Trading Systems in 'New Concepts In Technical Trading Systems' by J. Welles Wilder

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182

Dale,
Thanks for the reply.

I’m not over trading but what I meant was if you had to update the worksheets for whichever system or systems that you’re using on an hourly or 4 hourly basis, I think it would be a hell of a lot of work would it not?

I am just filling in some worksheets manually just now. How does your coding work and could I use it? I have a demo at GCI and Delta (I’m still struggling how to use that platform).

I will send you an email regarding the spreadsheets as I am sure they would help me to save some time. I’m going to stick to daily’s for now.

Thanks again
Boca

183

Good (Sunday) Morning Boca!!!

Glad to see Im not THE ONLY ONE doing some work (‘nudge nudge wink wink’)!!!

Daily vs shorter timeframes:

Well at both brokers (GCI and Deltastock) it’s a breeze really (with or without my ‘Wilder Indicators’ although OBVIOUSLY it’s quicker not using Excel but I would not say ‘dramatically’ so i.e. it’s ‘manageable’). At both brokers (and I have to say GCI is the ‘better’ here) you just use the ‘Export Chart Data’ function and if your Excel spreadsheet is set up as such it just reads the data file and plots the ASI. The only thing YOU have to do is manually calculate the TISAR and tell Excel what the last HSP and LSP was (there is no way of doing this automatically but it probably takes about 30 seconds to do). The reason GCI’s export is ‘nicer’ than Delta’s is purely because GCI outputs the data from ‘earliest to latest’ whereas Delta outputs the data from ‘latest to earliest’ which is difficult to manipulate. Having said that just remember that once you have the Excel spreadsheets set up it’s only the last period of data that you need to input into the spreadsheet i.e. the previous data does not and should not change. As far as ‘helping you’ with the indicators is concerned my offer was that whoever opened accounts at either of these brokers and specified me as the IB would get all my ‘stuff’ in return for doing this.

By the way: I’ve spent a good deal of time this weekend trying to fathom out WHY this last week was ‘not so great’. The main reason was that there were three stop and reverse orders that got executed because of news data but this has not happened before AND THEN IT DAWNED ON ME!!! Four hour charts i.e. not daily as I have always used up until now!!! ‘News spikes’!!! Had it NOT been for these things I probably would have ended up well over 28% up on the months starting capital!!! Solution: either back to the daily charts OR follow that ‘close all positions before a major news data release’ rule!!! I have not decided on which course of action to take at this point yet. A part of me says that it’s probably OK to close all positions just before a major news data release because signals to open new entry points are ‘a dime a dozen’ with the SI System. Another part of me says to go back to the daily charts because opening and closing positions without letting them ‘run their course’ is ‘breaking the SI System rules’ as it were.

Delta’s platform:

The Delta platform DOES take some getting used to BUT it’s worth it in the end I assure you. Although I personally ‘like’ GCI’s platform a while lot more there is no question that Delta’s platform, and in particular their charting software and script language, is FAR superior. If you need help on the platform I’m only ‘a question away you know’!!!

I just realised that I DO have your email address (I keep forgetting that some of you have sent me emails to my Windows Live email address when I was having ‘financial woes’). I’ll get in touch with you after submitting this post.

184

By the way:

After replying to Boca above I just remembered something important (which I’m sure I’ve mentioned before but just in case I have not):

Delta’s platform DOES come WITH an (the) ASI indicator. THE FORMULA IS WRONG!!! DO NOT USE IT!!! Those of you who have ‘the book’ will have no problem in seeing the error and correcting it. The incorrect formula does not APPEAR to change the way that the ASI is plotted BUT certainly DOES affect the value of the TISAR.

185

Folks:

If you’re interested:

I’ve been going through all my ‘stuff’ this morning getting ready for the week and ‘I gotta tell ya’ it looks like it’s back to the daily charts for me (for forex pairs anyway that is). For this week anyway (as a test)!!! While it MAY seem that you miss intraday movements on the daily timeframe AGAIN you are susceptible to ‘news spikes’ and this past week these cost me dearly not to mention the fact that I have noticed that there were many stop and reverse signals on the four hour timeframes that were NOT stop and reverse signals on the daily timeframes. Now that I have my CORRECT money management rules in place I reckon this is the way to go for me at the moment anyway (and I MAY even get some decent sleep as a ‘bonus’)!!! I’m NOT sure that I’m ready to use the VS on the daily timeframes yet so I’m going to go with Gold (and Silver) on the four hour timeframes and see what happens. The VS is NOT susceptible to ‘new spikes’ because of it’s design so ‘news spikes’ should be of little or no consequence.

