Absolutely right. You might then like to take that thinking a little further. How effective are systems likely to be and how long will they last. However if you can use price action to determing what the big boys are doing then maybe you can ride on their coat tails. I have a theory (totally unproven) that those who make systems work have a much greater grasp of whats really going on and important than they realise. You often see it in their posts when they use various reasons for not taking a set up. Food for thought?
Good (Saturday) morning everyone, great week past!!!
Hey Tony: I see you’re just slightly ahead of me on posts!!! What happens when we get to 1000??? Is there like a prize or something??? Does Pandora’s box open or what???
I agree with you (now) about systems i.e. Wilder’s ‘systems’ are based on volatility and momentum and price and that’s why they work (for the most part) I think. Having said that though I have found that as wonderful as I think they are they also require a bit of ‘insight’ as it were i.e. if one of the ‘systems’ is giving you a signal to go long but you just ‘know’ somehow that there is just no way that the signal is valid because you ‘know’ that no matter how much momentum you have in that direction the price is not going to keep going in that direction until it hits it’s target and you simply don’t take the trade. It’s taken all my ‘heartache’ and ‘pain’ to realise this i.e. I was ‘hoping’ to find a ‘system’ that I could trade ‘blindy’ and not have to rely on my ‘intuition’ because my ‘intuition’ has let me down badly in the past but I don’t think that there is such a thing as a ‘system’ or indicator that can be traded ‘blindly’ anywhere and I reckon it’s this ‘intuition’ that ‘seperates the men from the boys’ as it were. Having said that it’s not ‘intuition’ in the true sense of the word because it can be ‘learned’ i.e. it’s not something ‘magical’ or ‘mystical’ that you’re born with but comes with experience and ‘blood, sweat, and tears’. That’s why I get just a ‘tad’ ‘pee’d off’ when people dont’ want to read this (or any other thread for that matter) i.e. they just want to ‘cut to the chase’ and ‘plonk’ Parabolic SAR on the chart and start trading. If it were that simple nobody would do anything else for a living. If it were that simple Wilder could have created and sold an ‘automated Parabolic SAR trading system’ for all the different types of platforms and NOBODY including the institutions would need to sit at their desks or go into the NYSE every morning and trade i.e. the computers would do it all for us, everyone would be a trader, everyone would be extremely wealthy, and everyone would be ‘sitting on the beach’ while the computers made money for us.
It’s a wonderful business if for no other reason you will never stop learning I don’t think.
I actually have no idea why I’m posting this post. I do strange things between Friday night and Sunday night when everything is closed.
can someone please explain to me why the price is on an extreme decline trend however the ADX reads below 20 which means it is at ranging? is it a false signal? if it is a false signal, how can it last for 3 month?
[QUOTE=dpaterso;36177]Hey Tony: I see you’re just slightly ahead of me on posts!!! What happens when we get to 1000??? Is there like a prize or something??? Does Pandora’s box open or what???
Race you! But I warn you we may both go up in smoke!
Impossible to say without more info. What are your ADX settings, what currency, time period and dates. Certainly the last bit looks like a trend but overall it is ranging which might be accounted for by how the indicator is set up
Good ‘Sunday’ morning everyone!!!
Only a couple of more hours ‘and we’re back in business’ (it’s disgusting you know: I’ve mentioned it before i.e. I’m sure I had ‘a life’ before I started trading. Now I sit and stare at the charts over a weekend as if ‘dazed’ or ‘mesemerised’ by them waiting patiently for the markets to open. It’s much the same scenario as when your TV breaks!!! Have you ever noticed that when this happens people will still sit in the same ‘spot’ that they do every night and stare at a blank screen like somebody died)!!!
Anyway, some good DOES in fact come from this ‘obsession’ I’m sure.
