I just wanted to say thank you grail dale and everyone else for all of the great information. i have been reading through this entire thread for the last 4 days and i just want to say it is incredible. it was like a good book, and that last thing right at the end gave me goosebumps, Did I also mention: ‘Never Give Up’!!! so i just wanted to reiterate thanks for everything and you are now my hero.
eahahn12:
I don’t quite know what to say to you other than a very big ‘thank you’ for taking the time to go through the thread. I’m glad you enjoyed it and I hope in some way it helps you become a better and VERY successful trader and if I can help in any way then please feel free to ask and I’ll do my best.
I think what makes this thread so ‘different’ is because it not only deals with a specific trading system (although that was indeed the ‘catalyst’ as it were i.e. my ‘Parabolic SAR windfall’) but a lot of people have shared their ‘ups and downs’ and this is the type of thing you just cannot get out of a book or from a ‘disclaimer’ on a forex brokers web page.
For me it’s also been a ‘guide’ as to ‘where I’m at’ i.e. if look at my first posts and ‘track the mood’ of my posts throughout the thread I can see for myself how I have gone through different ‘attitudes’ and how my approach to trading has improved (at least I think so anyway) i.e. I started out as this ‘what is all you peoples problems with trading, it’s easy, just look at me’ person and now, after all of that, I know that it’s probably that very ‘take’ on things that contributed to my ‘trading demise’ last year!!!
Good trading and stay in touch.
4 days! I still have another 35.275 pages to read so it will probably take me at least 4 days to read the entire thread as well.
I can relate to a lot of things that [B]dpaterso[/B] writes, the huge ammount of money he lost previsously (been there :(), the mental challenges he faces when trading (don’t follow the rules of my systems, can’t stay away from the PC, greed, fear, panic, depression, euphoria, been there…), his love for Wilder’s indicators, especially PSAR (I’m still on the first pages of the thread)… reading his experiences is helping me face my own deepest emotions, and become a better trader.
I’m developing a simple system that uses ADX and a modified version of PSAR so I’m sure there’s a lot of useful information here 
Hello PipAddict (sounds like a login name I should have although mine should be ‘DowAddict’ or something like that i.e. I’m obsessed with trading the Dow for some reason) and welcome!!!
I like the sound of what you’re working on i.e. ADX and a modified version of Parabolic SAR. Wilder himself suggests using Parabolic SAR with ADX so you’re already on a ‘good track’!!!
When you get to the last couple of pages you’ll see that not only is Wilder responsible for developing Parabolic SAR and ADX and RSI but he also developed some trading systems which are the systems I use now and I can tell you that they ‘technical brilliance’ in my opinion and the single reason that there is ‘light at the end of my tunnel’ (well maybe not the single reason i.e. I have my huge losses to thank for this as well but you ‘get the picture’ I’m sure. Some people may find it ‘odd’ that I’m ‘thankful for my losses’ but I look at it this way: what if I’d ‘skated through this by luck’ and then ended up losing millions and not thousands a few years down the line because I was so ‘c*ck sure of myself’ and could ‘do no wrong’??? That scenario has pushed more than one well known and previously successful trader ‘over the edge’).
Good reading, good trading, and stay in touch.
Thanks for the response, Dale! I’m in the process of trying to work some of the later adjustments in the PSAR system mentioned later in this thread into some demo modules, along with some other methods I have gotten from this thread, the web and some books.
I will say again, this has been a great thread from a learning experience standpoint. If newbies spend the time to read it start to finish they will learn a LOT - and not just about trading methods, but the ups and downs and psychology of it all.
Cheers!
Tom
Hello Tom,
No problem and, if you have any more questions, feel free to post.
You still did not say whether you are looking at long term investing (or ‘tradevesting’) or trading?
Having the answer to that question would make it easier for anyone wanting to give you guidance or assistance or simply their opinion. Just a thought.
Unbelievable thread! Spent the whole day reading it, I’m really tired but it was worth it.
This thread helped me made an important decision, one that I was already contemplating, but now my decision is final: no more daytrading. Think about it, if you trade GBP/USD on 15m charts like I used to do, and you have a 20 pip profit, 4 pips go to the broker. That’s 20% of my profit! Madness! Would you pay 20% in commissions to buy stocks? I’m sure I wouldn’t. If a system trades once a day, making a healthy 200 pips per month (without spread), 40% of that goes to the broker! 20 trades/month x 4 pips = 80. No wonder my broker loves me :mad:
So from now on I will only trade daily charts. Not only are the indicators a lot more reliable, but the trends have less ‘noise’ as well, the news don’t affect the stops as much as in smaller timeframes, etc.
Do you still have this? Thanks Dale!