186

Dale,

First of all, thanks again for all the emails you sent me. Lots of reading, studying and playing around with trading platforms for me over the days ahead.

I got to say that I’m firmly in the daily TF camp. Everybody has their own ideas of this and one hat doesn’t fit alll, but analyzing the daily TF gives me the time to do my updating and analysis etc. Maybe one day, when I’m a full time trader and i can quit my day job:D , I’ll have the time for shorter timeframes, but until that time it’s dailys for me.

over and out for now.

187

Hi Dale… ready for the week to begin? I know I am. I’ve decided to keep using the TBP with gold, I’ve had pretty good results so far and I may add a forex pair to the mix as well, maybe eur/jpy, which I had pretty good results with in the past. As for the VS, I’m going to keep following my open trades and see what happens, I don’t want to give up that easily. Aud/jpy is now only up about 170 pips after being as high as +700 pips, and it is pretty close to the sar point. Gbp/jpy is showing signs of improving as it is only down about 80 pips now, after ending last week 250 pips down.

I really want to try out the VS on the 4 hr charts, do you know if there is any kind of function in metatrader that would export data to an excel sheet or something? If there was a way to get data to the spreadsheets faster, or somehow program the VS into metatrader it would be perfect, but I don’t have the knowledge for that. One thing I was thinking though, is if the VS sar points coincide with any kind of moving average crossover or something. For example, if a VS sar point usually occurs sometime soon after a certain moving average crossover or another indicator, then I could just set up an automatic alert sent to my mobile phone through alertfx.com and it should work… let me know what you think.

I’ve decided to wait a little bit on trading the SI live, just want to track it for a while and see how it goes. By the way, have you seen the ASI indicator for metatrader? I downloaded it and it seems to work, but I’m not sure about the calculation. Here’s a link if you wanted to take a look: Accumulative Swing Index - ASI - MQL4 Code Base I think someone brought it up earlier, but I wasn’t sure.

188

Yeeehaaa!!! (At least I think that’s how you spell it)!!!

Good morning everyone. Hope you all had a great weekend and I also hope that you (we ALL) have a good trading week!!!

Boca:

Daily or not??? That is the question!!! (‘Dalespeare’ get it? ‘Shalespeare’)!!!

Yes: it’s one of those things that everybody just has to ‘agree to disagree’!!! I DO know that the DAILY CLOSE is ALL IMPORTANT when it comes to instruments like the Dow and stocks and commodities but I’ve never been quite convinced that this applies to forex pairs. All the different timeframes have their benefits and drawbacks I suppose. It’s just a question of getting the best ‘ratio of benefits to drawbacks’ I reckon (well for forex pairs anyway).

Anyway: if I can help some more then give me a shout.

Nick:

I am glad to see that you VS trades are improving again (mainly because I am now long Gold on the four hour timeframe)!!! Let’s see what happens.

I do now that you can export data from MT4 i.e. ‘History Center’ and ‘Export’ (although I’ve never used it before so I could not tell you what the file layouts look like).

I can’t see any problem with your ‘logic’ of setting up a sort of ‘pseudo’ VS alert i.e. by using MA’s. Quite a clever idea.

Look: if the truth be told it sure looks like that at some point I’m going to have to ‘knuckle down’ and code all of this stuff into MT4 BECAUSE it is so popular. I just cannot tell you when or how long it’s going to take.

That MT4 ASI indicator that you posted is the one that I posted about a while ago. I checked the calculation back then (whenever it was) and (although I’m no ‘expert’ on MT4 scripting) it LOOKS right. What they (he) has done is make the ‘limit’ a variable (pretty much the same thing as my ‘PIPFACTOR’) and that again is to ‘compensate’ for the different price quotes from what I gather.

NOW: for some INTERESTING STUFF!!! (I think so anyway)!!!

