures and commodities and manage risk you need decent capital. Enter (with applause) the spot FOREX market!!! LOL!!! Now don’t get me wrong: high leverage in and of itself is not the problem. The problem is that a new trader may have, say, $500 in an account and be using only a FRACTION of that capital in margin on a particular trade. ‘Being human’ the new trader will think ‘hold on a minute: I’ve still got (say) $495 of free margin so let me open another position’. And so on and so forth. When the new trader looks again: at best (if he’s lucky) all that’s left is the margin that was in use (reserved) to open those positions in the first place. The rest of the capital is gone!!!
Regarding the BabyPips School (or any other ‘school’ for that matter): one mistake I know that I made is that when I started trading I wanted to know EVERYTHING about the markets (first the spot FOREX market and the, of course, the equity futures and commodities markets). When I say ‘everything’ I mean things like ‘what happens when the markets close’, ‘what conditions have to be met for a market to open the next day’, ‘what was the causes of the crashes now and then’, ‘what is the meaning of all of these fancy terms’, ‘what are all the different markets and how do they tie in with each other’. The list goes on. At SOME point I seemed to have ‘lost the plot’. As I’ve noted more times than I care to mention: when I started out trading and for a good few years thereafter it was almost as if I was more ‘in love’ with the IDEA of trading and the business of trading itself and somehow forgot that the very reason for my doing this was to make money. I’m proud of everything that I’ve learned about the markets in general. But I’ll tell you this: my knowing all of this interesting, but superflous, information, has not earned me one single dollar!!! I wasn’t ‘born’ into this business, started trading for a living relatively late in life (40-years old at the time if my calculations are correct), the economics that I learned as a part of my Accounting degree from ‘way back when’ were no longer applicable, and I wasted a lot of time (and money) in trying to understand and know everything there was to understand and know about the markets. Today: I trade by following little ‘lines and dots’ and the odd indicator here and there. I’m trading the very same trading systems that I started trading ‘in the beginning’. What’s changed??? Two very simple but fundamental things: I follow my trading systems ‘to the letter’ (I don’t ‘second guess them’ based on all of this interesting but superflous knowledge of mine) and I manage risk. That’s it. In hindsight: there was NO REASON AT ALL for me to NOT be profitable from the start (well: let me qualify that one i.e. had I ‘skipped’ the spot FOREX ‘madness’, implemented risk / money management, and had the discipline to not ‘second guess’ my trading systems, well, then, I’d be able to include MYSELF in that list of well known equity and commodities traders)!!! LOL!!!
Now (needless to day) I could continue here for at LEAST another two pages. But I won’t. Make of the above what you will. If it’s ‘just me’ well then ‘so be it’. I’ve found my ‘niche’ (market) thank goodness otherwise I assure you I’d not be in a position to able to be writing this reply to you!!! LOL!!! But personally (obviously): I think that there’s just a LITTLE bit more to it than that.
Once again I say to YOU: whichever route you choose I wish you well. EVEN IF it’s spot FOREX I’ll help you if I can (to the beste of my ‘tainted’ ability) and there are quite a few othe ‘old timers’ around here that will do the same ‘no questions asked’. In closing all I can tell you is that it is NOT (of course with hindsight) necessary to wipe out account after account after account before becoming profitable. If you want to make this business of trading as difficult and as daunting and as complicated as possible: it’s very easy to do. But never lose site of the fact you’re here to make money. How long it takes the cleaners to clean the trading floors at night, or how many employees one of the major banks is laying off (and why), do they ever clean ‘Charging Bull’ in Bowling Green and if so how often, is neither here nor there!!! LOL!!! Trading profitably can be simple. It requires time and dedication and it CAN be an ‘emotional rollercoaster ride’ (‘they’ say that it shouldn’t be that way but show me one person who after being ‘at this’ for their entire LIFE doesn’t get palpitations when they’re in a huge position that’s going their way ‘like a rocket’ or doesn’t feel dissapointed that they’ve ‘messed up’ on a trade. A ‘corpse’ is the only type of ‘person’ that comes to mind.)!!! There have been occasions where I’ve had an ‘axe’ ready to ‘chop up’ every PC in my office (but fortunately have not done so yet and those ‘occasions’ seem to be the exception now rather than the norm as used to be the case)!!! LOL!!!
