Jedster,
What was the close on S&P? The projections I sent were the correct ones. What has happen to the hugh swings seen in the past on S&P? Just curious as to what was the actual close.
Open 1342.61
High 1359.02
Low 1341.22
Close 1358.04
So the high target was accurate, well, almost exactly spot on, so well done. The Low target wasnāt close though.
Jedster,
Ok that high was close. The way I arrive at these projections seems to produce better results in the currency market for some reason. Next week I will load up an S&P chart & do more projections to see what happens.
Hi all!
Just my first post here. 
One thing often people miss about Adam Method is that it needs one thing to work:
[I][U]You must detect a trend - the market must be moving already.[/U][/I]
This simple point I think is the most difficult to determine. If you can successfully detect a trend with some strength any trend follower system will do the job (Adam included).
Apart from that, making geometric projections is somewhat archaic. I think the core of Adam theory has been improved by Jim Sloman with his Natural Market Mirror explained in the book āOcean Theoryā.
There is also good information in Adamās book, and I think is a āmustā read. I like the part of visualization, will help you with managing emotions.
Have fun!
Hi There. Yes Adam is clearly trend following. The difference is, other trend following systems try to quantify the strength of a trend, guess the tops and bottoms, wait for retracements, etc. Adam just really simplifies it which means, you can easily recognise a trend if applying the ārulesā. Clue 1 in the book is the biggest rule, and is a major contribution to what defines that the trend is continuing.
Iām not familiar with that so Iāll take a look. Yes, agreed it is archaic, but, the book was written in 1978. And, if it works, why fix it. For me, the projection simply helps visualise where the trend could take you and is only there to help you decide whether to take the trade or not.
Definitely. As Dale said previously, the 10 rules are worth the price of the book alone. They really are fundamental rules to trading and are worth following with any systemā¦
Wow, so itās been nearly a month since posting on this threadā¦everyone must be busyā¦
So I was about to post a status of my Adam trades and I looked back on the thread history and I see all my links (to upl.co) of graphs and trades are broken! So I contacted them and (eventually) found out that they had a raid array crash and lost the last 3 months worth of uploads!!!
So, apologies if all the previous post now contain no valid graphs or anything, it is really annoying because I was also using this thread to record my own activities! Needless to say, I now need to find somewhere else to upload images! I seem to remember someone mentioning imgur.com, so Iāll take a look at them nowā¦
<rant>
Further as an IT professional, I have to say how disappointed I am to find in todays day and age, a company providing an IT related service with a totally inappropriate backup regime/routine. Fundamentally all they had was a disk crash, one of the most common problems since hard disks were invented, but didnāt have adequate processes in place to ensure data was not lost. Very poorā¦
</rant>
Rightā¦where was I with Adamā¦
hi guys,
This is my first post at babypips.
I had a query regarding the swing index system developed by mr welles wilder.
Is there a specific limit move for stock and commodities future or the setting has to be kept as 3.
with 3 as the setting, i get tooo many trades though overall they are profitableā¦but the point is that maybe i am making a blunder by not choosing the correct limit move.
Hi.
Well you cannot be trading the Swing Index System āproperā if youāre using a limit move of 3 āacross the boardā i.e. for any and all stocks and commodities (or any other instruments for that matter). The reason: youāre either NOT using the Trailing INDEX SAR (in which case youāre losing a lot of profit on trades) OR you should be getting youāre ar*e whipsawed off.
To answer your question though: there are different limit moves in place for different commodities and stocks. Whatās more: with stocks and the major indices the limit moves or ācircuit breakersā are different now i.e. they work on a different basis than they did in 1978.
Only thing I can tell you is this: no matter WHAT youāre doing and how wrong or how right youāre trading the system and youāre profitable overall then DO NOT MESS WITH IT!!! OK: so maybe youāre not trading it to its full potential. Trust me when I say: youāre in the minority if youāre profitable overall. Be happy!!!
