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

Trading Systems Free Forex Trading Systems
41

Hi Tony, and thanks for that (I was actually hoping that you would see my post and comment).

As far as the trade in question is concerned it really was not an ‘overtrade’ i.e. the lot cost $50 which is nowhere even REMOTELY NEAR what my available capital / margin was and only a small fraction of Wilder’s ‘no more than 15% on any single commodity’ rule i.e. I’m NOT overtrading for my account size not by any means (‘been there, done it, got the t-shirt’ as they say and, of course, have the losses to prove it)!!! It really was just the fact that I could not, for some or the other reason, take the loss and I really don’t have an answer and I know that if I don’t get over this ‘mindset’ I’m going to land up in the same ‘sh*t’ as last time. I DO think it had a lot to do with the fact that up until then, on two of my accounts, I’d had a 100% success rate with the system and perceived my taking this loss as a ‘blemish’ or ‘bad omen’. I know this sounds ABSOLUTELY CRAZY but, like I said, I HAVE to control this ‘mindset’ from NOW otherwise we all know what the content of my future posts is going to be!!!

What I fail to understand is that since the beginning of the month up until this past Monday I have trusted the SI System IMPLICITLY and it has not let me down so WHY did I start to ‘second guess’ it all of a sudden? I don’t have the answer. I KNOW with ANY system there HAS to be losses in order to come out profitable at the end but WHY, ALL OF A SUDDEN, KNOWING ALL OF THIS, did I start my ‘sht’ again? I mean to say: at this point, in SPITE of these ‘issues’, I’m still around 280% up on the capital amount deposited at the beginning of the month when I started trading the SI System on the account in question (can’t give you the exact figure because although I could log in to this account earlier this morning I cannot log in now as I type for some reason) so I should be ‘extatic’ but I’m not as I feel that I have let myself down. I’m ‘beating myself up’ over the answer to this question in the hope that something ‘sinks in’ before tomorrow because I know that I cannot 'fuk up’ again. This is it. Maybe this mindset is a big part of the problem. I don’t know. Comments welcome of course (and appreciated).

Edit:

One thing that comes to mind is that maybe I should get the leverage reduced on this (my main) account (currently 200:1) but, of course, this is a ‘double edged sword’ i.e. I’d NEVER be showing results on this account like I am with a lesser margin percentage. This actually ‘came to light’ yesterday when I was trading the Bovespa i.e. currently on a $50 lot your profit / loss changes in increments of $100’s of USD at a time (it only gets updated every couple of seconds or so or when there has been a certain percentage change in price by the looks of things but fortuanately seems to follow the Dow so I should open with a ‘bang’ on Monday but it’s still seems very risky). Ironically I started trading this yesterday to ‘cover’ the Silver trade which ‘paid off’ this time round but is not ‘sustainable’ I know.

42

Dale, I’ve never seen the ASI indicator until last night… Hey what you are doing here is great. It also reflects about what every trader has or is going through. Taking profits early and letting losers run. If anyone has not, or is not doing that they are not telling the truth…

I did a look over on GBP/CHF and using the ASI it reveals a lack of any trend and choppy sideways action. Granted this pair has been in a downward move and seems to be basing. It just is risky IMO to play long or short as per the daily chart until price moves out on sideways range.

43

Here is a chart open for study

44

Hello,

Thanks for response and compliments and they are much appreciated.

I don’t know if you’re new here or not or if you know my WHOLE story but if you’re interested and have the time then read the ‘Parabolic SAR - that’s all!!!’ thread and ‘all will be revealed’!!! The point is that I have a trading system that really actually works and I am failing IT not the other way round and I HAVE TO STOP THIS FROM HAPPENING!!! NOW!!!

