The Adam Theory of Markets by J. Welles Wilder Jnr

Beginner Questions
263

Hi Jedster,

I noticed the same issue regarding the timing of solving Adam. Although the book said the closer a point is to the Now moment the greater the symmetry, sometimes the Adam chart has a better prediction if I do not solve it after every candle. Actually the example given in the book also said that it is not necessary to solve Adam everytime but only when you notice a pullback. I’m trying to solve Adam only when there is a pullback and see how is the outcome.
Thanks for sharing and I look forward to your analysis.

Regards,

264

Hello.

Well some great posts although this ‘killed me’ Jedster:

So I’ve knocked up a quick version of the indicator

LOL!!! I’m not sure what to say other that WELL DONE!!! And that I’m TOTALLY impressed!!! LOL!!! What??? You had nothing better to do so just ‘knocked up an Adam Indicator’??? Just like that!!! LOL!!! As I said: WELL DONE!!! LOL!!! I can tell from just looking at your examples that YOUR’S is INDEED correct and a HUGE difference between your’s and the ‘Future Candles’ MetaTrader Indicator that’s floating around.

OF COURSE: the question on everybody’s lips is going to be ‘what trading platform is that’ so I’ll save everyone else the trouble and ask ‘what trading platform is that’??? LOL!!!

Regarding your comments on the webinar that you were watching:

I agree that Adam Theory really does ‘fly in the face’ of a lot of what we’ve all been taught or learnt or have come to accept. But I think you’ll find that ALL will be ‘correct’ BUT are dependant on what type of trader you are. There’s no doubt in my mind that Fibonacci Levels work. There’s no doubt in my mind that Pivot Levels are always ‘spot on’ too. With both: price will ALMOST always pause and then either turn or push its way through (or go nowhere for a good while). But that’s not trend following. As noted: all of Wilder’s trading systems are trend following systems with the exception of ONE (I’ve previously noted TWO but actually in truth his ‘Reaction Trend System’ is supposed to work in both ranging and trending markets and ODDLY enough is based on not much more than Pivot Levels except he calls them something else).

And I agree too: I think the ‘art’ of Adam is WHEN to apply it (although the book does make it look and sound simple doesn’t it). As I’ve also noted previously: Wilder’s Volatility System is, by his own admission, one of his best ‘contributions’. That system works MAINLY because the stop and reverse points are just SOOO far away that it’s almost impossible to get whipsawed. Alright: it doesn’t use stops either so it’s not ‘something to be tried at home’!!! LOL!!! (But alright: I’ve devised various methods to make it less ‘hazardous to your health (account)’ which don’t seem to have had any adverse affect on the system itself). I THINK you’ll find the same applies to Adam. It seems a bit ‘old fashioned’ (now that I’ve seen YOUR amazing work) but I ‘solved’ Adam MANUALLY for EUR/USD daily and weekly at somebody’s request and will attach both charts to this post. Had one been trading Adam (so far as I can tell) on the weekly time frame you’d STILL be short, the trade would have moved against you somewhat, but I’m betting that if there is ANYTHING to Adam Theory one should start watching out to add to the short position and move your stop. In other words: the initial stop would have been SOOO far away that it would take something REALLY SPECTACULAR to stop you out before being given the opportunity to add to the position and stay in the trade and by doing this exponentially increasing the profitability of the trade. That’s the way I see it anyway.

But one thing’s for sure: Adam is NOT for those that cannot WAIT to get into a trade and cannot WAIT to get a hold of their profits (well: that based on my only testing it or solving it for the daily and weekly time frames). For those: there are Wilder’s other systems and / or a HOST of others (including but not limited to trading with Fibonacci Levels or Pivot Points)!!! LOL!!!

OF COURSE: ALL my personal opinion (above).

And yes: UNFORTUNATELY .PNGs are converted to .JPGs which UPSETS ME because it makes Delta Trading’s charts look ‘ugly’ so I almost always WinZip them anyway (and also: it doesn’t FORCE somebody that’s scrolling through a thread to wait for a chart image to appear etc. but THAT IS JUST ME)!!! LOL!!!

But WELL DONE AGAIN!!! Looking good.

Regards,

Dale.

P.S.