Regards,
Dale.
Thatās a good response. Very true, if it aināt broken, donāt fix itā¦
So, I just thought I should finally get around to posting where I am with my Adam trades.
Here is the state of my trades:
,
Note bad!!! Donāt forget, this is taken from a spreadbet account so the trades are Ā£1 per pip, so 970 is 970pips as well as Ā£970 (except for the EURJPY which was opened at Ā£0.7 per pip).
Now I need to equate this with how the other trades have got on. Initially, I had quite a lot of trades, I think there were 10 or so.
As I look in my trade history my previous trades were:
Long AUDUSD -245
Long GBPUSD -86.20, -198
Long SP500 +110
Long Dow -69
Long AUDJPY -71.20
Short USDCAD -180
Long NZDUSD -112.97
Long EURUSD -180
GBPUSD stopped out for -86.20 This was taken off the hourly chart and the stop was tighter. The projection at the time was good, but it would have needed a stop set over 250 pips away (as I look at my 4H chart now).
AUDJPY had 2 trades, one hit b/e and the other -71.20. These trades were documented in an earlier post.
AUDUSD got stopped out for Ā£-245 (-122.5 pips), but note that I recently took a new AUDUSD short position
NZDUSD got stopped out for -112.97. This looks like it was a good (ish) trade and the stop was just a spot too tight. NZDUSD has been in a range and had the stop had an extra 20 pips room it would have still been in the trade
Dow stopped for -69. Way too tight stop. Would have still been in had the stop been set corectly at about 100pips below entry. It would have been sitting at about +400ā¦
EURUSD stopped out for Ā£-180. Disappointed about this trade. The projection looked good. I guess there was too much vol in the EUR and should have stayed away from the EURUSD.
USDCAD stopped out for -180. I took this trade too early (it was kind of a countertrend break). I needed to wait for another 20 pips so it broke into new lows. This trade appeared to be setting itself up again, although this time I waited for the correct entry, rather than anticipating itā¦ The trade was never entered and waiting was the correct thing to do ā¦
short GBPUSD -198 This is similar to the USDCAD, I entered just a tiny bit too early as new lows were just being made, rather than waiting for them to form properly.
SP500 +110. I moved the stop up to secure in some profit! I should have had the confidence to (ignore Dale) and leave this trade running according to the rules as it would have bee about +700 by now. Who said the dow and S&P couldnāt go higherā¦! 
So that is a total of -Ā£1032.37 that has been realised.
Offset that with my current open positions which are about +2700 gives a net of about +1600 so far, since Beginning of Feb. +1600 pips in 2 monthsā¦Iād take that
Now obviously there are a few things to say here. These are open trades so the profit is not realised yet. Also, they are mostly short Yen. That is no co-incidence as Adam is deninitely a trend following system and the yen has been weakening for a couple of months now.
My early trades that lost, did so because I had my stops too tight, so I have learnt from this. This is the most important point that I have picked up I think, smaller position sizes and large stops. Unfortunately, this means that my current stops are quite wide, so if hit, my current nearly +3000 profit would likely be realised at only about +1500.
This leaves me with the decision of, should I be closing the trades to realise some profit and then re-enter if the signals are good, or should I leave the trade running for a long time. Still not sure about that yet.
However Adam definitely has value and I will continue to trade/monitor it (on demo of course) over the coming weeks.
hey thanks Dale
I understand what you mean but my query is basically regarding stocks(even currencies) that donot have a limit moveā¦
- should i set a limit too high but that spoils ASI trailing SARā¦
- If i set a limit too low as 3 which is absurd to be honest then the asi moves 100 points on every move.(this in turn disturbs the whole concept of the swing index system).
- Should i set the limit as a percentage of priceā¦say for example a 15% moveā¦so basically what should be the limit move that doesnot spoil the ASI.