I was in fact referring the the CSI (or ‘Commodity Selection Index’) in my previous post BUT you are quite right i.e. even the ASI is showing you that GBP/CHF has been stuck in a range for while. Remember though that the ASI is showing you what’s BEEN happening not what IS happening so it’s easy to see NOW that GBP/CHF is ‘rangebound’ but this would not have been that evident a week or two ago from the ASI. The CSI on the other hand already had a very low value a week or two ago when compared to all the other tradeable instruments so, according to Wilder and the CSI, I would not have / should not have been taking entries on this instrument at the time i.e. there were MANY other instruments (forex pairs, indices as always, commodities, metals, and oil) that had a MUCH higher CSI number (a good example being something like EUR/SEK) at the time (and still do) and it is on THESE instruments where the profit lies not on something ‘stuck in the mud’ and that’s why I say: the CSI is the ‘key to the kingdom’ with Wilder’s systems without a doubt. It is for this reason I’m sure that the last paragraph in the book (which is the last paragraph in the CSI section strangely enough) is in [B]BOLD[/B] but I cannot understand why there is / was not more emphasis put on the CSI (or maybe there is / was but I did not perceive it as such). Even ‘my favourite’: the Dow has a low CSI rating at the moment for obvious reasons i.e. LOADS of volatility but ZERO directional movement whereas (for example) the Brazilian Bovespa has LOADS of volatility AND directional movement.

Anyway, be that as it may, you can have a 1000% successful trading system or method but if you can’t follow it through it will STILL NOT WORK FOR YOU!!! (Hey, that rhymes, can I have it???)!!!

45

Sorry,

I must have been typing my repsonse to you while you were posting your chart so I only saw your chart now.

Like I said: it’s easy to see it now BUT even when using Stochs you must remember that you are now seeing a range that has been forming for some time now. Put it this way: chop off about fourteen days from BOTH indicators and you then really have no way of telling whether the pair is becoming ‘rangebound’ or not. Wilder’s CSI on the other hand may also not tell you this but WILL attempt to ‘put you onto’ instruments that, when compared to all the other tradeable instruments at that moment in time, have a far higher chance of NOT being ‘rangebound’ when compared to each other. In other words: the CSI is giving you the instruments which, at a given moment in time, have far more movement in one direction or another than other instruments and he says to only trade the top nine or ten on the CSI scale (I assume margin and risk tolerance permitting) which is TOTALLY different from trading everything and anything where you have an entry signal according to the SI System (which is what I, up until now, have been doing).

46

Yep hind sight is 20/20 as we all know. I’ll quiet down as I’m not familiar with Wilders book. I do look at price for any confirmation and a transition from down to up must put in a HL. I’ve lost much cash trying to pick bottoms and tops. I’ll look into this ASI and see if I can learn more about it.

I have been a member here before last year and forgot my password and login name. I’ve done a search and have located it. I think I’ll need to use that name from here on out. Nice thread you have here…

thanks

47

Finally received the book today. I had been wanting to read it but now i think i will have some time for it. I know i will learn something and hopefully i can apply the info for my benefit.

48

Hello,

[email protected]:

PLEASE don’t ‘quiet down’: I (everyone) appreciates your input. With OR without ‘the book’ EVERYBODY’S input is appreciated. What is your ‘new’ login name going to be? Please post.

ozzy007:

Welcome to ‘the club’!!! Please post your thoughts on ‘the book’.

Actually: while we’re on the subject of ‘the book’ I was quite ‘pis*ed off’ last week because I was looking for some more books by ‘the man’ and found that Amazon is selling NCITTS for $49.50 and Mr Wilder is selling it to us for $45. What’s up with that??? I think it’s time to ‘rattle’ ‘The Delta Society’ for a bigger discount for babypips members don’t you think??? Anyway: I found two books by ‘the man’ that I want to order BUT I fail to understand how ‘The Adam Theory of Markets’ is SOOOO expensive whilst the other one is SOOOO cheap??? Does anyone have the other books and, if so, what is your opinion of them?

49

That’s my copy of the book ordered.
Thanks for that discount code Dale. Appreciated.
Rgds
Boca

50

Heeey, good stuff (I don’t think you’ll be dissapointed. At least I hope not)!!!