Regards,
Miguel
Hi Miguel,
Take a look at this:
This is not what I was talking about i.e. it’s (obviously) not what I got from one of my brokers but I THINK it’s the same thing (I will look for the email I got from my broker and post it here shortly so keep referring back to this mesage is new ones get added after this).
I (personally) think that you ‘on the right track now’ my ‘new’ friend i.e. I can tell you that probably 99% of the losses I made last year were ‘incurred’ whilst trading shorter timeframes (anything shorter than the daily timeframe) and conversly the only time I made any money at all (there were times believe it or not) was when I was trading the daily timeframe. Maybe it’s just because I did not know what I was doing but even if I was a ‘seasoned expert’ you’re quite right in your observing the fact that the shorter the timeframe, the less profit you stand to make, the less reliable the indicators are, and the more susceptible to market ‘noise’ you are, and, I’ve said this before, not in any one of Wilder’s books do the shorter timeframes even ‘feature’ and that tells me something.
Anyway, like I said, I’ll go and have a look now for the email that I got from my broker with regard to the ‘weighting’ of the pairs but, like I said, if I remember correctly, it’s no different from the above lesson in the babypips school (I don’t know why I forgot to post a link to it before i.e. I remembered seeing it somewhere here but could not remember where until this morning. It’s absolutely amazing what a little bit of sleep can do)!!!
Edit:
I have not found the email yet (I have not looked yet) i.e. I thought I’d see what Google found for ‘weighting of currency pairs’ and I came across this page:
It does not have anything to do with the ‘weighting of currency pairs’ but what I found interesting is the ‘categorization’ of the different currencies toward the bottom of the page i.e. the ‘names’ given to the different categories.
Another edit:
I just went to the home page of the above website and there appears to be an absolute ‘sh*tpile’ of good information over there. For one thing (this will not be of interest to forex traders but means something to me) there is an explanation of the different S&P (Standard and Poor) ratings i.e. something I was always wondering about i.e. what’s the difference between a ‘AAA’ rating and some other rating. Good reading. Always something new to learn and that’s what makes this business ‘the best’!!!
And yet another edit:
Man, that site is great. It’s even got an explanation of ‘Dow Theory’ that EVEN I can understand!!!
OK, last edit for this post (I found what I / you / we are looking for):
[I]Concerning your question, in order to make 1 pip in 2 different pairs the same value you must adjust the lot size accordingly. [/I]
[I]'Since the value of 1 pip is calculated in the second currency of the currency pair, 1 pip in EUR/USD and 1 pip in GBP/USD are of the same value (when the lots are the same).[/I]
[I]You can �weigh� the pip value of the different currency pairs to each other but you must constantly do this. For instance if you profit 1 pip on AUD/JPY with 1 micro lot, your profit will be 10JPY. You must then convert this into USD to weigh it against EUR/USD. You can use the currency calculator in the platform for this purpose. (It is found in Accounts). Bear in mind that since the price is constantly moving you must do this every time you wish to �weigh� 2 different pairs to each other.’[/I]
Now that I have read this it’s only ‘half the battle’ I think and I’ll tell you why: let’s say that you ‘weight’ EUR/USD against GBP/JPY. The obvious problem (I think) is that EVEN WITH THE WEIGHTING of the pairs against each other it does not mean that EUR/USD is going to move the same number of pips as GBP/JPY for any given period i.e. the volatility may differ. Or am I ‘interpreting’ this wrong? Not sure.
chirules54:
How’s your weekend? I trust it’s been a very busy one i.e. lots of calculations and things!!!
I just thought I’d let you know that last night I decided to start using Excel for the SI System to trade Soybeans (and one or two other ‘instruments’ that I can trade at GCI that I cannot trade at Delta) until such time as I have finished ‘coding’ the ASI into GCI’s platform and then it occured to me: maybe I should look at writing software that will work with any broker i.e. outside of the trading platform(s) used??? I don’t know about other brokers but I can export data of my choice from Delta’s platform to a text file and import that data into Excel (GCI’s export is particularly nice if you want to use Excel because it allows you to export the data to an Excel workbook file without having to go through the extra step of first creating a text file and then importing the text file into Excel). In other words: the user could either ‘manually’ capture the data OR the software would import the data and calculate the ASI and draw the indicator. The reason this became to ‘clear’ to me yesterday was because it is possible to create the ASI indicator using ‘line charts’ in Excel and it’s a whole lot easier doing it this way (this is how my ‘systems’ are coded at Delta) than looking at the numeric results of the calculations and having to find the LSP’s and HSP’s and then having to manually keep track of the Trailing Index SAR’s etc. etc. etc.
I mean: what if we had a software package that had ALL the systems in the book ‘coded’ into it and then the user chould ‘choose’ which system to use and it would pretty much just ‘spew out’ the calculation results and draw the indicators??? Maybe I could even get ‘my hero’ to ‘bundle’ it with the book!!!