Regards
Amar
Amar,
To be honest, there is no right answer. There is only an answer that is accebtable to you, given your trading circumstances. That isnāt meant to sound obtuse, but it really is the case. Welles Wilder came up with the swing index when limit moves were an (almost) everyday occurance. As Dale said, limit moves wok differently now, so you have to decide how to interpret this part of the equation and how to apply it to your trading. There are a bunch of things you could do:
- You could ignore it, but limit moves are an integral part of this equation and it means you will never have 100.
- You could leave it at 3 (or what ever), but as you said you will get 100 almost all the time.
- You could set it as a percentage, but you have to determine what is an appropriate percentage to use.
- You could look at your instrument, determine what constitutes a ālimitā move in todays modern times and use that as a value.
5)You could set it at a very high value so it is taken out of the equation, but you would then have to re-scale the result in some way because as you said, the SAR becomes invalid.
Each option has its own advantages and disadvantages. However, what it really comes down to is how you are applying this strategy to your trading. You havenāt said which instruments you are trading, or how you are using the ASI, so at this stage both Dale and I are guessing at what you might be doing. What Dale said is spot on though, if you are using it now in a particular way, and it is working to some extent, then carry on as you are.
Also, perhaps start a new thread to discuss that particular point? This thread is really intended for the Adam theory of markets and while it sometimes gets a bit off topic, you donāt really want to have an indepth discussion about technicalities of the ASI on an Adam thread, unless of course, you can pull it all back to Adam theory to tie it all in nicelyā¦
Looks like this is starting to be a monthly update, I know this can be quite a slow moving strategyā¦
So earlier in April, several of my longest running trades finally closed out. The results were:
GBPJPY Ā£735
GBPJPY Ā£661 (I had 2 positions in the GBPJPY)
EURJPY Ā£387
AUDJPY Ā£0.00
These trades had been open since early Feb, so about 2 months.
I have mixed views about the results. Donāt get me wrong, I am not disappointed. Well, maybe I am a little disappointed, I shall try to explain. The āflawā in this strategy (if I can call it that) is that if you leave it to run exactly as described in the book, then you end up giving away between 25%-40% of your profit when the trend finally turns. At one point these trades were sitting at an unrealised profit of not far short of Ā£3000. They ended up closing for a total of about Ā£1800.
However, if you try to tweak it, and bring up the stop tighter so that you get out earlier (with supposedly more profit), then it never lets you catch the run in the first place and you end up being stopped out for a loss or at best, break even.
If I offset this profit with all my losses earlier in the year (when I was learning/trialing this strategy) I am net about +Ā£200 overall. Ā£200 is clearly nothing to write home about, however the losses came about while I was trying to learn the system, and I had my stops much tighter. The winning trades came about when I left it exactly as described in the book and I havenāt had a loss since 17th Feb!
Ok, lets turn my hat around and look at it from a different point of view. Each of these trades initially risked between 1% and 2.5% (depending on the exact position of the stop). After 2 months these trades have returned something like 30% profit. Had I followed the rules with my earlier GBPJPY, Dow and SP500 trades, I would be sitting at about +55% realised profit. That is a pretty amazing return for 2 months.
Obviously these sorts of returns are pretty amazing. They are the sorts of returns where people question whether it is actually true or not. Surely it canāt be returning that amount in that short period of time? Well, I think these posts bare out the truth. The rules in the book absolutely work, IF you follow them correctly. If you donāt, it doesnāt. Simple as thatā¦
It is not quick by any means, but it clearly works, you just have to have patience and trust that it will come through in the long run. Whether you believe the rhetoric in the book about Wells Wilder and Jim Sloman (personally, I do, and I think it adds to the character of both the strategy and the men behind it), the theory works. What did Jesse Livermore sayā¦āIt never was my thinking that made the big money, it was always my sittingā. Well, that is absolutely trueā¦as can be seen when trading the Markets according to the theory of Adam.