I’m kinda hoping that we can all start doing some analysis one of these days.

For example:

I’m ‘having a theory’:

Would it be feasable to say that when an instruments price closes above it’s previous HSP or below it’s previous LSP (which would both be entry signals) then it has indeed changed direction and when you’re being given a signal to stop and reverse because the price has retraced enough so as to give rise to a 60 point drop on the ‘Trailing Index SAR’ then could this be viewed as ‘corrective’??? Thoughts anyone???

Also:

There are one or two things that I HAVE NOT been able to figure out and they’re worrying me terribly:

Nowhere in book (for the SI System) are you ‘told’ when to ‘get out’. Your intial (‘tentative’) entry point is signalled when the price has closed above or below the previous HSP or LSP. From then on you stop and reverse as indicated by the ‘Trailing Index SAR’. My problem is this: if you just keep stopping and reversing then your actually trading the ‘Trailing Index SAR’ and not necessarily the ‘swings’. Do you agree with me? Comments?

If you’re using the CSI to evaluate the different instruments and let’s say that you find 10 instruments that are high on the CSI scale and you are being given entry signals. What then happens if a couple of days later those same 10 instruments are NO LONGER high on the CSI scale. Is THAT a signal to ‘get out’ OR do you just continue to stop and reverse as per the ‘Trailing Index SAR’ which (I think) is dangerous for the simple reason that should the CSI rating drop the instruments is then in effect becoming ‘rangebound’ so to just keep stopping and reversing if the instrument is now trading in a range is just looking to ‘feed your broker’ as they say in the ‘classics’. Agree with me on this one? Ideas? Thoughts? Solutions?

Try as I might I don’t seem to come up with answers to the above that satisfy my logic so I’m ‘throwing this open’ to debate (which, after all, is the reason for this thread in the first place).

51

Hey Tony, by the way:

‘How’s the Dow’???

You’ve got to love this man: down most of the day on Friday and then in the last half an hour it rallies 247 points!!! What’s up with this man??? It’s ALMOST becoming predictable i.e. 1 day up and 1 day down!!! Fortuanately the SI System is keeping me out!!!

52

I read the Wilder website about the [B]Delta[/B] thinggy.
Do you follow that?

53

Hi,

I do have ‘The Delta Phenomenon’ (the book) but I have only used the ‘phenomemon’ once or twice (profitably I might add). I cannot really judge it though and, to be honest, it leaves far too much open to interpretation and judgement for my liking (I’m not too good at that), and unless you can afford the annual fees every year (which are not cheap by any stretch of the imagination) to actually get the ‘Delta Turning Points’ ‘given’ to you as worked out by Mr Wilder himself, it’s not something that I would ‘trade’ but may use (the book) as a ‘guide’ or ‘confirmation’ now and then.

54

Dale, I have been calculating some CSI ratings because I plan on trying out the volatility system for awhile… so far the pairs I have gotten that have the 3 highest csi ratings are usd/zar, gold/usd, and gbp/jpy. I know you haven’t traded live with the volatility system yet but I was just wondering what you thought about these pairs and if you would trade any different ones. Also, I was able to get better results calculating the CSI by converting all numbers by their “pip factor” as you stated for the swing index. For example I get a CSI of 1.067 for gbp/jpy, and it has a “pip factor” of 0.01 so I divide by that to get 106.7. eur/usd has a CSI of .006477 divided by the pipfactor of .0001 equals 64.77.

55

hi Dale

ordered the book 2 weeks back!!what’s with the US postal service? do they know where Cape Town is???did you wait just as long for yours?

Chewing my nails to the bone waiting for this thing…:mad:

56

Hello folks, I was getting worried that the thread had ‘stalled’ before it’s even really begun!!!

chirules54:

You are quite right (in my opinion) in that you have found that you have to use the ‘pipfactor’ so that you’re comparing ‘apples with apples’.