As noted attached are my ‘old fashioned’ Adam Theory Second Reflection Charts for EUR/USD. The daily chart was solved up until the CLOSE of yesterday (01/02/2012) and the weekly chart was solved for the week ended 27/01/2012. Either way and thus far STILL: it sure looks like we’re going DOWN DOWN DOWN (it’s just taking a bit longer than expected). And, alright, my personal interpretation once again: people are ‘partying like there is no tomorrow’ it would seem if you take a look at the Dow, S&P 500, and the NASDAQ. As a matter of fact: most analysts (‘take it or leave it’) were expecting the S&P 500 to move up around 10% for the YEAR and as of last night it had moved up ALREADY by 8% since the beginning of the year. Now I realise the 10% wasn’t expected to happen in a ‘straight line’. There’s going to be a correction or two or three or … along the way and ‘it is coming’. What’s more: aside from all the ‘rhetoric’ coming from Europe NOTHING has changed really. That’s my PERSONAL ‘take’ and where my ‘limited understanding or interpretation of fundamentals’ comes to an ‘abrupt end’!!! LOL!!!

eurusdadamdailydate01022012.zip (25.4 KB)

eurusdadamweeklywe27012012.zip (28.6 KB)

265

Hi Dale,

Thanks - no problem. I just figured that manually rotating images in paint, or whatever is a bit fiddly. The examples in the book are over 6-9 month periods. I wanted to be able to try this out on the 1H or 4H timeframe to get used to it, see how well it works for me, and to do that, I want to be able to see the 2nd reflection relatively quickly. If I had to plot everything manually, I could see that being a hinderance.

It is an MT4 indicator. Need to finish it off as it has a couple of drawing issues, but fundamentally it does work. I’m one of these always start never finish type people, so lets see how long it takes for me to finish it… The 80/20 rule works with this, I’ve done the 20% easy bit, the 80% fiddly parts now to follow…

I tend to agree. Whilst there is simple, I think there also has to be a pragmatic way to apply this. Yes, that might include fibonacci and yes that might include areas of s/r. This is mentioned in some of the later examples where he talks about the price getting over the previous highs. However, the mindset of expecting the market to change here or there is a way of thinking that needs to be changed.

I like your S&P example. According to Adam, now is as good a time as any to buy. Everyone is looking for a top to form…

266

Hello.

a bit fiddly
and
a hinderence

Those are understatements!!! LOL!!! Trust me. I’m just very lucky to have a very high quality BIG screen on my PC otherwise it’d be impossible (oh and did I mention I still had to buy those ‘1 x magnification off-the-shelf’ reading glasses to get around the ‘fiddly’ bits)!!! LOL!!!

Again (personally): I think one needs to see AS MUCH AHEAD as possible. I don’t see seven or so bars being enough. Not unless you want to get whipsawed or stopped out for no good reason.

My S&P example??? Here’s where it gets ‘tricky’. I’ve not solved Adam for any of the indices. Right now it really IS a ‘no brainer’ what Adam would show. I trade them only with the Swing Index System and sometimes with one or two of those other systems on my forums. I guess one could say that I’d be going AGAINST Adam actually. In other words: there’s no question that when the S&P corrects or turns the Swing Index System will have you stop and reverse LONG before Adam has even ‘thought’ about it. The trade-off: many potential whipsaws. That’s why I keep ‘banging on’ about Adam being ‘good’ for LONG term trades. In other words: I believe Adam to be ‘good’ for when the markets have made a sort of ‘paradigm shift’ or moved to a sort of ‘next level’ (whether it be up or down or above or below where it has been i.e. something like a ‘glacial shift’). I don’t know if that makes sense. Anyway: what I’m saying is that I MYSELF are ‘expecting’ and waiting for a top (but I’ll only know once the Swing Index System tells me so and even THEN the Swing Index System also doesn’t ‘pick tops’). So I’m ‘solving’ Adam for EUR/USD and EUR/JPY (for testing) with the ‘idea’ that at some point the indices ARE going to correct or turn and given the now positive correlation with EUR/JPY and EUR/USD and the indices (which went a bit ‘haywire’ for a good while last year) this would mean that those two pairs will fall too. Basically what I’m saying is that my ‘solving’ of Adam for those two pairs is confirming what I’m ‘expecting’ to happen with the indices. All of which is ironic because all of that in and of itself ‘flies in the face’ of Adam Theory I know!!! LOL!!! Which is the very reason I’m only ‘SOLVING’ Adam and NOT trading it!!! YET!!! LOL!!! BUT you can be SURE I’m applying Wilder’s RULES IN THE BOOK (which was the whole purpose of starting this thread in the first place i.e. not Adam but to draw attention to those rules)!!! LOL!!!