So where am I now. I have one position remaining, a short AUDUSD. It is currently +177 pips (and Ā£) in profit, however, the financing costs are steadily eating up the profit, so actually it is net only +Ā£127. This does make an interesting point. Since they are long running strategies, the financing cost does need to be taken into consideration. Trading high differential interest rates (current examples obviously being the AUD or NZD against the yen) will incur costs if you trade against them. Obviously it can work for you being a carry trade as well, but the point is, it needs to be taken into consideration.
Itās fair to say I havenāt been actively monitoring my Adam charts as often as I was back in Feb. As a result, when I look at them now, I appear to have missed quite a few entries. However, with that in mind I look at my charts now and this is what I think:
The AUDUSD position I am looking to enter again, should the price break below about 1.02. The projection alread looks quite good, by then I think it should be better.
The Dow could go either way. possible entries would be to go long at about 13050 and short at about 12680. Will have to see what the projection looks like closer to the time.
The GBPUSD - Iām annoyed I missed the entry for this one which would have been about 1.6070 (ish), however, there is a new entry forming at about 1.6150, so hopefully I will go long there.
NZDUSD could be looking to go short at about 0.8050 by the end of the month.
AUDNZD - I missed the entry short here which was at 1.2750 on the 27th March. The projection is not showing such a good entry right now, so might have to leave this one and see what happensā¦
GBPCHF - once again, missed a good long entry at 1.4650 on the 18th April. However projection is still good, so need to jump on that train with this one I thinkā¦
EURGBP - again, missed the entry here to go short at 0.8270 on about the 4th April. Projection is still good though, so I think I will entry very soon.
So thatās about it. Previously all the trades were on a demo account, however, after a few months of demo trading this, I think it warrants some live trades so I think I might actually now go LIVE with some of these. Clearly the strategy works in the long term so there is no reason not to. When to go in, well, the book just says to jump on that train, so here we goā¦ I need to work out what the transaction cost is likely to be and decide which trades to take. Iāll post more as and when I take the entriesā¦
Hey everyone and Jedster.
Jedster:
Thanks so much for your input on both the Swing Index System (the Limit Moves) as well as for posting your Adam Theory trades and keeping this thread alive. Iāve been rather busy what with working on setting up Deltastockās Branch Office here and all so Iāve not been posting much anywhere of late but I do try to at least keep up to date.
My opinion for what itās worth: those profits are not bad AT ALL if you ask me. We know (knew) that Adam Theory WILL give back a lot of profit but the same could also be said for most of Wilderās trading systems to be honest. Alright: the Swing Index System would give back far less BUT itās the potential whipsaws that may result in your making the same profit with both systems overall. Not sure. But it sure looks like youāve ānailedā Adam Theory!!! Well done!!! Thereās still plenty of ālifeā in Wilderās theories and systems for sure!!!
Regards,
Dale.
Hello Jedster,
is there any way to try out the ADAMS indicator which you have written?
best regards.
-guandi
Hi Dale,
Yes, itās a while since we spoke, not since we were talking about the ASI. It would be could to pick that up again, not sure where the best place is to have some chat about the ASIā¦?
Yes, as I was reflecting on this strategy after making that post, I can see how the profits from this are pretty good. Had I been trading it by keeping to a strict 2% (some of the trades risked less, some a little more), and perhaps trading it on some markets that complement each other, rather than just on the JPY crosses, I am sure that the profit would be quite consistent.
I was tempted to try it out on the USDZAR as there could be some serious profits there and I donāt think the spread would be a factor given the length of the trade. Would definitely have to make sure it was a short trade though, otherwise the financing charges would be crippling. That said, with the financing working for you, if the trade was open for 6-8 weeks, it could be an absolute cracker of a tradeā¦
Yes, definitely plenty of life in the theoriesā¦
Hi,
I am happy to share that indicator with people that are serious about this methodology. However, as was mentioned in some of the earlier posts, the application of Adam requires analysis and understanding of the ideas and methodology. There is nothing quick or easy about this, the indicator simply helps with that work. On itās own it wonāt do anything.