And after ALL of the above: I’m not even sure if I’ve answered all your questions!!! LOL!!! I think I may have gone ‘off track’ somewhere (as usual). If you want to know anything more: please ask (although this post should keep you busy for a little while)!!! LOL!!!
Regards,
Dale.
Holy **** Dale!! LOL. 3000 word reply!
Okay, first and foremost I’d like to say that I very much appreciate the length you have gone to, to explain this to me. Also, I can officially say I am now more or less ‘immune’ to ‘this’. haha.
For the purposes of anyone reading, for myself, and so that you can check whether I understand your position, I’m going to summarise your post. Your position is as follows;
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Spot Forex is chaotic. You’ve performed tests that show, adhering to the exact same system but at different brokers, time zones, time frames, weeks of the year etc. will provide different results. Also as a more experienced trader, you traded spot forex and equity futures and commodities at the same time using the exact same everything, but only found success in equity futures and commodities.
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Spot Forex has not created any famously wealthy individuals except for George Soros, and his fame and perhaps his wealth was based upon a single highly risky trade. Stock and Commodities has produced MANY successful traders that you can list off the top of your head, even without the need for google.
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Spot Forex encourages leveraging oneself to a ridiculous degree of even a hilarious 1100:1. At leverage of this level it is more or less a scam that attracts people without very much capital for trading in ways that guarantee losing.
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BabyPips provides a new trader with information overload when, in fact, trading successfully is simple and attempting to understand as much as is presented by BabyPips will actually get in the way of trading in a simple but profitable way.
Correct me on any of these points if they are misrepresentative or if something important is missing. My reply to all this will be posted shortly…
So here is my reply to you, Dale.
I should say right from the outset that Babypips school actually covers most of these concerns.
Leverage of 1100:1 actually does make me laugh out loud. I plan on trading at a leverage of anywhere from 2:1 up to 20:1, whilst maintaining strict risk management. Also I will not be under capitalised. So far I have had many rushes of gold fever, but I have kept my mindset in the long term category.
I find that having all this extra information about spot forex helps to me understand how simplicity is the right way forward. But achieving a simple trading system is not always simple. It’s an art and a science. I think of it as something akin to Einstein’s e=mc^2. Is it simple? Absolutely. But it took an extraordinary amount of insight and years at work to create something so simple that works in practice. The indicators of price action that are available to us today were created from such effort and insight, and whilst simple to follow, I think there’s a lot of reading to be done to understand why they work, and when they work and how they work.
As far as Spot Forex being something of gimmick… I think it is more of a case that brokers understand that if you give a client enough rope, they’ll hang themselves. At the end of the day, no one is forcing you to put that noose around your neck. Although I must admit, my understanding between the differences of CFDs vs. Futures vs. Spot is rather weak at the moment. I am actually going to read up on it right now.
But I think that your tests were bound to produce different results based upon a number of factors. When I approach spot forex, I know that my broker is making this market for me, and so I think knowing what the brokers strengths and weaknesses are is vital to your performance. Your examples strike me as someone testing different cars on a race track and complaining about achieving different times. Of course this will happen because each car is unique in so many different ways. Thankfully we’re not robots, so we don’t have to drive them in precisely the exact same way, and hence we can even out such disparities.
Thats my perspective. Looking forward to feedback…
LOl!!!