Regards,

Dale.

267

I like that daily EU chart. It’ll be interesting to see how the market performs over the next 10-20 weeks. We are essentially saying that the Euro is still falling. It might get up to the mid 1.30’s, but lower lows are yet to come.

268

Like I said: Adam Theory is NOT for someone looking to catch a quick ‘bounce’ off of a Fib Level or a Pivot!!! LOL!!!

Regards,

Dale.

269

Jedster,

Thank you for sharing your test results & they really look promising. The indicator should be a big help. Maybe supply & demand levels along with S&R would fit it. Thanks again.

270

No of course. It won’t work like that. However, IF the application of Adam to shorter timeframes does work, it will mean people will come into it expecting quick profits, not really understanding the philosophy behind it.

I think that is why Adam sits very well with me (does that sound a bit odd?). I like the ideas behind it as I can relate to the exact comments in the book. In fact, I think those comments and clichés in the book were unwittingly quoted from me…

I’ve been that guy (along many many other I’m sure) sitting there while a big move up carried on moving up. A move that I was not in. I was that guy saying, “I’ve been taught not to chase the trade”, etc, etc. It felt wrong because I was also saying to myself “If it is going up, then buy”. But all the time I’m thinking “any time now it will turn around, etc etc”. Eventually I go long and, lo and behold, I’ve bought at the top (because it was an unplanned emotionally driven trade) and I have to take the loss on the way down. “There we go” I say to myself, “you were taught not to chase trades, thats what happens…”.

With the application of the 2nd projection, and the following of the rules, along with a healthy dose of pragmatism, I think this is something that could work for me.

I also think, taking snapshots of the projection and then saving them away is essential. It needs to be documented and then tucked away so that in 1,5,20, however many days or weeks time, one can come back and see if it was the right point to pick for the projection.

271

Maybe supply & demand levels along with S&R would fit it

Yes, that’s the sort of thing I’m thinking of when I’m talking about the pragmatism. It doesn’t mean you are chosing the top, but it does mean you are aware of resistance levels when considering placing the trade.

272

Meet [B]the OTHER guy[/B]!!! ROFLMAO!!!

Yep. That’s why I’ve said many times here. The stuff in the book is SOO logical and probably stuff that you ALREADY know (knew) but without your even knowing it at the time (conciously) you’re doing the wrong thing!!!

Regards,

Dale.

273

Hi all,

re PNG/JPG issue: I think the best thing is to upload your PNGs to www.imgur.com and just paste the appropriate code (the one in IMG-brackets) into your post; center it for better appearance, and voila. Of course one has to be prepared to weather Dale complaining about ‘being forced to look at all those huge graphics’, hehe. :stuck_out_tongue:

re The other Guy: lol, yah, it’s weird, isn’t it? Kinda like a kid who’s been told not to touch the oven window coz it’s hot tentatively approaching it and then … YELP, HOT!!! Mommy was right!
The worst thing is that sometimes those hunches, no matter how dumb, are turning out well, making it even harder to resist next time.
Maybe we need a custom indicator which will black out the screen and ask ‘ARE YOU REALLY SURE ABOUT THIS, DUMBA$$ ???’ in big red letters. :smiley:

re Adam Indicator: Wow, Jedster, you must be pretty good at coding … ‘knocking up’ something like this on the fly.
I hope you’ll link it here, later on, once you’ve ‘fiddled’ the other 80%, coz I can’t code worth crap, and I’d surely like to have a closer look at an Adam Tool.

Cheers,
O.

274

I think the best thing is to upload your PNGs

Yes, there are loads of sites like that. I use Upl.co . Free, unlimited, really quick to use, etc, etc

re Adam Indicator: Wow, Jedster, you must be pretty good at coding … ‘knocking up’ something like this on the fly.
I hope you’ll link it here, later on, once you’ve ‘fiddled’ the other 80%, coz I can’t code worth crap, and I’d surely like to have a closer look at an Adam Tool.