You will need to have read the book, at least once, but more than likely, two or three times. You need to have done a whole bunch of the 2nd reflections manually and started to understand what they are for/how they work. When to do them (and when not to do them). You will probably create a whole folder full of your projections (saved as .jpg or png, etc) for various different instruments with perhaps various different timescales. Post some of your own projections here and explain your analysis and/or conclusions, or ask some questions.
When you can show that you are putting in some effort into this methodology and are constructively contributing to the thread, that is the point that the indicator will become useful.
I took two more entries. I am long cable and short USDCAD.
Actual entries were 1.6165 for cable and 0.9813 for USDCAD.
I suspect that most people are probably playing the the USDCAD channel so would be buying at this point instead of selling, but, there has been a significant move down the last few days and we have just made a new low in USDCAD, the lowest since last September I think. Projection looks ok, not the best Iāve seen, but promising, so it could be a good opportunity, lets see what happens over the next couple of weeksā¦
Hello Jedster,
thank you for your reply and i understand what you mean.
Best regards.
-guandi
Hi Jedstar,
I have been trying to make my own Adam Theory Indicator with help from MQL5.com without success. To be honest am struggling with the coding and making it work. Is it possible to email me the indicator and how you apply it with you money management. I have been trying it for a while with success as long as i dont break the rules as set out in the book but am over drawing the charts by hand.
Cheers Texy
I am happy to share that indicator with people that are serious about this methodology. However, as was mentioned in some of the earlier posts, the application of Adam requires analysis and understanding of the ideas and methodology. There is nothing quick or easy about this, the indicator simply helps with that work. On itās own it wonāt do anything.
You will need to have read the book, at least once, but more than likely, two or three times. You need to have done a whole bunch of the 2nd reflections manually and started to understand what they are for/how they work. When to do them (and when not to do them). You will probably create a whole folder full of your projections (saved as .jpg or png, etc) for various different instruments with perhaps various different timescales. Post some of your own projections here and explain your analysis and/or conclusions, or ask some questions.
When you can show that you are putting in some effort into this methodology and are constructively contributing to the thread, that is the point that the indicator will become useful.[/QUOTE]
Well, its July now, so quite some time since my last post, however I do think it is worth posting an update. Apologies for the wordy natureā¦hard to summarise this sort of thingā¦
Firstly, and importantly I am now trading this live. I have done enough research and demo trading to know it does work, if you have the patience. In the book Welles Wilder originally described using the technique with commodities or equities, but it does also work with currencies. I want to explain how I go about trading currencies. How I do it is in principle, pretty much the same as described in the book, but how I get there is slightly different. Oh and also, I am no longer using the indicator and I am not making any form of 2nd reflection. I shall explain whyā¦
If you take the book at its word, Wells Wilder was saying that if you surrender to the markets and look at the chart, you simply trade in the direction of the major trend. When you look at a chart, you have to ignore all other factors that you might know (or think you know) about that instrument and simply look at the price. If the overall trend is down, then you sell, if the overall trend is up, you buy, and if it is neither up nor down, then you do nothing. The projection helps visualise what might happen, but, I personally have found it unnecessary. In many cases it was just wrong. Equally, if I adjust the start position by a few bars, I could get a projection that, over 20-30 bars was uncannily accurate. In the end though, I just found it unnecessary. It was detracting me and instead of concentrating on the existing chart, I was focusing more on the projection. Simply by looking at the chart it is pretty easy to see if the chart is trending or ranging, so that is what I do.
Here is an example. You donāt need to know the instrument, or the timeframe. Just looking at the chart and with no other information, what would you do, buy, sell, or do nothing?