Now HOW did YOU manage to CORRECTLY summarise those two posts in just a few short paragraphs??? LOL!!! The total characters of my initial post, as one post, was somwwhere in the region of 22000+ characters when I was ‘informed’ of the 15000 characters per post limit when I clicked on the ‘Post Quick Reply’ button??? LOL!!! And the title ‘Post Quick Reply’ of the button in and of itself normally makes me chuckle when I’ve just completed a ‘short novel’!!! LOL!!!
Well done!!! MANY people have told me to write a book at some point and come to think of it: maybe it’s not such a bad idea. It’ll be just like all the other books on trading: THOUSANDS of pages of ‘cr*p’ that could quite easily have been summarised in two or three chapters!!! LOL!!!
Ironically: the ‘thinnest’ book on trading that I have purchased over the years (and was my first) is J. Welles Wilder’s ‘New Concepts In Technical Trading Systems’ in which my main trading system is detailed (Wilder’s Swing Index System)!!! LOL!!! Oddly enough though: it’s like going from the sublime to the ridiculous. Wilder’s book is SO concise and ‘to the point’ that most people (well me anyway) only ‘get it’ after about the one thousandth read because just about every little word and sentence is material to the success or failure of the trading systems and it’s very easy to miss even the tiniest and seemingly insignificant bit of detail. The way I (ME) write: you have to wade your way through endless lines of text to find the ‘important’ or ‘meaningful’ bits!!! LOL!!!
As I’ve noted: you have CORRECTLY summarised my ‘take’ on the subject!!! LOL!!!
Now to comment on your next post.
Regards,
Dale.
Alright let me comment here in sections (I’ll try to keep my comment ‘clear and concise and to the point’)!!! LOL!!!
I should say right from the outset that Babypips school actually covers most of these concerns.
Honestly: I’ve not looked at it in ages. To be VERY honest: I don’t think I ever even went through the whole thing i.e. I just ‘jumped’ to the parts where there were details of indicators or trading systems. Who knows??? Maybe if I’d gone through the whole thing step by step things would have turned out a lot differently and a lot sooner than they did. I’ll never know I guess.
Leverage of 1100:1 actually does make me laugh out loud. I plan on trading at a leverage of anywhere from 2:1 up to 20:1, whilst maintaining strict risk management. Also I will not be under capitalised. So far I have had many rushes of gold fever, but I have kept my mindset in the long term category.
I sh*t you not!!! I’ve always joked around about 50 000:1 leverage but until just this last week the most I’d ever seen on offer was 500:1!!! But as I noted: leverage in and of itself is not the problem. The problem comes in when the trader doesn’t know how to calculate and manage their risk. Many people don’t understand this or get confused by this. It doesn’t matter if you’re trading a micro lot (1 000 units) of EUR/USD (YES: I’ll use a spot FOREX example) with 10:1 leverage or 50 000:1 leverage (or, alright, 1 100:1 leverage). You’re STILL making (or losing) $0.10 per pip movement. The only difference that leverage makes is how much margin is required to open that position. Leverage is very misunderstood I’m afraid. If I’m trading CFDs on the Dow Futures at 1:1 leverage or 10:1 leverage: I’m still making (or losing) $1 per point movement (and note that’s PER FULL point as in ‘1.00’ i.e. ‘in the good old days’, and THAT wasn’t too long ago either, the Dow was never quoted with decimals but THANKS to the requirements of the likes of Goldman Sachs and Algorithmic High Frequency Trading Systems this was changed). The only difference is the amount of margin that is used (reserved) to initiate and keep the trade open. So if you’re discliplined and implement risk / money management it doesn’'t matter what leverage you trade with.
I find that having all this extra information about spot forex helps to me understand how simplicity is the right way forward. But achieving a simple trading system is not always simple. It’s an art and a science. I think of it as something akin to Einstein’s e=mc^2. Is it simple? Absolutely. But it took an extraordinary amount of insight and years at work to create something so simple that works in practice. The indicators of price action that are available to us today were created from such effort and insight, and whilst simple to follow, I think there’s a lot of reading to be done to understand why they work, and when they work and how they work.