Thanks - and you haven’t even seen the result yet! :slight_smile:

I am a software developer by profession, so I should be able to turn my hand to other things. MQL is a bit crude, but I’ve written quite a few EA’s and indicators so it wasn’t too hard. I like the challenge I guess…

I’ve been out this afternoon so had no time. Should be sufficiently ready by tomorrow morning for you guys to try it out…

275

Jedster,

You are absolutely right about not picking tops & bottoms. I gave that up long ago, but I do try & get the meat in the middle. Oliver is right, you must have some really good coding skills to knock out an Adam indicator that quick. My hats of to you on that. Looking forward to its completion.

276

This is great, everyone wants to pay me complements and they haven’t even seen my work yet :wink:

Ok, so I’ve done what I can for the moment, probably need to try it out and see where we get. I don’t especially want to post the indicator directly in the forum (not just yet anyway). We can discuss it here, just don’t want to post it publically just yet…

So please feel free to send me an email, or IM, or whatever is the offline equivalent and I’ll get back to you with all the details.

Edit:
The application of Adam requires analysis and understanding of the methodology. There is nothing quick or easy about this, the indicator simply helps with that work. On it’s own it won’t do anything, so please don’t contact me just because you saw that you might be able to get something free. You need to have read the book, at least once, but more than likely, two or three times. You need to have contributed to this thread constructively. You also need to have been doing a whole bunch of the 2nd reflections manually and understand what they are for/how they work. If you have done all of these things, then please feel free to carry on and contact me. If not, then please do those things first and then in a month or so, go ahead and contact me.

277

Jedster,

Don’t think I have been a member long enough for IM, but an email will be forth coming. Tks again.

278

I’ve emailed you as well, Jedster.

Cheers,
O.

279

Hi Jedster,

I’ve just sent you an email. Thank you!

Regards,

280

Ahem. Hello. Hello. Remember me??? Dale??? Anybody feel like saying hello or sending me an email??? LOL!!!

Don’t worry. I know loyalty doesn’t count in this business!!! LOL!!! Go for the $$$!!! I understand!!! LOL!!!

Well I’ll tell ya what Jedster: I don’t know if your indicator (which of course takes the HARD WORK AND TIME AND EFFORT out of the ‘Adam equation’) but all of a sudden my forum membership is climbing like I’m giving away Gold coins!!! LOL!!! ‘I owe you one’!!! LOL!!!

Anyway: SORRY for the BORING EUR/JPY Adam Second Reflection Chart (daily and based on the close of yesterday) attached!!! LOL!!!

INTERESTING chart if you look at it given where the major indices are!!!

The way I ‘read things’ (of course: given where the market ITSELF goes in the next few days): one would be waiting for a peak (on the Adam Second Reflection Chart shown in yellow) to be projected below a REAL peak on the current REAL chart at the time. That, to me, would a) signal and entry point and b) it is above the REAL peak on the current REAL chart at the time that would be where your initial stop would be placed. And, well, from there, it should (could???) be ‘downhill all the way’!!! LOL!!!

Now I’m getting real interested in Gold and Silver too (in seeing what Adam ‘has to say’)!!!

Regards,

Dale.

P.S.

Just an observation (and something I was thinking about). There’s been one or two posts here talking about ‘mixing’ Adam Theory with other ‘stuff’. Isn’t that EXACTLY what the entire premise of Adam Theory is i.e. forget about all the other ‘stuff’??? As I said: just an observation (obviously open to comment and debate).

eurjpy_adam_daily_date_02022012.zip (22.9 KB)

281

Hello Dale!
I won’t forget you 1) for your cool look with black sunglasses and all :slight_smile: 2) for sharing the works of Mr Wilder with us.

Regards,

282

LOL!!! Thanks. I’ll have you know that those are GENUINE and VERY EXPENSIVE Ray-Bans and the only EXPENSIVE thing left that I have from ‘my previous life’ (well THEM and a VERY EXPENSIVE VACUUM CLEANER)!!! LOL!!! Still wanna trade Spot FOREX??? LOL!!!

Regards,

Dale.