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

Trading Systems Free Forex Trading Systems
647

Good (Sunday) morning all!!!

Just so that you know I’m STILL around (I’ve not drunk myself to death or anything like that): I’ve been having workstation ‘issues’ since yesterday morning and have ended up doing a ‘clean install’ of my main workstation which I’m still in the process of finishing up and of course need to complete such ‘clean install’ before tonight!!!

One thing that has had me wondering for a while now is if it was my main workstation that was having ‘issues’ with this site i.e. slow loading of pages from the site and constantly having to ‘refresh’ pages etc. etc. etc. Well: for what it’s worth it’s definitely the site not my workstation i.e. this site appears to be ‘grinding to a halt’ ever so slowly!!!

Craig:

Seems you’re doing a great job of ‘keeping things afloat’ in my ‘technical absence’!!! Well done. You’re working hard I see!!! You efforts and hard work WILL BE REWARDED THIS WEEK!!!

Well: for ‘testing purposes’ I decided to just ‘throw in’ a ‘take’ on kaalilaatikko’s DMS trade.

Unfortuanately my answer to the the question is real simple. I’d not even have BEEN in that trade NOT EVER right up until now!!! Why? Because on 25 June 2008 there was indeed a crossing of +DI below -DI AFTER THE CLOSE. I would have placed my stop order to go short ‘a couple of ticks below the low’ of the bar of 25 June 2008 valid for a day. That order was NOT hit during the next trading day and therfore would have been cancelled at the close of the next trading day (Delta’s current ‘technical issues’ aside). So: I’d simply just not have been in that trade!!!

As I’ve ‘alluded to’ before (and I firmly believe this): market orders are going to get you in trouble!!! This is just ONE of the MANY examples that I see every other day i.e. after having gone long or short at market the price has turned the very next day. At best case you’re going to carry a loss with you for a while. At worst case you’re going to get stopped out for a nice big loss. I’ve seen this happen FAR too often with ALL the systems.

OF COURSE: doing it my way is goint to keep you out of MANY MANY trades. One of my FAVOURITE SIGNATURES on this site is this however:

‘I’d rather be OUT OF A TRADE WISHING I WAS IN than IN A TRADE WISHING I WAS OUT’!!! (I forget who’s signature it is but will look it up later i.e. I need to ‘get going’ and finish off this workstation).

(By the way craig: I got your emails regarding IndyMac yesterday. Thanks for that. ‘Rumour’ has it that Freddie and Fanny are also gonna be ‘bailed’. Tomorrow’s opening is gonna be REAL interesting!!! Put it this way: NEVER IN MY WILDEST DREAMS would I ever have expected to buy Dow at 1 point!!! Who knows??? Maybe my time WILL COME!!!).

648

Craig & Dale, thanks for your DMS analysis! I’d like to add my interpretation about entering DMS. It’s true that in my example I wasn’t having a position at the time of +DI/-DI crossing. But I don’t think that changes this kind of a situation essentially. We could also end in not having an open position before the crossing after TP-ing the previous position earlier. If doing that e.g. with the help of AC, in the example there could have been a TP somewhere around 1.0200 when AC first turned red for the previous trade, and that would have been hit. There was also some analogous discussion about initial SIS entries a few posts ago: should we follow Wilder’s rules or could we use TISAR of the previous, virtual trade.

The Extreme Point Rule (let me call it “EPR” here) defines the reverse point which should be used for both entry and exit. Here I can imagine having a virtual long position and not reversing it to a real short position until EPR is completely filled. So Dale’s stop rule could also have been applied on Jul. 11th, and it would have got cancelled.

But then there is also the possibility to consider retro DMS trading. If you don’t apply EPR when you don’t have an earlier position open, and you didn’t open the new position right after the signal, then the price would have been in a favourable level for several days. But if you apply EPR in every case, then there is no place for a retro trade here yet.

I’m now inclined to the following principles for the initial (and any other) entry of DMS:

  • Wait until EPR is filled, even if you don’t have an earlier position.
  • Rank the trade as either a “good” or “bad” one based on the indicators on the date of EPR (ADX, AC and possible others). Don’t take a “bad” trade.
  • Enter by placing a stop ‘a couple of ticks’ below (on short) / above (on long) EPR
  • Use TP once AC turns against the trade.

J.

649

Hi all,

Thought I’d share some info on live trading, as I just started Friday of last week (July 11th). For starters, I closed a position out for a profit that day. Ok, so the truth be told I was dorking around with the Delta interface, and accidentally opened up a trade without any system or reason behind it. (Note to self: Don’t mess around with the live platform, if unsure test it on the demo). Anyway, that trade went almost instantly in my favor, so I set a stop at 2pip profit in the unlikely event that it would work out better. Almost immediately after setting the stop, the pair dropped like a rock which left me with $3 extra in my hand.