For example: I read somewhere on another thread over the weekend that it is possible to make money by going ONLY EVER long or short. So I’ve had a look at this and I can tell you that there is definitely some merit in this. The idea really is that every single day at the close you go long at the close with a tight stop (like maybe the low of yesterdays bar less the spread or a couple of ticks) and you just keep doing this every single day until all your positions have been stopped out or you decide to TP. Take a look see how it works. Then I got to thinking about Parabolic SAR again. Now check this out: let’s say that you have just been given a Parabolic SAR signal to go long (initial signal / entry signal). You go long BUT you do not set your stop loss at the current value of Parabolic SAR but rather to the low of the bar that gave you the signal less the spread or a couple of ticks. Now let’s assume that the price goes up after entry and your stop loss has not been hit. The next day you take another long position and set the stop loss as described above FOR THAT BAR only and you move the stop loss on your first position (yesterday) to the current value of Parabolic SAR. You keep repeating this process every day until ALL your poisitions are stopped out as per normal by Parabolic SAR. The effect of this is that you are constantly adding to your positions i.e. more profit at the end, you are creating a ‘profit cushion’ because the positions that are in ‘the green’ will negate any losses if you are stopped out early by Parabolic SAR, and you’re basically following the principle of letting your good trades run and your bad trades loose (yes ‘loose’ not ‘lose’). Take a look see.
I’ve also spent a lot of time this weekend analysing the relationship between a Parabolic SAR entry point and the ATR (Average True Range) at the time that this entry point is given. In other words I’m trying to ‘filter out’ those situtations where you get a Parabolic SAR entry signal but the difference between the opening price of that bar and the current Parabolic SAR entry point i.e. your initial stop loss is absolutely HUGE and what I found is that there is defintely a relationship between profitable trades and the size of the initial stop. Why I have said before that 'Parabolic SAR ‘fits’ a commodity like Soybeans ‘like a glove’ is because you’ll notice that on a chart of Soybeans when you are given a Parabolic SAR entry signal the opening price of the bar and the current value of Parabolic SAR is very small and these trades always turn a good profit. With forex pairs I have however noticed two important ‘differences’: for one, when you get a Parabolic SAR entry signal the price almost always retraces it steps for a bar or two before going in the direction of Parabolic SAR (assuming you don’t get stopped out within this period) AND those trades that start out with the HUGE difference between the current value of Parabolic SAR and the opening price of the bar also, for the most part, either only break even or turn to a loss. I have experimented with this sort of thing: if the difference between the current value of Parabolic SAR and the opening price of the bar is greater than one half of the 14 day ATR then you don’t take the trade BUT you keep following Parabolic SAR until this difference is smaller than the current value of the 14 day ATR and then you open a position as you normally would. The idea is that when you open your position Parabolic SAR is not so far away SO if the trade goes in your direction then you’re OK BUT if it goes against you then you’re not stopped out for 85% of your capital!!! It also allows you to ‘miss’ those initial retractments as described earlier. The only problem is that you DO in fact miss some profit and there are still losses although not as great as they would normally be. I KNOW I’m on to something here I’m just not quite sure what. Like I said there IS a relationship between a profitable trade and the size of your intial stop loss as disctated by Parabolic SAR I just need to quantify it somehow.
One other thing that has become SOOOO apparent to me though is this: this business is realy all about ‘waiting’ for the right trade i.e. as you all know I am now trading Wilder’s trading systems and it is so clear to me now that if you just have the patience and self control to wait for the right trade you cannot go wrong. One of his systems (or rather suggestions) involves the use of Parabolic SAR, ASI, and ADX. The ‘key’ is to sit and wait for the setup to occur and then you’re VERY good to go ALWAYS BUT for some or the other reason it is the most difficult thing to do i.e. wait for the setup. I THINK I’ve arrived at the point where I can do this now and I am just SOOOO sorry that I did not develop this ‘discipline’ last year because I can tell you that things would be very different for me right now. Anyway, there is a bit of ‘useless’ information, use it, don’t use it, but trust me it’s fact!!!
I must also just mention that posts like this are just ‘food for thought’ i.e. I will not be trading any of this (well not live anyway) until I’ve ‘proved’ any of it. The idea is to get people thinking and maybe come up with something that I’ve missed and eventually come to a highly profitable ‘system’ as it were.
One other thing: it appears that this thread is ‘out of vogue’ for some or the other reason. Let me tell you this: just because I ‘wiped out’ does NOT mean that Parabolic SAR is at fault I can assure you.
hey bro… do you alwiz get to get in ang get out of your trade at target price or at the first dot? what is the maximum slippage you ever experience?