I spent a good deal of time yesterday and last night having another look at the CSI. From what I can see: you CANNOT use the CSI to ‘evaluate’ forex pairs UNLESS the way their prices are quoted are the same. For example: ‘evaluating’ GBP/JPY, EUR/JPY, CHF/JPY, and USD/JPY is not a problem and likewise ‘evaluating’ EUR/USD, EUR/GBP, AUD/CHF, and NZD/USD (to mention but a few examples) is also not problem and SHOULD give you ‘useable’ CSI results. You CANNOT however just ‘lump’ all instruments together and expect the CSI to give you ‘useable’ results. If you do this: Gold WILL ALWAYS ‘come out on top’ followed always by the ???/JPY pairs, or Silver, or Oil, and then the ‘exotic’ pairs. Now I would find it a ‘long stretch’ to believe that Gold is ALWAYS the ‘top’ instrument to be trading. Why do I say this? Think about it logically (well my logic anyway): while Gold MAY have a high pip value when compared to a forex pair if it is not ‘moving’ i.e. has no directional movement then it’s ‘of use to no bugger’ and you’re wasting your time trading it. What I THINK I have found is this: ATR values are a ‘function’ of price whereas ADX and ADXR values are a ‘function’ of movement. In other words: you CAN compare the ADX / ADXR values for any and all instruments i.e. you CAN ‘lump’ them all together and get useable results BUT you CANNOT do the same with ATR (remember that the CSI is, amongst other things, a product of the ADXR and the ATR). I have created an Excel spreadsheet (attached). The instruments listed on the spreadsheet are the instruments that I got entry and / or TISAR signals from the SI System last night (daily timeframe). Take a look at the spreadsheet and ‘play around’ with sorting the instruments by the CSI and then the ADXR(14) and ADXR(7) (note it’s the ‘Average Directional Index Rating’ or ‘ADXR’ and NOT the ‘Average Directional Index’ or ‘ADX’ to which I’m referring). Compare the instruments in each case from ‘top down’ to the charts and you’ll find that sometimes EVEN ALTHOUGH an instrument has a very high CSI rating (when sorted by the CSI) ADX and ADXR are telling you that there is little or no directional movement. No movement: problem with any trend following system (like MOST of Wilder’s and other systems)!!! NOW try and sort by the ADXR(14) column and THEN see what you come up with!!! (I included a column for ADXR(7) as well because I figure that it will ‘react faster’). You’ll notice that all of the ADXR values sort of ‘fall into a comparable range’ i.e. you’re now comparing ‘like with like’ whereas all of the CSI values do NOT ‘fall into a comparable range’. Now in the book Wilder actually does give you two options i.e. either use the ADXR values or the CSI values to select instruments to trade. The difference being that the ADXR is indicative of directional movement whereas the CSI is indicative of directional movement AS WELL AS volatility. While this MAY be a fantastic concept it would appear that it cannot be applied to instruments ‘across the board’ i.e. the instruments CANNOT be ‘lumped’ together if you’re going to base your choices on the CSI values. It’s FINE if you’re comparing the CSI values for the Dow, Nasdaq, and S&P or for Soybeans, Corn, and Sugar but you CANNOT compare the CSI value of Platinum with the CSI value of GBP/AUD for example. You’ll notice on the spreadsheet that I even tried to include a ‘DIVISOR’ (loosely based on my ‘PIPFACTOR’ for the SI System) to give me a ‘CSI CORRECTED’ value for each instrument but EVEN THEN Gold WILL ALWAYS ‘come out tops’ and I doubt that this can always be the case for the reasons mentioned earlier. (Also note that for the CSI calculation on the spreadsheet I HAVE NOT included the margin requirement, the value per pip, or the commission, for the simple reason that with forex pairs these values are SO similar to each other for the purposes of the CSI calculation that the difference that they make to the resulting CSI values are negligable in my opinion).

(By the way: the instruments colored ‘light blue’ are ‘exotics’ and the instruments color ‘light orange’, or whatever the color is actually called, are commodities i.e. Gold, Silver (metals???), and Oil).

See what you all think!!!

csi vs adxr.zip (3.73 KB)

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By the way:

Referring to my post #172 (wherein I noted that I could not figure out WHY some points were ‘Significant High Swing Points’ or ‘Significant Low Swing Points’ while others were not designated as ‘Significant’):

Well I THINK I’ve ‘fathomed it out’. Right at the beginning of the book ‘the man’ says that a ‘SIGNIFICANT HIGH POINT’ is ‘the highest price reached while in a Long trade’ while a ‘SIGNIFICANT LOW POINT’ is ‘the lowest price reached while in a Short trade’ SO I’ve taken this to mean (as it relates to the SI System) that a ‘SIGNIFICANT HSP’ is the highest ASI value reached while in a Long trade and a ‘SIGNIFICANT LSP’ is the lowest ASI value reached while in a Short trade. Make sense???