Just a thought (thinking and typing out loud)!!!
Sorry Dale, been away from home and I just got back. I’m reading on the csi right now and I will calculate several… are there any in particular you want me to “double check”? I was going to do gold and gbp/jpy or something at first just to compare.
alright, here’s my preliminary calculation and what I got… not sure if i did it right so here are the numbers…
gold (1 lot) values are from my feb 07 candle (midnight ny time thurs to midnight ny time friday)
adxr= 22.75
atr(14)= 15.88
v= $0.01
m= $18.47 (my max leverage with oanda is 50:1)
c= 40 pips so $0.40
I got .5589 for gold…
Hello,
Whooooaaa!!! Our figures are TOTALLY different (although it seems you got to a very nice ‘round’ figure i.e. ‘0.9999’ something as opposed to my ‘99.9999’ something)!!!
Let me give you my figures (which will be for the daily bar on 2008-02-08):
ADXR = 43.84
ATR = 20.08
V = 0.01
M = 8.98
SQRT(M) = 2.9967
C = 0.80
This gives me a result of 1.9480. I then used your figures in my calculations and arrived at the same answer as you so the manual calculation is correct based on these figures (and it ‘proves’ my ‘CSI Indicator’ as well i.e. I get the same figures).
What I’d like to know is why the big differences between our ADXR and ATR values (margin we know why i.e. different leverage) because that’s what is making the difference. I mean I could understand ‘slight’ differences but these differences are huge for the purposes of this calculation. I mean to say: we’re both looking at daily charts and the prices are (should be) the same (give or take a pip or two) so why would there be such a difference???
Actually: don’t bother to answer that question i.e. I know why. I’m taking the ADXR and ATR figures from my indicators so they are based on 999 days worth of data whereas yours (I think) are being manually calculated for the last seven days or so??? Is that what you’re doing??? Do me a favour: pull up the ATR on your charts and use THAT value to calculate first ADXR and then the rest and see what you come up with???
I’ll tell you something else ‘for fun’ i.e. about YET ANOTHER thing to ‘complicate my life’:
I’ve discovered a HUGE ‘issue’ with indicators and charts and it’s something that I’m not sure anyone has come across (well if they have they’re sure keeping it quiet)!!!
Check this out:
Let’s say that your daily chart can hold a maximum of 999 days worth of data. Now let’s say that TODAY your ATR indicator gives you a specific value of, for example, 20.08. I guarantee you that if you check TODAYS ATR value TOMORROW the value will have changed and guess why: each day that a new bar is drawn the very first bar in the chart (or the very last bar in the chart depending of which way you’re looking at it) i.e. bar number 999 (at Delta) ‘falls off’ the end (the beginning depending which way you’re looking at it) i.e. that data is simply not there any longer so any calculation done today will be ‘thrown out’ and this happens every single day!!! I found this out while ‘coding’ the ASI into my Delta platform i.e. I could not understand why the ASI was not remaining constant for any (prior) given day and was always ‘moving around’ every day and then I realised why i.e. for the reason described above so MY ASI indicator ‘compensates’ for this on a daily basis. It’s an interesting issue though and it’s a HUGE potential problem for something like the ASI for the simple reason that it means that every day (without compensating for the ‘999th bar drop off’) the ‘goalposts’ are moving every single day i.e. the ASI indicator may be telling you to place a long order today BUT when bar 999 ‘drops off’ tomorrow what was a valid ASI signal today MAY NOT be a valid ASI signal tomorrow and so on and so forth i.e. the indicator moves ‘out of kilter’ with itself if you do not compensate for the ‘999th bar drop off’. See what I mean??? And this affects ALL indicators that reference ANY prior data i.e. any indicator that does not only reference the current days data and this has got me thinking that I need to modify ALL indicators to compensate for this. I’ll also guarantee you that this happens with ALL charting packages for the simple reason that unless they NEVER ‘drop off’ some history i.e. they just keep accumulating data ‘from day dot to inifinity’ this ‘999th bar issue’ (or whatever the maximum is that your broker ‘keeps’ on file) is going to cause a problem. This, of course, does NOT apply if you’re using Excel (would you believe) for the simple reason that you are starting at a specific point and whatever the value of your indicator is at that specific point it’s not going to change i.e. it’s ‘static’ (unless of course for some or the other idiotic reason you decide to change it). Go figure!!! It’s no wonder that everyone says that indicators are useless and unreliable i.e. it’s because of ‘stupid’ things like this I’m sure. How can an indicator be reliable and consistent if the data that’s being used to calculate it’s value today is simply no longer there tomorrow???