Well you make a good point and MAYBE I’m being a bit ‘sanctimonious’ when I say things like ‘all you need is … and forget about trying to learn or understand the markets’. I think I’ve noted this before somewhere: MAYBE (and I think this is what you’re saying) WITHOUT all the ‘digging’ and reading and learning and asking questions I STILL wouldn’t be profitable. I mean: I don’t trade something ‘blindly’ although the sole extent to which I’m subjective (conciously anyway), I believe, is that when looking at a chart, and if it just doesn’t ‘feel’ right, then I won’t trade that instrument at that time, and it’s not something that I can really explain. That’s the only reason why, I believe, my (Wilder’s) trading systems cannot be automated. I suppose I could sum it up by saying that I’ll never trade an instrument where the price bars have HUGE wicks on either side of the body of the price bar. That sort of ‘turns me off’. And I tend to look at instruments that ‘ordinarily’ trend and they’re pretty easy to ‘spot at a glance’. I don’t rely on an indicator to tell me whether an instrument is trading in a range or is trending and that’s odd because ONE of the functions of Wilder’s ADX is JUST THAT but unfortunately lags too much. But ADX is only a PART of one of Wilder’s trading systems. It was never intended to be used as a standalone indicator. At worst case, on it’s own, it MAY be used to confirm signals of his other trading systems but, as I noted, it does lag. Would I get whipsawed LESS if I used it as confirmation for my Swing Index System trades??? Probably. But if I look at the amount of trend trades that lasted MONTHS that a trader would have missed because ADX wasn’t giving the ‘correct confrimation’ well, then, I’d rather live with the whipsaws!!! LOL!!! Alright: this is getting LONG again. What I’m trying to say IN SHORT is that I’ll never know NOW if all of the ‘superlous knowledge’ gained as noted has stood me in any better stead. That being said: one thing I DO know is that if you’re trading a purely mechanical or technical trading system you cannot ‘second guess’ that trading system no matter how ‘wrong’ the trade may ‘feel’ to you (this of course assumes that you’ve got a sound trading system that has been PAPER TRADED over a good few years of data and can be proved to be profitable over time). Honestly: I still SOMETIMES have a hard time taking a signal that ‘feels’ wrong to me but I’ve learned to literally FORCE myself to take the signal. And guess what??? Almost all the time: the trading system was right and I was (would have been) wrong.
As far as Spot Forex being something of gimmick… I think it is more of a case that brokers understand that if you give a client enough rope, they’ll hang themselves. At the end of the day, no one is forcing you to put that noose around your neck. Although I must admit, my understanding between the differences of CFDs vs. Futures vs. Spot is rather weak at the moment. I am actually going to read up on it right now.
You’ve ‘hit the nail on the head’ and to this end read the attached Adobe .PDF document. It’s ‘good for a laugh’ but there’s a very succint point made (I THINK ‘succint’ is the right word to use). As far as CFDs vs. spot FOREX trading is concerned. OTHER than the way that the underlying instrument may ‘move’ and the fact that if you’re, for example, trading CitiGroup, or Bank of America, you’re looking at the SAME CHART as every other trader that’s trading that particular instrument and that, to me, makes a HUGE difference, there IS no difference (and don’t get me wrong: there are CFDs on equity futures and commodities that ALSO don’t ‘behave themselves’ and that I wouldn’t trade either). Pure candlestick trading or trading chart patterns is supposed to be the ‘ultimate’ in trading so I’m led to believe. Well here’s the thing: take three different brokers in three different timezones that close their 4-hour and daily charts at different times and see how many times the candlesticks are identical and how many times the same chart patterns occur at the same time at the different brokers. It’s not often I can tell you. Does it all ‘average out in the end’??? I’m not sure. But it’s a little thing like this that I’m referring to when I say that you’re starting OUT with ‘odds stacked against you’ before you’ve even placed your first trade. In other words: given an identical trading system it’s success or failure may very well depend at which broker you’re trading with and in which timezone they are. That doesn’t sound like an ‘exact science’ to me!!! LOL!!! Then again: apparantely trading is an ‘art’ but I perceive it as a ‘science’ and that could very well be the reason for my ‘contrarian’ statements and opinions.