Are ANY of you guys ACTUALLY READING THIS or am I just plain ‘dumb’ that I get ‘stuck’ with all of these questions???

190

To Mr J. Welles Wilder Jnr.:

Should you ever ‘stumble’ across this thread PLEASE feel free to register and ‘chime in’!!! I have NO doubt that if we are ‘on the wrong track’ with all of this that you would be able to ‘steer us in the right direction’ and such ‘steering’ would be MOST appreciated!!!

191

Good stuff Dale… I took a look at the spreadsheet and it makes sense. Now the only thing is, since the adxr values can change over time, maybe another way to look at it would be to take the adxr value each day for an instrument, and average it out over say, the last 6 months or a year. I’ve kind of done this in a simpler way on my charts by drawing a horizontal line at the 25.00 mark on my adx graph and just going back over the past year or so on different forex pairs to see which ones look like they are above 25.00 most often. Maybe you could use some sort of percentage formula, like “days above 25” or something like that.

Also, with regards to the VS, I’ve been thinking: on the daily charts at least, the VS seems to give good entry points, i.e. the trend has been established and should continue for some time, but with my experience (with aud/jpy at least) it seems to get you out too late. I’ve been looking at using a cross of the di- and di+ lines on an adx graph as exit points, and it seems to get you out much earlier, I am going to look into this a bit more. So in effect, the SAR point would only be used as an entry point, the di-/di+ cross as a possible exit, and then you could use the SAR point for re-entry. Let me know what you think… I have a few other ideas but it’s bedtime for me… school again tomorrow.

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Hello,

I suppose there are a lot of ways you could ‘play’ the VS to get an earlier exit. Once ‘in’ switch to a shorter timeframe??? Once ‘in’ instead of waiting for a CLOSE to signal a stop and reverse just put a stop at the current VS SAR??? One could EVEN use the SI Sytem for an entry (because that gets you in FAR FAR earlier than the the VS) and use the VS SAR for an exit??? Reduce the ‘constant’ for an entry but once ‘in’ increase the constant for an exit signal (or the other way around)??? I think ‘the sky COULD be the limit’ as far as creativity is concerned. As far as using +DI and -DI I’ve always found them to be very slow to react. HOWEVER: I HAVE found that by shortening the period the reaction time is faster (obviously) and seeing that you’re not looking at +DI and -DI ‘to trade’ as such i.e. only for an exit then you may have a very good point.

I don’t actually know what to suggest to be honest i.e. I’m ‘a bit scared’ to mess with any of these systems (other than with the ‘obvious’ like the ‘PIPFACTOR’ ‘thingy’) because we have no way of backtesting the results of our changes other than by following trades through historically on a chart and as we ALL know by now things ALWAYS ‘look good’ when you ‘backtest’ like that!!! It’s a good point you know: I mean I / we know when the book was published BUT HOW LONG did Wilder trade these systems before publising the book??? Now the answer to THAT question would either make us EXTREMELY nervous or EXTREMELY confident wouldn’t you say??? On the other hand I’ve traded / tested all the systems in the book at one point or another and although you MAY not be MAXIMISING profits they are profitable nevertheless and I have grown to trust them (OK - MOSTLY trust them)!!! All of his systems rely on the ‘stop and reverse principal’ as you know and by ‘design’ you will take losses. As I have said before: I have taken many losses with ALL of the systems since I’ve been trading them (mostly the SI System as you know) BUT I ALWAYS come out ‘up’ and that’s good enough for me. What I find now (I may have mentioned this in some other way, shape, or form previously) is that it has DEFINITELY become EASIER to take losses i.e. no more do I hold on to a position that’s in a loss i.e. if it’s going to hit the stop and reverse and a loss is going to be realised I am able (now) to ALMOST ‘accept the loss with pride’ if that makes any sense to you at all. It’s because I KNOW that ‘at the end of the day’ another (SI System???) trade will cover the loss and add some profit to my capital. Does it take longer to attain ‘financial freedom’ (I actually LOATHE that expression) using Wilder’s systems (as opposed to trading with candlesticks)??? Probably??? Maybe??? BUT I can ASSURE you that you will NOT wipe out an account with these systems and his money mangement rules and if it DOES take longer then so be it. It’s better than living with the ‘regret’ of losing thousands of USD because you THOUGHT you had a system that would make $$$ FAR quicker!!! I (obviously) ‘scour’ this site and ‘that other forex site’ looking at various ‘ideas’ and ‘systems’ that other people have come up with (ESPECIALLY when I’m trading the daily timeframes because I get so bored I could CRY) and I see these ‘make 10 000 - 500 000 pips per day’ ‘systems’ all the time. THIS I believe is possible ON A GOOD DAY!!! But what I find ‘missing’ in the ‘system info’ is ‘WHAT HAPPENS ON A BAD DAY’??? At least with Wilder’s systems (up until now anyway) for me a ‘bad day’ is ‘break even’ NOT ‘the cold shivers’!!!