As far as the instruments or pairs go:

I have seen that Gold (as always lately) is high on the CSI (and if you have a look at the charts it’s real easy to see why). I am having a very serious ‘issue’ with USD/ZAR i.e. Gold is going up in leaps and bounds but the ZAR is weakening against USD, GBP, and EUR and this does not ‘fit’ so I’d be very careful. The reason I’m wary is because last year I lost a ‘shtpile’ on Gold at one point and I remember seeing exactly the same thing happening at the time and it was not long after I was out of margin that Gold reversed and started it’s ‘march’ on to where it is today. In other words: at the moment there is ‘divergence’ between the ZAR and Gold and this should not be UNLESS there are a lot of people (institutions???) going long ???/ZAR because they are (pretty???) sure that Gold is going to correct and then the ZAR is going to 'fall through it’s own are’. Look: I’m not expert on fundamental analysis as you know but I do know that I saw the same thing happening last year. Coeincidence??? I don’t have the answer.

GBP/JPY: always volatile, high yielder, no problem I dont’ think.

The Volatility System: all I can say is (again) be careful i.e. you need LOADS of margin and a very strong stomach to use that system from what I can see. Either that or you need to get your leverage lowered i.e. from 200:1 down to something like 50:1!!! Even with the SI System you need ‘big ones’ sometimes i.e. although the system is right a very high percentage of the time sometimes the previous HSP or LSP is FAR away from your entry point and you need to be able to control you ‘fear’ when the trade is going against you for a day or two (which I’ll be honest I’m not handling too well at the moment i.e. I’m making money but I’m taking profits early and on 99% of the trades where I’ve done this my profits would have been quadrupled had I left the trades alone and stuck with the system).

fischerb:

That sounds about right!!! Things take FOREVER to get here (unless you pay DHL for ‘door to door’ which normally costs about ten times the value of the item)!!!

57

Thanks for the input Dale… My broker oanda has a max leverage of 50:1 already and I’m not going to trade huge lots so I think I will be ok hopefully. For now I think I’m going to go gold and gbp/jpy for sure with the volatility system. Neither one is close to an entry yet though, and I’m using 2.8 for the sar multiplier too. I’ve also been looking at usd/cad, it has a pretty high csi too and has had a pretty good adxr for the past few months. I know it is a “comdoll” but since it follows oil prices to some extent I guess it would be similar to trading oil, but I don’t know. I live in the northwest U.S. and I visit canada often so I have sort of an “affinity” for the currency I guess… you gotta love a country that has kids playing hockey on a frozen lake on their 5 dollar bill :smiley:
Still doing extremely well with the TBP system though, after a week that started out pretty poorly it has turned around and the last two days it has worked great… probably due to the massive weakness of the usd lately… all-time lows against the eur and chf… crazy.

58

Hi (sorry to be using this space for this message. I will delete it it again when finished).

To the lady from South Africa who sent me a PM:

I tried to reply to you but I keep getting an error message that tells me that you cannot receive private messages.

Either change this option in your User CP or send me an email to [email protected].

59

Hello All,

Thread will be a great one I’m sure Dale. Just looking fwd to getting my hands on a copy of the book and reading it through. Shouldn’t be long now.

60

Hello ‘Wilder Fans’!!!

Great week last week (due to equities and commodities trading that is i.e. not such great trades on forex pairs) (for me anyway). Great month actually (again thanks to equities and commodities i.e. fell short on forex pairs). For equities and commodities: the SI System ‘RULES OK’!!!

In light of the above I got to thinking this morning (happens sometimes) and, in true ‘Wilder Style’, I’ve come up with this idea and would like to know if anyone is interested in contributing:

I’ve spent a great deal of time having a look to see WHY trading forex pairs is not producing the same results as equities and commodities and it’s become very apparent to me that it’s ‘the way they move’ that is the problem (not to mention the fact that I still think that trading forex pairs is a ‘mugs game’). EVen the SI System gets ‘confused’ a great deal of the time by forex pairs which results in a lot of stops and reverses according the the TISAR which, inevitably, costs you money.