As for starting on a Friday, there’s good and bad to it. The good is you setup your positions and LEARN to not touch them for a couple of days. Of course the reason being is that markets are closed, but I feel like it was beneficial in getting the mindset where you don’t have to constantly check your positions. Just set them up properly and then let the systems run their course.

I have to say while I’ve been doing a good job of keeping my emotions in check, there’s definitely a world of difference between the demo trading money and your real hard earned cash. I was actually joking with Dale on Friday that I needed to go real quick and close out a position for a $5 gain. While it was a joke, in some ways it was odd as I can equate it to seeing a $5 bill sitting on the ground, and letting it sit there while you hope the wind brings a much larger bill to replace it. Ok, so that’s a bit of a stretch, but human nature and conservative side of most people makes it hard to let the positions run their full course. Since Friday, both positions I had tanked and were down as much as $100 (remember that’s paper loss as position wasn’t closed), but as the Wilder systems seem to do, they are both up about $20 as we speak, and hopefully will hit TP Monday or Tuesday of this week. I also have a 3rd position based on the SIS (EUR/CAD) that is currently bouncing between $15 profit and loss, but have to wait this one out and see if the trade turns my way or not. Will provide additional details on the SIS trade as it continues to develop.

I think people need to heed Buffett when they are going to move to live trading - here are a few of my favorite Buffett quotes:

Risk comes from not knowing what you’re doing.

If past history was all there was to the game, the richest people would be librarians.

In the business world, the rearview mirror is always clearer than the windshield.

And this one is spot on regarding investing advice from CNBC or any other tv analysts:

Let blockheads read what blockheads wrote.

Well in any event, I’m currently having fun and gaining additional faith in the systems. I can say that now that I’m beyond demo trading, I can see how people can easily be their own worst enemies by not being able to keep objective and level headed regarding their trades. I can’t remember where I heard the quote, but I think it applies to being successful in forex (and in most other areas of live). It goes something like “If you think you can, or you think you can’t - you’re right.”

Edit: Just came across another good one from Vince Lombardi -
It’s easy to have faith in yourself and have discipline when you’re a winner, when you’re number one. What you’ve got to have is faith and discipline when you’re not yet a winner.
Vince Lombardi

Wishing everyone the best on their trades.

Craig

650

Good (Monday) morning all.

Craig:

Edit: Just came across another good one from Vince Lombardi -
It’s easy to have faith in yourself and have discipline when you’re a winner, when you’re number one. What you’ve got to have is faith and discipline when you’re not yet a winner.
Vince Lombardi

Thanks: I needed that this morning (see the AUD/NZD opening gap last night)!!!

To make matters worse: I’m still having ‘very expensive Viewsonic monitor issues’ this morning. Hope to sort them out today!!!

651

Well I’m having some minor issues of my own, but they are “keyboard driver” issues :slight_smile: I accidentally transposed two digits so I ended up getting into an RTS trade about 50 pips prior to where I wanted to. Per the system, the trade should go my way, so the net result will be a little less profit than I should get. If it hits the 50 pip differential, I might add to my position, but that will be a decision for later today unless it reverses and heads my way earlier than my original entry point should have been. The nice thing is I was instantly notified by using the delta alerts to send an SMS/text message to my phone, so once the order hit I could check in at my computer and see what was going on.

So another note to self - check, double check and check your entries again. Just went through all my open orders (day orders) and have verified them against the charts.

Also, I’m looking at some potential ways to modify the SIS. I have an idea I’m vetting out through my own analysis, and when I think I have something that is worth sharing, will put it out to the group at large.

Dale - Have you heard anything more on the day orders not clearing out at Delta? When I logged into my system last night to place my Sunday evening orders, I didn’t see any additional day orders still open, so hopefully they’ve resolved the issue.

652

Having computer problems also. When I keep my computer running and it sleeps I can’t get it to wake up. I have to reboot and it’s having a hard time doing that oo. I usually have to let it sit shut down for a few minutes before I can reboot even then it recycles a few times before it decides to really boot up. My back up computer won’t connect to the net, I think its modem might be bad. Kinda sucks knowing nothing about computers.

653

Has anyone been trading the DMS system? I’ve been reading up on it and looking at it through some historical charts and it looks like there’s some real merit to it. I’m going to begin looking for some DMS trades starting close of candle Tuesday night (my time - start of trading day Wednesday July 16).

Would be interested in others thoughts, as I might look at some sort of trailing stop approach (I remember Dale using a Williams indicator for something to that effect) just to try to capture more profits, but that will have to be worked out as I get a few trades under my belt.