Edit:

Let me add this:

Let us ALL not forget my ‘Parabolic SAR fiasco’ of last year!!! I firmly believe that had I ‘stuck’ with Parabolic SAR from the day I started that thread up until today I would not have landed up where I did and have ‘every man and his dog’ after me for money now!!! I remember how EXCITED I was when I made my first couple of USD out of ‘pure Parabolic SAR’ but then, for no good reason, a ‘couple of USD’ was not good enough so I started ‘messing around’ and tried to ‘optimise’ the system and ‘played’ with ‘this and that’ until it got to the point where I lost sight of the fact that with ‘pure Parabolic SAR’ I made AT LEAST SOME USD i.e. it never ocurred to me until it was too late that none of my ‘tweaking’ and ‘optimising’ and ‘stuff’ was actually working and the the system in its ‘pure form’ was ACTUALLY the only thing that DID work and WOULD HAVE WORKED had I just ‘stuck to it’ to this day!!! (And strangely enough ‘pure Parabolic SAR’ is the ONE system in the book that I know CAN be backtested using MT4 and, the people that did this, although saying that there were indeed HUGE drawdowns, also discovered that there was ALWAYS a nice profit ‘at the end’).

Last edit to this post:

As I was reading this post to check for spelling and grammar mistakes it occurred to me JUST HOW PROFOUND my ‘signature’ (quote from ‘the book’) actually is!!!

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Fist off let me introduce myself. I�m 29 married with two boys. I�ve been a travel agent for about 2 months and have my own booking engine through ytb and have been studying forex for about 3 months. In the mean time I work mornings as a grunt while I wait on the above to take off. I love forex and study about 5-6 hours daily. I don�t do much cause everything I want to do requires money and free time. When I get money I�ll get back into boxing, hunting, collecting more guns, try golfing, travel a ton, and scuba dive. Last year I became debt free thanks to Dave Ramsey�s �The Total Money Makeover� and Rober Kyosaki�s �Rich Dad Poor Dad�, both of which I highly recommend for those that really want to become rich in this life. I made my first ever investment this year buying a decent amount of silver, I�m about break even with the huge drawdown. I�ve got several k to start in forex once I get the hang of things and feel confident about my system.
I just finished your Parabolic SAR-that�s all! thread and this one. It�s been a HUGE inspiration to me. Dale, more people than you realize are rooting for your success. So many times during the thread I just wish I coulda gone back in time to warn you about the risks you were taking. It�s so easy to see clearly when you�re not the one in the situation. Since readying I find myself doing the same damn thing though! I lose, want to get revenge on the market and start trading smaller and smaller time frames till I end up down to the 1 minute time frame and have lost more, then get pissed and up the lot sizes. You know what happens from there. Since reading your threads at least I�m able to see that when I do it. I just stop what I�m doing close everything out and take the night off. Then come back with a clear head the next day. Its so easy to let your emotions get the best of you if you�re not careful.
I took your advice and got John Carters �Mastering The Trade� and J. Welles Wilders �New Concepts In Technical Trading Systems�. Now that I�ve finished your 222 page psar thread I can have more time to finish reading them! I�m working on the SI system calculations now. Still not getting how to get the SAR calculated. I�ll go over it a few more times. Hopefully that will become clear. I�m getting 22.8 for my SI value on Date 4. I�ve got n=1.30 , k=1 , r=.95. I saw that you said 15 was incorrect that the correct value was 24. Don�t see how you�re getting 24 though.
Glad to see things are going so good for you now, you deserve it. Thank you for everything your doing here Dale. I look forward to working with you and everyone else that�s been contributing to these systems. Looks promising. Here�s to many pips in our futures!

