The Adam Theory of Markets by J. Welles Wilder Jnr

Beginner Questions
407

Hello.

Sorry: I know this is totally off-topic but there was a post somewhere earlier on this thread where it was mentioned that somebody had ‘woken up to £45 000 000’ (Euro Millions Lottery). This has been bugging the hell out of me so I decided to do a little exercise. Check it:

Summary:[LIST=|INDENT=1]
[li]As of right now (14/02/2012 at 17h25 GMT+2): £45 000 000 is the equivalent of $70 542 000.[/li][li]Let’s assume 2% risk. Your maximum risk would therefore be $1 410 840 on the trade.[/li][li]Let’s assume the Swing Index System (as there is now a valid signal to go place an entry order to go short the Dow at 12 736.00).[/li][li]If you entry order is executed your stop would be placed at 12 942.08.[/li][li]Based on your capital, risk percentage, and entry and stop price, you would be ‘allowed’ to sell 6 846 CFDs on the Dow.[/li][li]If your stop was taken out: your ACTUAL loss would be $1 410 823.68.[/li][li]You would be making (or losing) $6 846 per point movement ($1 per point).[/li][/LIST]I could live with that!!! LOL!!!

Now does everyone see why I say you’re wasting your time ‘messing about’ with $100 accounts??? LOL!!!

Regards,

Dale.

408

lol, gimme those 70 million bucks and I’ll trade them right away. :smiley:
You may even keep the 542,000.

O.

409

Thanks. I’ll take you up on that!!!

And hey: that’s just the ‘good old faithful’ Dow. When you start looking at the Italian MIB40: it moves on a BAD day anywhere between 100 and 200 points at 1 EURO per point!!! I’ve seen it move 600 points in a few hours!!! LOL!!!

Now THAT is where ‘I want to be’!!! LOL!!!

But that little ‘exercise’ above puts things into perspective. MORE than once I’ve read ‘but with $10 000 are you seriously telling me to risk only $200 on trade???’. Well there’s the problem right there. If you’re going to trade for a living don’t think you’re going to start with $10 000 and quit your ‘day job’. If you risk too much: you’ll eventually lose it AND be without your ‘day job’. And if you implement risk management rules: it’s the only way you’ll EVENTUALLY GET to a point where you can quit your ‘day job’. But ‘doing it right’ is the only way it’s going to work out. The point is: even WITH the vast sum of money ‘on the table’ in my ‘exercise’ above: you’d STILL have to manage risk. The difference is that the actual $$$ value is of a ‘material nature’ and certainly more than just ‘covering costs’.

Regards,

Dale.

410

Haha … Greed cometh before the bancruptcy. :slight_smile:

O.

411

By the way:

For interest sake and given a Target Spread of 3 points on the Dow: the SPREAD would cost you $20 538!!! LOL!!! (But alright: my CFD Position Size Calculator factors that in so the figures are correct as shown above).

I just thought it worth a mention!!! LOL!!!

Regards,

Dale.

412

So, its been a few days, I thought I would post where I’m at with some trades. I have to say, it isn’t where I thought I would be…

Lets tackle the Yen first (I’ll do the others in another post); I was basically short the Yen…

I had originally gone long on the AUDJPY. The market moved up so I moved my stop up, and opened a 2nd position. The Yen then strengthend and hit my stop, the result was one b/e and 1 loss. There was some discussion about whether this might have been a change in the trend. Well, it doesn’t look to be the case, I think it was just a matter of me bringing up my stop too close (and been too eager to add to the position). The JPY in principle has continued to weaken…

Now, the current AUDJPY 4H chart shows two peaks. Price has broken above the highest and the projection looks pretty good. So, I have gone long again.

http://www.upl.co/uploads/AUDJPY.png

The GBPJPY was very similar, I had moved my stop up and added to the position. The stop almost got hit, it was missed by 0.5 of a pip. On a 130 pip move, to be kept in the trade by 0.5 pip was, well, a surprise to say the least.
So with GBPJPY I am still in with two positions, both currently in profit (one only just). If I only had one position, I think I would be looking to enter again anyway as the previous highs are being broken and again, the projection looks good.

http://www.upl.co/uploads/GBPJPY.png

EURJPY is not quite the same. I entered a few days ago (9th Feb) when a breakout over the previous highs had taken place. The projection at the time looked great. However, I had a very wide stop (because the swing low was a long way off). EURJPY has been in a channel since then. It was up a little, but within the last few hours it has had a big drop. Anyway, the stop is a long way off and IF there is a general weakening of the Yen, then this should be ok, like the others…

http://www.upl.co/uploads/EURJPY.png

413

Now, the SP500 is again quite similar. I have been long since 3rd Feb. My stop just held it in play.

http://www.upl.co/uploads/SP500.png

SP500 is breaking new highs again. It has passed the previous peak of 1355 and I was thinking of going long again. The projection looks good. Within the last few hours we have just come off the highs, so this might be a little retracement of the relentless march onwards.