I understand that you did not trade live with this… but if trading live will have entry and closing problems? that will have very much difference no matter how successful the system is… i have one too… now thinking whether to start trading live or not… but before that is better to do more research to explore more possible drawbacks and put measures into consideration…
“hey bro…”,
I have absolutely no idea what you’re talking about as far as getting in and out of the trades etc. etc. etc.
As far as slippage is concerned: I never have slippage of any kind and if you’re trading the daily charts (or longer) this is not going to happen. If you’re trying to ‘scalp’ the market it’s goint to happen no question.
glad that you’ve made it and still doing well, it doesn’t mean i can definitely make it if you can… but at least you gave me some hope… thank you
Now you are cooking Dale. My first 2 attachments are from post 514 on alternative templates friday night. The third is post 516 as the trade set up and the last is the management of the trade (next post)
This is the ongoing trade management. In a nutshell I identified a low risk area where I would want to play. When it reached that I got an entry signal I trusted. There was a low risk with high potential R and we’re off to the races. The point here is that whatever approach you use you are not taking a random signal but rather one that has everything lined up in its favour. I tracked this all night and of course it might not have got there, might not have given an entry opportunity or might have fizzed when I got in. But with a potential of up to 5R everything was in its favour. A trade with a very wide stop on a short timeframe is of no use as you cant get a big enough slice and in addition the further you need it to go statistically the less likely it is to be successful. As I said in my post one trade like this a month would net you 160% a year
Hi Tony,
Thanks for the posts and input and examples.
I like the way you trade (I DO mosey on over to your thread every day to look see what’s going on and I know, from what I read everywhere, that the way you people trade really is THE ONLY way in the long run). My problem is that when I look at a chart (like the ones that you posted) and somebody else has ‘detailed’ the candlestick formations and chart patterns like you have then it’s as ‘clear as daylight’ but when I try and do it on my own it’s not clear at all. Like I said before: I have printed out ‘forests’ of candlestick formations and chart patterns and I just don’t ‘see it’ or don’t have the ‘confidence’ to base a trade on what I see. Having said that, now that I’m trading Wilder’s systems the strange thing is that when these systems give you a signal and you analyse that signal most times you find that the system has somehow ‘mathematically calculated’ the exact same point that someone like you would probably just be able ‘see’ just by looking at the candlestick formations and chart patterns. I don’t know if that makes sense? What I’m saying is that it’s almost like I will ‘eventually’ be able to ‘see’ these things without the sytems if you see what I mean i.e. kind of like ‘learning them ar*e about face’. A very good example is his ASI i.e. the indicator will give you the exact place to get into the trade calculated mathematically and then if you look at the chart it’s always on a support or resistance level which a person SHOULD be able to just ‘see’ but I supposed it comes with experience like anything else.
As far as waiting for the perfect setup is concerned: again I’m just so sorry that it’s cost me so much time, effort, and money to come to this realisation (but admittedly I don’t think I would have arrived at this point had I not spent so much time getting to know Wilder’s works ‘inside and out’. I do know, however, WHY it is so difficult to wait i.e. it’s the ‘mindset’ that ‘if I don’t get in now then I’ll miss this trade and there will never be another one like it again’. Not true and I have the Dow, Nasdaq, and S&P to thank for teaching me THIS lesson i.e. what you don’t ‘catch’ today you can bet your life on you’ll get another, possibly even better, ‘shot’ at a decent trade the next day or the next or the next but it WILL come.
forext00:
Thanks for the kind words. Let me tell you that I have FAR from ‘made it’ i.e. I’m still ‘clawing’ my way out of the very deep hole that I made for myself last year. Having said that: even with my creditors knocking on my door I really and honestly do believe that a good living (and then some) can be made out of this business and I think that of all the possible ways to make money once you have ‘mastered the trade’ it must be the most satisfying way to your living. Even after all the losses and misery I can honestly say from the bottom of my heart that I love everything about this business. I love reading about it, I love watching it ‘go down’ every day on Bloomberg and CNBC, I get up in the morning because of it!!! Having said that I’m not sure that trading forex pairs ‘is my thing’ i.e. I definitely ‘lean toward’ trading the Dow, Nasdaq, and S&P (and anything else traded on the NYSE). It ‘excites’ me no end. But, because of the absolute ‘mess’ that I made last year, I’m ‘stuck’ with trading forex pairs for now (and ‘the odd bit’ of gold, silver, and oil) but my goal is to get back to where I was last year financially (at very least) and then trade my $7K Dow lots again except THIS time around I really feel that I will at least ‘almost’ know what I’m doing!!! I do believe that by ‘sticking it out’ I have learned a lot not only about the world around me and ‘this business’ but about myself and what type of person I really am first and foremost.