Think of the implications of this for just a minute:
Let’s say you’re calculating something as simple as a simple moving average. If you do it this way (let’s assume you’re calculating the SMA of the close for the last 7 days):
C(7)+C(6)+C(5)+C(4)+C(3)+C(2)+C(1)/7=SMA(7)
The above will be correct every day BUT suppose you are calculting a ‘smoothed’ SMA (which is the way that Wilder ‘does’ his i.e. all his manual calculations incorporate ‘smoothing’):
SMA(7previous)+C(6)+C(5)+C(4)+C(3)+C(2)+C(1)/7=SMA(7latest). (This SMA is ‘smoothed’).
As the data ‘drops’ off the end (or the beginning of the chart depending on which way you’re looking at it) the SMA(7) being used every new day is going to change every new day!!! And for those of you who think this is ‘splitting hairs’ remember that this ‘error’ is compounded over (in my case) 999 days worth of data!!!
Dale, yes that makes a lot of sense, because I got my numbers for the adxr and atr from my oanda chart, so it probably has the problem you just described. I’ve had weird problems with my oanda charts because I have gotten different figures for parabolic sar and other indicators when you compare gci’s charts and oanda…
Well… i’m not sure what to make of this… it looks like your calculations are correct, and the problem is my charts, i’m kind of confused though, what do you think?
Well ironically I think that we’re BOTH right. Many a difference is ‘explained away’ by the different timezones that the brokers may be in i.e. your data at Oanda is NEVER going to be the same as mine at Delta for example but the difference between your Oanda data and your GCI data should not be as great although, having said that, remember that because of the 1 hour difference between Oanda and GCI that 1 hour difference is compounded every single day.
What I’m MORE worried about is the fact that although we have different data and results the CSI results should be relative to the other instruments at the same broker but I need to make sure that my ATR, ADXR, and therefore CSI ‘indicator’ are not changing on a daily basis because of my ‘999th bar issue’.
Yeah, I think the fact that we are both getting the same answer when we use the same data is a good sign. The calculation is correct but the numbers used to calculate it are different. I will calculate gbp/jpy and eur/usd with my data and I will post it in a few minutes so we can compare again if it would be helpful, we can see the relativity of the pairs to each other.
OK, well, I’m posting my current value for all of these indicators here for a permanent record and I will post the same values on Tuesday morning and let’s see what the differences are (if any).
By the way: I used the incorrect value for ‘M’ when I posted my results i.e. I was using the value of a few days before but remember that this changes according to the current price so the values that I post now are current i.e. as of ‘right now’, Sunday, 10/02/2008, at 13:04pm SA time (for Gold):
ADX = 17.15
ADXR = 43.84
ATR = 20.08
V = 0.01
M = 9.21
C = 80
CSI = 1.92
I actually have no idea how I came to the HUGE figure that I did when I first posted my results a couple of pages back i.e. on 07/02/2008 BUT I have a very strange feeling that the difference is because of my ‘999th bar’ issue but I’ll quickly be able to ‘tell’ if that’s the problem on Tuesday morning.
Edit:
Let me include the current data for EUR/GBP here as well (as I have just checked what the CSI for EUR/GBP was also on 07/02/2008 and it’s already different on that day when checked today but I’m not sure if I’m using the same figure for ‘M’):
EUR/GBP pm: Sunday, 10/02/2008 at 13:16pm SA time:
ADX = 18.6791
ADXR = 43.6417
ATR = 0.0060
V = 0.19
M = 7.26
C = 3
CSI = 0.0123
Let’s see what happens.
Ok, I need to get to bed but here are my final calculations for the night, not sure how useful it will be but here it goes…
calculated with lot of 1000
gbp/jpy
adx= 32.63
atr(14)= 2.421
v= $0.09
m= 38.93
c= .45 (5 pip spread)
csi= .7574
eur/usd
adx= 20.32
atr(14)= .0108
v= $0.10
m= 29.02
c= .15 (1.5 pip spread)
csi= .00271
Thanks for that.
I need to wait now for Tuesday morning to see whether or not I have consistent indicator values or if they should be ‘compensated for error’ as well.
By the way: I’ve been meaning to share this with everyone:
I’m not going to mention the company that writes this software because I’m sure that all of them are the same but I had a good ‘chuckle’ when I read the following line which is a ‘software feature’, would you believe, for the ‘broker/dealer side’ of the software:
[I]‘Change Price Tool allows you to modify prices that are made available to traders by adjusting external feed or to set prices manually’!!![/I]
I love it!!!
As much as I love this business I do know that it’s got more ‘stories’ and ‘twists and turns’ than a ‘$2 hooker’!!!
OK folks,
Sunday night, indicators checked, systems checked, orders placed, time for bed (went quick tonight)!!!
May you all have the week that I think I’m going to have!!!
Good trading!!!