P.S. I youtubed Lacuna Coil, Nightwish, After Forever, and Within Temptation. I�ve now got Lacuna Coil and Nightwish and am going to get the other two sometime soon, :smiley: . Great music!

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Good Morning All (ESPECIALLY ‘randont’)!!!

randont:

To wake up and read a post like yours is something let me tell you. (I’ll tell you a secret: it ACTUALLY made me a bit emotional). I really do appreciate the very kind words and words of encouragement and the fact that in such a short post you managed to share a whole lot of things with everyone (the way I ‘waffle’ it probably would have taken me three PAGES to impart the same information)!!! Sometimes (when I read something like your post) I think to myself ‘well maybe I WON’T have my own building on Wall Street’ i.e. maybe these two threads THEMSELVES are my ‘contribution’ to this business and maybe my most worthwhile accomplishment in life. Who knows. I don’t maintain these threads for praise (or ‘strokes’) but I’m not gonna lie to you: it’s a good feeling when you get some!!! Thank you.

I’m pleased that you bought ‘the books’. I don’t think you’ll be dissapointed. I think I was just plain ‘lucky’ to have heard about and purchased these two ‘gems’ when I ‘started out’. They have both served me well (and still do). Of the two I’d say that John F. Carters has probably had the most ‘impact’ (strange as that may sound) i.e. although Wilder’s work is the ‘nitty gritty’ (and the sole reason I’m not ‘sweeping the streets’ for a living) I don’t think that I’d be doing anywhere NEAR as well EVEN WITH fantastic systems like Wilder’s without at least TRYING to understand the ‘human’ side of things and that’s where these two compliment each other (for me anyway).

Now for the ‘nitty gritty’:

I have no idea where you get the 22.8 SI value from. You don’t say whether or not you’re working this out ‘manually’ or with Excel or something like that. I’ve done both and I am 100% sure that 24 is the correct value (and I, like you and many others, also had many ‘variations’ at first). Most of the time (when I kept getting erroneous values) my mistakes were as a result of incorrectly identifying the maximum values for ‘R’ (Column 10). Check them again. Feel free to send me an email ([email protected]) and I will send you my Excel spreadsheet for the ‘original’ calculation i.e. the Excel spreadsheet that I used as a ‘template’ which was ‘cross referenced’ to the book.

Anyway: ‘welcome to the club’!!! I CAN assure you of success with Wilder’s work (I’m gonna do something nice for that man one day)!!!

And by the way: thank you to everyone ELSE that contributes here. I must point out that yesterday I had a LONG ‘chat’ with ‘Bocajunior’ using Yahoo Messenger. He has come up with something regarding the CSI values that I think I may have ‘missed’. I am waiting for him to post his findings here so that we can all ‘dive in’ and sort this CSI ‘thing’ out once and for all. The point I’m trying to ‘reiterate’ here is that I am NOT always right in my thinking and it’s BECAUSE of sites and threads like this and the communities that are built up that will contribute to our success and not just me alone.

(Oh, and ‘randont’: I SINCERELY hope you bought some of the ‘old’ Nightwish stuff i.e. Nightwish with my beloved Tarja and NOT the new Nightwish with that ‘washed out old grandmother’ that they now have as a front lady)!!! And I ALSO hope that you don’t waste the opportunities that ‘come your way’ by virtue of where you live i.e. go and see as many concerts as you can (I know for sure that Evanescence has played in Vegas and I THINK the ‘new’ Nightwish (unfortuanately) has been there as well recently)!!! When I’m ‘outta the sh*t’, before I buy or erect my Wall Street ‘monument to self’, and before I buy my ‘Alaskan Crab Boat’, I’m gonna spend AT LEAST a year going to EVERY SINGLE CONCERT that these bands put on!!! (And I’ll be sure to let you make all my travel arrangements)!!!

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Randont,

Hello there and welcome to the forum. Very nice post. I also have the two books you mentioned, in fact I just bought “Mastering The Trade” yesterday as Dale and thoroughly recommeded it, so I’m looking forward to reading it.

Hope to see you on here, and happy trading to you.
Best Regards
Boca

196

Morning all, Morning Dale.