(http://i.imgur.com/e59an.png)
The obvious answer to me is to sell. The trend is down, so we want to sell. Guess what happenedā¦
(http://i.imgur.com/tN7kf.png)
The market had fallen nearly 500 pips and it then went on and fell another 1200! So a short was definitely the right call. People often think, it has fallen 500 pips, it canāt possibly fall any more, but of course it often does. And that is why we need to jump on board that train!
This is the whole principle of Adam (I think), and that is all we need to do, however, commodities and equities are easy, forex is a bit different (I think), because all the different currencies are inter-related. So you need to establish which particular currency (not currency pair) is trending.
Basically, at the beginning of each week I spend a couple of hours to go through all the forex charts. I generally use the 4 Hour chart and it shows approximately 2-3 months worth of data. It is not precise size, just approximate. It is large enough to get a feel for what the market is doing and has been recently doing.
I then make a note, if I were to enter a trade right now, what would it be, Long, Short or nothing, and then move onto the next chart. By the end of the analysis, I have a list of currencies and I tot up the buy/sell counts for each one, giving me a total for each currency. I then know whether I should be going long or short on a particular currency. Note that this is per currency, not currency pair. So, for example, with the above chart the AUDJPY was clearly trending down, so I would have noted a short for AUD and long for JPY.
Now this is not a new technique, it has been described many times over. A good explanation can be found here (How to Create a āTrading Edgeā: Know the Strong and the Weak Currencies | DailyFX). The difference being, they use a MA to determine strength and I simply look at the chart and say up, down or neither.
By the end of the analysis, the totals simply confirm what would have already noticed in the charts, that one or two currencies are always strong or weak, and the others are simply ranging. It doesnāt matter which period you choose, go back months or years, there will always be a few trending currencies and the rest are just ranging.
So we now know which currencies we want to trade. As it stands right now, my analysis tells me to go long on AUD and NZD and short on EUR and perhaps also JPY.
The next point is to decide which pairs to trade. You might just think I take both the above currencies and trade them, so short EURAUD and long AUDJPY, for example. Well, that is pretty much it, however I want to spread my risk over several currency pairs. I donāt especially want to be exposed to just one other particular currency because if there is a change for that one currency, I will be affected. So, if I wanted to trade the AUD, I might place 2 or 3 AUD trades. How do I select what to cross with? Well, I go through my list of currencies and since I want to go long AUD, I find other currencies that have a downward bias.
I also want to consider what the financing charges are going to be. I am going to be holding these trades for several weeks, and I donāt want the financing to eat into my profits. This is only really important when trading high interest rate differentials, but it does help me in deciding which actual currencies to trade. I also look at the ADR. If the pair only moves 20 pips per day, that is no good.
I think this is very much at the heart of what Wells was trying to describe - to just look at the chart and trade what you see.
Based upon that technique, currently, I have 5 positions open:
Long NZDJPY
Short GBPNZD
Short EURNZD
Long AUDCAD
Short EURAUD
This fulfils my requirement to be long AUD and NZD and short EUR. All my trades have a high interest rate differential, so they are all also carry trades.
Position size is small. The stop was chosen as the most recent swing high (or low) and I was risking approximately 0.5% per trade, so my lot sizes are 0.3, 0.4, etc. This morning I checked, this is where they were sitting:
Long NZDJPY +223
Short GBPNZD +320
Short EURNZD +429
Long AUDCAD +89
Short EURAUD + 406
Thatās nearly 1500 pips in just under 3 weeks. Percentage wise, I am up about 7%. Ok, long way to go yet, these trades are likely to run for a few more weeks. Also, I know I am going to give back about 30%, as that is the nature of this strategy.
However, I also have in the back of my mind that since I am trading off the 4H chart, I am expecting my trades to last about 6 weeks (approximately). When it starts approaching that time I will seriously consider closing the trade and locking in my profit. I am looking for somewhere between 400-1000 pips per trade (depending on the vol).
Also, since we are trading the strength or weakness of each currency, if I do my analysis and it tells me that a currency is no longer a definite buy or sell, then that might also be time to close the trades and realise the profit.