In true ‘Dale Style’ I ‘slapped’ the following (other favourite) indicators onto my forex charts:

Parabolic SAR
RSI
Stochastics
AO (Bill Williams’ Awesome Oscillator)
AC (Bill Williams’ Accelerator / Decelerator)
MACD

What is very apparent to me is the fact that a lot of the time you will get a valid SI entry but this entry conflicts with most of the other indicators and this got me onto an idea (which I cannot take sole credit for i.e. it was Wilder’s CSI that gave rise to the idea):

What if we devised our own ‘rating scale’ for each of the above indicators and used this rating scale IN ADDITION to the CSI and / or ADX and ADXR (for forex pairs)???

Here’s what I mean:

Let’s just take RSI for example:

What would be the ‘main’ RSI signals (in relation ALWAYS to a valid SI System entry)?

In other words:

Let’s say that you have just got a valid SI System entry signal to go short.

Firstly not all valid SI System entry signals are ‘created equal’ i.e. I have found that an entry signal based on a ‘swing high’ or a ‘swing low’ is a far stronger signal than an entry signal based on a TISAR entry alone. So: we ‘weight’ the entry signal to start with i.e. if the SI System entry signal is based on a ‘swing high’ or a ‘swing low’ the entry signal is given a ‘rating’ of ‘2’ and if the entry signal is based on a TISAR then it is given a ‘rating’ of ‘1’ and if the entry signal is based on both a ‘swing high’ or a ‘swing low’ AND a TISAR then the entry signal is given a ‘rating’ of ‘3’. Ok so far?

Now (remember that we have just a valid SI System entry signal to go short and let’s say it was based on a ‘swing low’ which would then give the SI System entry signal a ‘rating’ of ‘2’ as per the above):

Let’s look at RSI now:

For a short entry to be ‘valid’ which RSI ‘points’ or ‘issues’ or ‘signals’ would carry the most ‘weight’ or have the highest ‘rating’:

In my opinion they would be (for a short entry):

Is RSI above or below 70?
Has it actually crossed 70 from above?
Is it between 70 and 50?
Has it actually crossed 50?
Is it going down or up now?
Is there divergence?

Now what I’m saying is this:

Each of the above RSI ‘issues’ would be given a ‘rating’ and you would do the same with all of the other indicators mentioned above. Once complete the idea is that you would land up with a ‘rating’ for each pair and using this ‘rating’ in addition to the CSI and / or ADXR and ADX would WITHOUT A DOUBT give you the VERY BEST entries OF ALL TIME!!!

In other words: even although two or three pairs MAY have a very similar or ‘close’ CSI and / or ADXR and ADX one of them MAY have FAR BETTER Parabolic SAR, RSI, Stochastics, AO, and AC ‘ratings’ making IT the BEST choice to trade. I mean to say: even although a pair MAY have a VERY HIGH CSI and / or ADXR and ADX there MAY be a conflict with all or most of the other indicators which is not really helping matters much now is it!!! I mean it does not make sense when you are getting a valid SI System entry signal to go short, the pair has a very high CSI and / or ADXR and ADX, but Stochastics has been in oversold territory for a couple of days and RSI has been below 30 for a couple of days. See my point?

Now I know it may be easy to ‘judge’ things just by looking at all the other indicators but I ‘favour’ the ‘mathematical’ way of ‘doing things’. In other words: I could ‘code’ a single indicator that would ‘replace’ Parabolic SAR, RSI, Stochastics, AO, and AC and this indicator would be based on the ‘ratings’ of the other indicators and then combine IT’S value with the CSI and / or the ADXR and / or the ADX value and give you a single indicator with a ‘overall rating’ value and the pair(s) with THIS highest value should be those ‘no brainer’ trades!!!

What do you think?

Basically the (your) ‘contribution’ that I was talking about would be to help me identify the most important ‘issues’ for each of the indicators and then we compare notes.