A very informative chat we had yesterday on Yahoo. Great!:slight_smile:

Ok, lets take a look at the CSI and here are my thoughts on it.

First of all, the section within the bracket of the calculation, or “K” as described by Wilder. I noticed that when I calculate this for mini lots on FOREX pairs I was coming up with the same sort of number ranging from 0.035-0.051 for all pairs. So I believe, to shorten the calcutaltions for calculating the CSI we could just use a mid range value of about 0.045 for K for all pairs to give us a “good enough” CSI. This is an option that can be used if desired. If not, we can use the correct K value.

I have all the K values available for all the pairs and I will post them here for reference. These should all be good enough to help us calculate the CSI.

USD/CHF K = 0.045
EUR/USD K = 0.037
GBP/USD K = 0.036
USD/JPY K = 0.045
USD/CAD K = 0.045
GBP/JPY K = 0.031
EUR/GBP K = 0.047
EUR/CHF K = 0.036
EUR/JPY K = 0.036
GBP/CHF K = 0.032
EUR/AUD K = 0.034
AUD/USD K = 0.047
AUD/JPY K = 0.046
AUD/NZD K = 0.038
CAD/JPY K = 0.045
CHF/JPY K = 0.045
EUR/CAD K = 0.036
NZD/USD K = 0.051

197

Ok, now lets look at a CSI calculation.

CSI = ADXR x ATR (14) x K. We all agree on that dont we.

So, here’s an example for EUR/USD
CSI = 44.4 x 145 x 0.37 = 240.6

Ok, now if everybody has being paying attention we can see that the ATR for EUR/USD is actually 0.0145 so to use it for the calculation we need to multiply this by the pipfactor of 10,000 to get 145.

This seems to ring true for all currencies quoted x.xxxx.

Another example here for AUD/USD
CSI = 17.3 x 108 x 0.47 = 88.6.

Again, the ATR is actually 0.0108 but we multiply this by 10,000 to get our usable ATR for the CSI calculation.

198

Ok, if you are all still awake, what about pairs such as GBP/JPY and USD/JPY? Lets take a look.

GBP/JPY
CSI = ADXR x ATR(14) x K
= 27 x 297 x 0.32 = 255.

Now, ATR is actually 2.97 whcih is 297 pips so we need to multiply the ATR by 100 for us to be able to use it.

What about USD/JPY?
CSI = 33.1 x 137 x 0.046 = 208

Again, the ATR is 1.37 but we multiply this by our pip factor of 100 to get 137to use in the CSI equation.

So for pairs quoted xxx.xx we have to multiply the ATR x pipfactor of 100 for us to use it.

199

Ok, if you are all still awake,

LOL!!!

Thanks Boca.

Just so that I’m clear on one thing here:

You’re saying this (I need to know):

If a pair is quoted as x.xxxx then your ‘CSI PIPFACTOR’ is 10000 i.e. the number of zeros is the same as the number of decimals in the quoted price. If the pair is quoted as x.xx then your ‘CSI PIPFACTOR’ is 100 i.e. the number of zeros is the same as the number of decimals in the quoted price. AND if you DO NOT have any decimals then there is no ‘CSI PIPFACTOR’ or should I say the ‘CSI PIPFACTOR’ will be ‘1’. How am I doing here???

200

BUT hold on there:

I just thought of something:

Let’s say that we were calculating the CSI values for commodities. Then what?

What I’m saying is this:

Soybeans is ALSO quoted as xxxx.xx and Coffee is quoted as xxx.xx i.e. two decimal places i.e. same as GBP/JPY. I’m pretty sure that in THIS instance you would NOT HAVE to use a ‘CSI PIPFACTOR’!!!

I suppose what I’m trying to figure out is WHY there should be a difference between a forex pair and a commodity IF the prices are quoted in the same format!!!

Edit:

Could it not be that two decimal places is supposed to be our ‘benchmark’ i.e. everything must be brought in line to two decimal places so that the price / ATR is in the same ‘format’ as the prices quoted for commodities???

I don’t have the answer i.e. just ‘throwing some ideas’ into the ‘pot’.

201

That seems to be the case Dale form the currencies tested which are the majors etc. Exotic ones such as CNY and NOK, well I have not tried them out yet.

The other ones that need more work are Gold and Silver… Lets take a look at them in the next posts…