But I think that your tests were bound to produce different results based upon a number of factors. When I approach spot forex, I know that my broker is making this market for me, and so I think knowing what the brokers strengths and weaknesses are is vital to your performance. Your examples strike me as someone testing different cars on a race track and complaining about achieving different times. Of course this will happen because each car is unique in so many different ways. Thankfully we’re not robots, so we don’t have to drive them in precisely the exact same way, and hence we can even out such disparities.
This is the only thing I cannot bring myself to agree with (that you’ve noted). Those tests were based on the same pair, same timeframe, same broker, same period, same EA (‘Test 1’). How could the differences be explained away FIRST getting different results when the tests were initially run and then getting different results doing the exact same test a week later??? To me that’s MORE frightening than the fact that the results of ‘Test 2’ (different brokers, therefore different timezones, but the rest being equal) differed greatly. At least THAT I can ‘get my mind around’ i.e. there’s at least SOME type of logical explanation albeit it frightening too!!! LOL!!!
But hey: all of this is ‘just me’ and my ‘findings’ based on my testing and my experience. Maybe (as I’ve noted) my trading systems are just not suitable for the trading of spot FOREX. I do know, as but one example, that all of Wilder’s trading systems’ calculations are heavily weighted in favour of the daily CLOSE. Given that you have as many different daily closes in spot FOREX as you have brokers in different timezones that would explain a lot. THAT BEING SAID (I’m starting to sound like an analyst here i.e. ‘well this could happen but if that happens then this could become that happening’): I’ve always sworn that I’d never trade (again) on any timeframe shorter than the daily timeframe. Now: I find I’m trading on both i.e. long term trades on the daily timeframes and intraday trades on the 1-hour timeframes (alright: if I’ve got profit locked in on a trade with a stop and reverse order I’ll change the order to a stop only and go to bed and sometimes to my delight in the morning the trade has kept on going in my favour). This ‘change’ came about from being ‘bored out of my mind’ (trading the daily timeframes, although the signals are by FAR more reliable, does require ‘bucketloads’ of ‘patience and restraint’ so I started experimenting and found that other than certain anomalies that occur on the 1-hour timeframes with Wilder’s Swing Index System, which do not manifest themselves on the daily timeframes, the system performs just as well). The point I’m trying to make I guess is that I don’t think that you ever DO stop learning in this business even if it’s unintentional!!! And, well, I enjoy being ‘glued to the screen’ hour upon hour whereas it would drive others nuts or they’re just not as fortunate as I in that they have to have a ‘real job’!!! (And THAT was most DEFINITELY a joke i.e. ‘bad things’ have happened to people that have told me that trading is not a ‘real job’)!!! LOL!!!
IN CLOSING (I’m worried that I’m getting to that 15 000 character limit again): I’m not here to ‘knock’ spot FOREX trading or spot FOREX traders. I failed at it and I assure it wasn’t for lack of trying on my part. But I can trade equity futures and commodities well. The EXACT reasons for this will probably always be debateable (even to myself). I’m here to share what I know to work for me (and OBVIOUSLY to solicit clients let’s be honest). BUT: it doesn’t help to solicit clients that are going to lose their money either and the only way that I PERSONALLY know of to aid new traders to not lose their accounts is to advise them to trade equity futures and commodities. The idea is to help new traders GROW their accounts and therefore increase their trade sizes and in so doing the broker commissions become bigger and bigger. Many people think it’s the opposite (and unfortunately with FAR TOO MANY BROKERS the opposite IS true) i.e. people think that it’s in the broker’s interest for a trader to lose their account. That depends on whether you’re a ‘Bucketshop Broker’ or a ‘Proper Broker’. And THAT unfortunately is a ‘slippery slope’ i.e. you either have to take the word of someone like myself or open a live account and see if you can close profitable positions without being requoted until the position has turned into a loss!!! That type of thing!!! LOL!!! Broker Reviews on REPUTABLE review sites like Forex Peace Army DO help but sometimes some of the reviews posted can be ‘suspect’ as well unfortunately. There are actually three different ‘Broker Models’ but that’s a discussion for another time I think.
