Hello.
Sometimes Wilder’s Swing Index System ‘holds up’ and sometimes it doesn’t!!! LOL!!!
I’ve tried the ‘flipping in my head’ method and that doesn’t work for me I’m afraid.
What I’m beginning to see though is this (but please do note that it’s very early days yet so this opinion of mine could very well change):
I don’t think that Adam is going to solve the problem that I intended to solve with it (which was, on a weekly basis, to give me the most PROBABLE direction that an instrument would trade in for that coming week). My plan was to say: ‘alright: if Adam says that the Dow will close lower for the coming week I’d then only take short trades using any one of my trading systems, especially Wilder’s Swing Index System, in an effort to eliminate whipsaws’. The problem (and as ironic as this may be): Wilder’s Swing Index System gives me the same signals. The only difference being that it will get me in long and short (stopping and reversing) during the moves that Adam predicts.
What I’m saying really is that IF there is merit to Adam then one must TRADE ONLY Adam and forget about the rest. According to the DAILY second reflection chart for EUR/USD I would have, last night already, just after the close of the daily bar, been required to move my stop to above the next projected SIGNIFICANT HIGH POINT (which would, at this point, effectively have been locking in profit). I would have used +100 pips above that projected SIGNIFICANT HIGH POINT. The only reason I would have used a value of +100 pips is simply because using Wilder’s logic he was placing stops at +100 cents (commodities pricing) above these points (obviously the opposite would apply for short trades).
Note I’m talking ‘past tense’ above i.e. making just over 100% out of a BROKER’S ‘no deposit $20 bonus’ in four days is good enough for me!!! Now let’s see if I can withdraw it!!! LOL!!!
Having spent many years making a veritable study of Wilder’s work: all of his trading systems are designed to capture L-O-N-G term trend moves. There are two exceptions but they’re not the best trading systems for short term trading I’ve ever come across to be honest (then again: I’ve never really traded either of them long enough to make that as a statement of fact).
At this early stage I’d have to say that there IS merit to Adam but the REASON is the fact that your trade has SOOO much room to move over a SUCH a long period that I’m figuring it would be pretty difficult to be wrong on the trade. Does that make sense??? What I’m saying really: if you’re looking for ‘trading action’ then this SURE IS NOT the system for you (not on the daily and longer timeframes anyway)!!! LOL!!!
Alright: Wilder DOES say that Adam should be timeframe INDEPENDENT. So a good test would be for some kind soul to write an Adam Indicator for all of us right??? LOL!!! There are only two ‘floating around the Internet’ (for MetaTrader 4 anyway) and neither are correct. Not the two that I found (or should I say were given by somebody) anyway. I cannot do it in Delta Trading because one cannot draw ‘future bars’ in Delta Trading. And ‘solving Adam’ manually (as I’m doing) on, let’s say, an hourly basis just ain’t gonna happen!!! LOL!!! Put it this way: it then REALLY WOULD be easier to use graph paper and acetate!!! LOL!!!
But hey: I’m happy and willing to give Adam (Wilder) the benefit of the doubt for a good while for the reasons I’ve mentioned either on this thread or in this post (I forget which): 301 Moved Permanently
The above being said I’ve got a GOOD test for Adam. BANK OF AMERICA!!! LOL!!! It’s trading at, oh, around, $5.27 the last time I looked (yesterday). If I ‘solve Adam’ for BAC and Adam is correct: BAC should be out of business in a week or two or three because according to the second reflection chart the stock would have a negative price (at a ‘rough guess’ anyway given that I don’t have the prices on the Y-Axis showing). Let me tell you THIS though: if BAC becomes the target of a M&A deal in the very near future and price shoots up (or it files for Chapter 11) well, then, you cannot doubt Adam then. THAT is FOR SURE!!! LOL!!!
But the above HAS given me SOMETHING to think about (well should I say WILDER has given me something to think about in this book). I’ve been watching BAC simply because it’s ‘cheap’. Remember Wilder’s words??? And I’ve been thinking about this ‘ad infinitum’ since a) Warren Buffet bought a few billion USD worth of the stock and b) since finding ‘The Adam Theory of Markets’ (not so much the ‘Adam part’ but Wilder’s ‘words of wisdom’ in the book). Think about this: I, like most other idiots, would be looking at BAC and saying ‘it’s cheap’ right??? I mean it’s a big bank, it’s an iconic American bank, ‘what could go wrong’??? Right??? What’s more: why would ANYBODY like Warren Buffet buy that stock??? I mean (and as far as I can tell): the man has TEAMS of analysts that look into stuff like this and stock valuations right??? Here’s the ‘catch’: Warren Buffet bought Class A stock (or Preferential stock or whatever the correct term is) right??? All his analysts value BAC stock at around $8.00. So it’s trading ‘under book’ right??? In other words (which is what they calculated): if BAC closed their doors over the weekend, collected all funds owing to them, settled all of their debt, and sold off all of their assets then Warren Buffet gets his $5.00 - $8.00 move ANYWAY (I’m not 100% sure at what price he bought the stock at but it was around $5.00). COMMON stock holders (which EFFECTIVELY would be somebody like me), however, would get NOTHING!!! NADA!!! Add Adam to this??? Let’s see what happens in the coming weeks. There’s no announcements (about BAC). There’s no rumours (about BAC). Just Adam. There is only ONE other possibility and that is that BAC pulls the same ‘move’ as Citi i.e. does a ‘reverse share swap’ so that the stock becomes worth $50 again and not $5 (which is of help to NO trader and makes no difference to an investor).
While the above may APPEAR to be ‘off topic’. Think nicely about my insights. The point is that if there is ANYTHING to Adam then SOMETHING is going to happen with BAC in the coming weeks. Now THAT’S quite a good test wouldn’t you say??? LOL!!!
Regards,
Dale.