I really hope that everyone that has decided to try to do this for a living succeeds. Having said that (I know I’m repeating myself) it’s NOT a ‘business’ to be taken lightly and there is a message in my statement (and I’m repeating myself again but if you’re going to stand ANY chance at all it can’t be stressed enough): you WILL NOT make it in this business if you think you’re going to get your hands on an indicator, ‘slap’ it on a chart, and collect your profits at the end of the day. It simply is just not going to happen like that. Now and then it MAY appear to happen that way (remember my ‘windfall’ last year) but I can assure you that it’s not ‘sustainable’.
Yes fair enough Dale, I think you are right its the process of looking at thousands of charts until you start to pick out high probability recurrences. Stick with it!
Dale,
I just got my Wilder books (I bought them Amazon before I knew about your discount)! I used the free shipping method at Amazon and since I couldn’t wait around for them to show up I went to the local books store and bought several trading books.
One of the books is called “Way of the Turtle” by Curtis Faith. I think you’ll like it a lot. He discusses a lot about the mentality of trading and how to NOT let your emotions get the best of you. I remember reading about the Turtle system when I played in the options markets a few years back but could never find detailed information. So I couldn’t resist purchasing this book! :o
Also, it is spooky how your earlier post for today almost mirrored what I was thinking about over this weekend. I was wondering how a “weighted” entry system following the PSAR would work. In other words the first reversal dot would count as an opening signal (choose your lot count to start, like 0 or 1). Then on the second PSAR dot in the series you add to your position (add by some lot size; like 1). Finally, you could continue this on all the PSAR dots but near the end you’ll have too much “weight” for the reversal period so I’d suggest having a max position count (so maybe you’ll only trade a max of 5 positions). And yes the Turtle book influenced me on this idea. 
Lastly, I would like to comment/(ask a question) about your testing methods. After having followed this thread for some time I want to ask you if your test your method ONLY until you get a false signal and then move on to a “new” system. I wonder if you have found some good systems that would be profitable given a long enough time frame and/or with the proper weighting. I’m a newbie so please don’t take this as a criticism since I probably don’t know what I’m talking about. I’m just trying to understand your methods in further detail.
Hi daxm,
I did a bit of reading about ‘Turtle Trading’ funny enough a little while back. If I remember it started out as an experiment or something i.e. the guy got a few people together who knew nothing about trading and the idea was to prove that anybody could trade profitably it they had the right ‘system’ or ‘mentor’ or something like that. From what I gather there were also some ‘breakaway’ ‘Turtle Trading Systems’ and it seems these caused a few (legal???) problems or something like that if I remember correctly. I do remember finding a ‘Turtle Trading’ website i.e. supposedly the ‘official’ ‘Turtle Trading Website’ somewhere on the Internet but I can’t remember now where (I actually ‘got on’ to this stuff while I was putting a lot of time into investigating channel trading ‘systems’ like ‘Donchian Channels’ and ‘Envelopes’ etc. etc. etc.) Anyway: you now have the book so you could probably shed some more (accurate) light on ‘The Turtles’ for everyone! From what I gather it was very succesful at the time.
As far as Parabolic SAR is concerned (and my latest ‘experiment’) I’m pleased that it makes sense to someone else as well!!! I don’t think that you’ll get ‘too heavy’ at the end i.e. with Parabolic SAR, with or without ‘compounding positions’, there is an inevitable loss when the reversal comes. The problem is that you never really know when the reversal is coming so my ‘experimental idea’ was to just keep ‘loading up’ with positions, that way creating a very nice ‘profit cushion’ so that when the reversal does eventually come it (hopefully) is only the very last position that you opened that will turn into a loss.
As far as my ‘testing methods’ are concerned: well those leave much to be desired!!! Let me put it this way: my only ‘testing method’ is to apply whatever ‘bright idea’ I’ve just had to some daily charts, see what the results ‘appear’ to be, and then just jump straight in (on a live account of course in true ‘Dale style’) and if I make money then the ‘test’ has worked and if I lose money then the ‘test’ has failed!!! Dumb huh!!!