How we got from ‘Parabolic SAR - that’s all!!!’ to THIS I don’t know. BUT WAIT: I DO know. I got ‘involved’ in the thread again!!! LOL!!! Of late, when that happens, the threads tend to ‘drift off course’!!! LOL!!!
But if I MAY say so: this has, thus far, been one of the more INTERESTING ‘interactions’ and hopefully some of the above will help some new traders (if nothing else it should give them ‘hope’)!!! LOL!!!
Regards,
Dale.
P.S.
Regarding the attachment. I know that the type of behaviour described doesn’t manifest itself at Deltastock but I’m willing to bet my trading account that it certainly did (and still does) at my FIRST broker being the ‘Bucketshop’ and scam artists that they STILL are!!! LOL!!!
Forex Brokers - Tales from the Back Office How Brokers View - Forex Articles.pdf (67.2 KB)
Thanks Dale,
This was a valuable conversation for me! I am glad that you have found your niche, and I’m going to keep what you’ve said in mind as I set out to find my own.
All the best! 
P.S. the pdf was very insightful, thanks for that as well!
Hello Jake,
I must thank you too. It was one of the ‘better’ and I hope meaningful discussions that have ‘gone on here’ of late. For a good while now there’s been a number of threads started that have resulted in nothing else but other members ‘flaming’ each other and not helping anyone nor addressing the issues at hand.
By the way: I found that article on a link sometime ‘way back when’ (while looking for something else) and when I looked for it again (for another thread not too long ago) it had dissapeared. Funny that wouldn’t you say??? Anyway: I managed to retrieve it from Google’s cache and saved it as a .PDF ‘for posterity’. But I’m pleased YOU ‘got the point’ being made (although you appeared to have alrady understood what that person in the article was saying).
Frankly (and ‘not knowing you from a bar of soap’): you seem to be approaching this in the right way. I think you’re going to be JUST fine. At least that is my wish for you.
Regards,
Dale.
Hi Dale
I am going through your thread, and I am very much impressed with your PSAR strategies. All your postings/comments are very thoughtful and informative. I have been trading (on/off) FOREX since last 6 years, and have wiped out many live/demo accounts. I would like to try yor PSAR strategies and have few questions;
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Like other indicators/EAs, the PSAR seems to be working well in trending market. Have you tried it in choppy market?
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If I get trading signal on daily/weekly/monthly charts, can I use 4HR charts to enter or at least exit the trade?
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Is it a good idea to use other indicators like AO, AE for confirmation of PSAR signal on daily charts?
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Are you still using PSAR strategies and what is your performace/win %?
With regards,
Pramod
really enjoyed this entire thread thought it was very well worked out i trade in the same manner daily charts and just the parabolic sar but i only trade the 8 majors in 8 lot trades but i have noticed back testing is really incredible i believe in that old adage K.I.S.S. everybody says not to trade with just one indicator but then again everybody is selling some kind of program or trading scenario you are not going to get every trade so quit looking for something that does not exist THE HOLY GRAIL DOESNT EXIST I took a trading course here recently i paid a 1000.00 dollars for and he himself said enter and exit on the parabolic sar signal and this guy has one hell of a track record plus he runs his own investment group
greenberret1960
can you post picture examples please to explain how you trade with just the SAR, and anyone else trading with just the SAR? Thanks
here you go
Thanks Greenberret1960, why did you buy there? and what’s your favourite pair using this strategy?