Think I’ll go long at about 1360. The stop…hmmmm… Thinking of bringing it up a little, maybe to just below that spike from yesterday, however, I brought my stop up too tight last time, so I’ll probably just leave it where it is for now.

414

Jedster,

So at this point what are your views on Adam & the second reflection indicator. I will reserve my views until next Tuesday.
I will say they are still mixed somewhat, but I think it is just me.

I don’t follow the S&P, but when it closes today send me the close price & I will fire back to you some projections for the next few days. These are not to be used to trade, but they can be accurate most times. Just mix the projections in with Adam & the second reflection & see what it looks like. I do trade using these projections & you could to especially if they will match up to Adam & the second reflections. Are you live with Adam?

415

My thoughts are that it is sound in principle. It is basically just saying, when there is a trend and it makes new highs, BUY. (and SELL for new lows). And don’t be put off with thoughts like “it is really high, it can’t possibly go any higher”.

Well, I’m definitely not live. I wouldn’t trade live until I had lots of practise, know it inside out and was confident in what I was doing. Not just with this, but with any system. I would want to know the strengths and weakness. I would want to know when to use it (and when not to), etc. I’ve only just started with Adam a couple of weeks ago, so, long way to go yet…

416

Jedster,

That is my approach to all things ref trading as well. The how & the why. If you want the projections for S&P, just post the close price & time. If you don’t see any relevance no problem.

417

Do you mean the close from a particular candle on my chart, or the officialend of day price for the S&P 500 ?

418

Listen up gentlemen (not sure if we’ve got any ladies on this thread).

For all you S&P traders here: I hope you’re not getting TOO side-tracked with Adam Theory and missing other stellar trades. I don’t want to be responsible for that.

See this: Technical Trading Systems at TechTraderCentral - Trading - CFDs on Indices - TTC (dpaterso)

Regards,

Dale.

419

Jedster,

Offical EOD price & the time. What I send will be projected for 24 hrs.

420

Well, the close from my broker was 1341.8 and it looks like the official close was 1343.23

421

Jedster,

Send the info for the close of the next date (Thursday).

422

Jedster,

Using 1343 as the close this is the projections for the next 24 yrs (Thursday until market close).

High - 1358. Low - 1322. Range = 36.

Let me know the actual results at the close & any relevance to Adam.

423

Hi Ace,

I’ve just re-read your numbers (I didn’t really pay attention first time) and unfortunately I think this is not going to be an accurate prediction. Shame though, it would have been nice to see.

Volatility for the S&P right now is very low, about 1/4 of what it was 6 months ago. ADR for the SP500 right now is about 10 or 15. Yesterday had a pretty big move and was about 20, so the chances of it moving more than double the ADR is quite low.

Of course there might be some major incident that causes a big range this afternoon…

424

Hi Dale / Jedster / Ace,

since you have checked out Adam on both currencies and the S&P, what are your thoughts on Adam so far?
Does Adam work better with currencies, or are the S&P predictions more accurate?

O.

425

I personally think it is equally applicable with all, but it is a little too early to say whether projections on one or the other are more or less accurate.

From a trade point of view, I also think it is too early as I haven’t had enough trades. I am mainly trading off the 4H chart. I have only had one trade on the S&P which was taken on 3rd Feb, nothing on Gold, and a handful on some currencies. Of those trades, and as mentioned in some posts, I think they only stopped out becuase my stop was too tight.

So, in a couple of months time, when I’ve got maybe 5-6 trades on each, then I would hope to be in a position to say how well one has performed towards the other, and whether it works or not. If I am in profit then I would say it works, and if not, then I would say “it might work, but it is not for me”.

However, I do think the only way to do this is to dive in. It is a methodology, rather than just “a strategy”, so you have to think, and look, in a particular way, with a particular mindset. The only way to do that is to open an account (demo of course) and trade that account with nothing but Adam. Then after a while, you have the results there to analyse.

The hard part is, to trade with just the Adam method, without other thoughts or strategies creeping in and affecting the decision. The way I do that is, when I decide to take a trade (or not), I literally ask myself, “are these decisions based upon Adam”. I have a couple of pages printed out and I keep them to hand on my desk. I can then look and remind my self if I am following the rules or not. If I am influencing my decision with any other factor, then I have to go through it again and take a new look…

426

Jedster,

I may have made a mistake, but am unable to verify now as I am away from the office, but 29-36 should be the ADR until market close. Will be back in office after 1:300pm est today & recheck the projection.