OK - no - seriously though - I have never ‘backtested’ anything that I’ve ‘come up with’ i.e. neither of my trading platforms has a ‘backtesting’ facility like Metatrader (I used to have an account at a Metatrader broker but they closed down. It was the only account that I never ‘wiped out’ myself would you believe). I do ‘backtest’ but all it really is is ‘pulling up the idea’ on some charts and scrolling through the charts and ‘seeing’ or ‘manually calculating’ the results. Let me put this another way: at no point last year was I ‘backtesting’ or even ‘testing’ for that matter i.e. I was ‘trying’ to trade and make a living!!! Like I have previously stated though: I do honestly believe that if you ‘stick’ to Parabolic SAR you WILL make money IN THE LONG RUN (and this, by the way, HAS in fact been ‘backtested’ by someone on this thread, two people as a matter of fact, using Metatrader and the results were positive with the distinct warning that you have to have enough capital to ‘suffer’ the inevitable drawdowns). Trading with Parabolic SAR just does not ‘suit’ my ‘trading personality’ and that’s why it may ‘appear’ that last year as soon as I suffered a loss I’d move on to something else. I don’t think this was the case. What I do remember is that I got ‘frustrated’ because I was holding on to a position for ‘days on end’ only to have it reverse on me and turn to a loss and then I’d be sort of be starting all over again which I just could not take and this made me do things, stupid things, that cost me a lot of money in the end. You will see (as soon as you get Wilder’s books) what I mean when I say that with some of the systems in the ‘New Concepts’ book you know within a very short space of time whether your’e trading in the right direction or not, you take your loss or profit in a short space of time, and then move on to the next trade. This ‘suits’ who I am i.e. there is no waiting around for a couple of days, even weeks maybe, ‘nursing’ a profitable Parabolic SAR position only to find after two weeks the thing turns against you and if you’re ‘lucky’ you’ve taken a profit. This scenario is FINE if you have HUGE capital i.e. so what if you have had a position open that today, after two weeks, it’s showing a profit of $5 000 but next week it reverses and you only get $2 000 out. $2 000 is $2 000 but to do the same thing and end up with $200 after two weeks work just drove me insane. See what I’m saying. I (now) believe that it’s far easier to ‘load up’ on a position and ‘shoot’ for a small number of pips than it is to open a small position and hope that the market starts trending ‘until the cows come home’ to make the same profit.
Anyway: I’m ‘elated’ to see that someone else has bought Wilder’s books (especially ‘New Concepts In Technical Trading Systems’). I hope that when you get it you’ll see the ‘magic’ that I see. Those systems ‘work’ for me. Whether it’s because (and this relates to my answers to you above) it is the first time I have (have been ‘able’ to) ‘stick’ with /at any one or two ‘systems’ over period of time I do not know. I do know that they just ‘make sense’ to me and they do not leave me to my own ‘devices’ i.e. ‘here is when to take a position and how’, ‘here is where you TP’, ‘here is where you set your stop loss’, and so on and so forth. That’s (evidently) the way I need to trade right now. It may NOT be the same for you though but I can tell you that there is so much other stuff in that book that you’ll be amazed. I hope it (they) make you a successful trader.
By the way:
Here is a little ‘tidbit’ for you:
If you’re ANYTHING like me i.e. ‘obsessive compulsive about trading’ then you might like to know what has been happening with your open positions over the weekend. In other words: I like to know before the open on Sunday whether I should be drinking rum (to drown my sorrows) or Red Bull (because I can’t wait for the markets to open on Sunday night so that I can trade non-stop until next Friday night)!!!
On this site:
Oz Forex Foreign Exchange | Inter-Bank Spot Rates
you can get the CURRENT Interbank FX rates as they change RIGHT THROUGH THE WEEKEND (you just have to refresh the screen when you want the ‘live’ rate).
For instance: I have some positions open on GBP/JPY from Friday and I already know what they’re going to open at tonight (profit of course otherwise I probably would not be telling you)!!!
Dale,
I have started reading “New Concepts” and am enjoying it. His typos confuse me a little but I’m muddling through.
Since your trading style requires more “action” why not have a slow account (and do the PSAR system) and then have a fast account that you can mess around with on a daily basis. See if you can truly and unequivocally follow the PSAR for a solid year or some such. The nice thing about FOREX is you can trade very small lots if you want. So, if money management is an issue just trade minis or micros. Just my 2 cents.
I don’t remember any legal issues, nor where any mentioned in the book, but Curtis Faith was the most successful trader in the Turtle system. He started with $2 million dollars and at the end of 4 years had $178 million. His book really isn’t about “the turtle system” as it is more about the mentality needed and short comings to avoid in human behavior to be a good trader. So far, of all the trading books I’ve read it is my favorite.
Hi,
OK - well - I have not found any ‘typos’ - so please point them out to me - maybe I missed them. There is one calculation on one of his worksheets that I think is wrong i.e. ‘The Swing Index’ system worksheet but you’ll get to it (it drove me absolutely ‘nuts’ to try and come to the same answer but after checking and checking and checking there is just no way I could be wrong or should I say I hope not)!!!
As far as having the two accounts is concerned I do agree with you. I will tell you though that I will keep trading the ‘Trend Balance Point System’ and the ‘Reaction Trend System’ and the ‘Volatility System’ (when I finally get an entry point that is) as my ‘base’ and I think that this week I will also start using the ‘Swing Index System’. Interestingly enough, Wilder, in an early interview, says that of the systems he favours the ‘Volatility System’ and the ‘Reaction Trend System’ and in a later interview he suggests using Parabolic SAR, ADX, and ASI together.
As far as the ‘Turtles’ are concerned I was just ‘recalling’ stuff that I remember reading on the Internet some time ago i.e. I could have got it wrong. If you like what you’re reading about ‘trading phsycology’ and you don’t mind ‘sprining’ for some good books you should also have a look at John F. Carter’s ‘Mastering The Trade’. There is some insight there that you won’t just find in ANY book that’s for sure.
Anyway, welcome to my ‘Wilder’ world!!!
I’ll certainly look that book up. I love to read and I especially love to read things that interest me (real world type things). My wife and I have a “bad” habit of purchasing too many books. We have a huge wall in our house that is nothing but a giant book shelf! 
On page 23 of “New Concepts” I’m sure there are a few errors. First, his table 3.4 shows the sum of the true range as 10.00 but in the calculation just below the table he uses 9.90 (yet he gets the same answer both times of 1.43). Then he refers to this ATR (the 1.43 he just calculated) as 1.41 near the bottom of the page. They aren’t huge issues but it can be confusing when you are trying to figure out where these numbers are coming from. 
It seems to me there was another place in the book up to this point there was an error but I don’t remember where it is. If/when I find it I’ll let you know.
Please correct me if I’m wrong on these. I’ve got a terrible case of pink eye right now and I have a hard time focusing on my reading (not to mention the terrible headache I’ve got). So, for all I know I’m just spitting out random letters at the moment that just look like they go together to me. :eek:
Nice to hear (about the books I mean). John F. Carter’s book really is an ‘inside look’ at how the markets work, why traders make money, more importantly why ‘new traders’ lose money, and a whole lot of info about the tools that ‘professionals’ will use when trading the stock market not to mention the excellent chapters on ‘trading psychology’. He also has quite a few ‘systems’ detailed in his book that might interest you. It’s a ‘fresh’ book and a lot newer than ‘New Concepts’ but then they are really two very different books i.e. ‘New Concepts’ really just gets down to trading ‘from the get go’ which is really kind of ‘more my style’ but I refer to John F. Carters book when I need some ‘inspiration’ (usually when I’ve made a nice loss) i.e. he always makes me feel like an idiot but opens my eyes to my mistakes!!!
As far as the ‘errors’ in ‘New Concepts’ is concerned: I have to tell you that I ABSOLUTELY HATE TO ADMIT IT but you are quite right (I never even noticed that before). I am aware of only one (other) ‘error’ and that is on the daily work sheet for the ‘Swing Index System’ i.e. I think it’s about the third or fourth ‘SI’ that’s calculated: try as I might I cannot get to his figure but the rest are correct (I’ve calculated that ENTIRE work sheet manually with a calculator AND Excel)!!!
I hope you enjoy it (did you get ‘The Delta Phenomenon’ together with ‘New Concepts’)?