Would be interested in anyone’s feedback on the system so far, and I’ll be happy to provide post-trade summaries to anyone who is interested - if you are drop me a PM. Also, I can try to provide some “historical” DMS trades (ie after the fact) on the forum here for everyone to see as they follow along at home.

654

Well.

Good (Tuesday) morning all!!!

It would FINALLY appear that I’ve got my workstations running ‘real smooth’ again!!! (It’s funny: the last time I had ‘computer issues’ I seem to remember a few others having ‘computer issues’ at EXACTLY the same time as well)!!!

Randon: just watch out with rebooting all the time (and make SURE you’ve got a backup workstation). This is exacty what started my ‘computer issues’ off on Saturday i.e. I’ve got two Viewsonic 19" LCD monitors and it turns out that this model has inherent problems with something or the other. One ‘packed up’ and was sent away to be repaired under warranty and I continued to use the other one until on Saturday it started to do the same thing i.e. would not start up. So: I just continued to reboot (after shutting down ‘blind’) my ‘main’ workstation UNTIL I got a display but by the time this happened I’d messed up the registry. I then decided to sort out my ENTIRE network and workstations so things are good now!!!

Now:

You know what folks???

The more I sit and watch and work with these systems the more I’m starting to believe that the VS/VSTOPS and the DMS are ‘top of the pops’. They are the only two systems that don’t have you sort of ‘hanging on every little subtle nuance of price change’ all day every day!!! It could be (at this late stage) that maybe I’ve ALWAYS been wrong in my thinking of ‘the more complicated things are the better they should perform’!!! I’ve spent a good deal of time lately (computer ‘nonsense’ aside) analysing a whole bunch of VS/VSTOPS/DMS trades. One that REALLY ‘sticks out’ OF COURSE is AUD/NZD!!! If you take a look at that pair since the very beginning of it’s uptrend some weeks ago you’ll note that the VS/VSTOPS (with a ‘constant’ of ‘3.1’) would have gotten you in very near the bottom AND YOU’LL STILL BE IN THAT TRADE LONG (well at VERY worst case you MAY have stopped and reversed ONLY ONCE and THAT would have depended on whether you’re following ‘my method’ of trading the VS/VSTOPS or stopped and reversed at market as per ‘the book’). That is a WHOLE PILE of $$$ WHICHEVER way you ‘played it’.

Now I DO KNOW that I’m ‘guilty’ of ‘chopping and changing my mind’ every so often but I’ve got to continually re-evaluate what’s working (well) and what’s not so that’s why I post my ‘current take’ on things. In other words: I don’t intend confusing anyone here!!!

At the same time I’ve also looked at the SIS AGAIN and it is now starting to appear to me that the ‘key’ to the SIS trades are the ‘SIGNIFICANT’ HSP’s and LSP’s not just the ‘NORMAL’ HSP’s and LSP’s. The ‘NORMAL’ HSP’s and LSP’s are what appear to cause the majority of ‘false’ SAR’s AGAIN no matter whether you’re using ‘my method’ of placing SAR orders or placing orders as per ‘the book’. I’ve mentioned this before and I THINK I’m STILL right though: a ‘SIGNIFICANT’ HSP or LSP is the highest HSP or LSP formed DURING THE PREVIOUS (VIRTUAL???) TRADE. Being able to recognise or ‘pick’ the HSP’s or LSP’s on THIS basis appears to make the world of difference. DO you, however, need the ‘aggravation’ is the question!!!

Of course (as I’m sure that everyone agrees): the VS/VSTOPS and DMS require ‘truckloads’ of ‘patience and restraint’ and lack thereof (I reckon) will be the major ‘stumbling block’ for many with these systems.

I also have to say that right now my ‘mettle’ is being tested to the ‘nth degree’ with just about everything I’m doing. AUD/NZD I just have to ‘wait out now’ until I get a signal to short it again and ‘resell’ all the lots I’ve had to ‘dump’ and the chances are that means I’m going to wait for a valid VS/VSTOPS signal to go short (or possibly a DMS signal). As for my equities positions (the Dow and some financial stocks) I’m (again) using the VS/VSTOPS or DMS to track the trades. Had I been using the SIS for this I’d be ‘taking a bath with my clothes on’ as they say in the classics!!!

Anyway: after all said and done I’m ‘back on it’ and will be back on YM again too. I’ll be answering all my emails once I’ve submitted this post.

Later.

655

Hi all,

Here’s a quick update. Sunday night I took a couple of RTS based positions, went to bed Monday seeing them down slightly (less than 1% drawdown). When I awoke this morning, I saw a 7% drawdown of my account. (Ok, in retrospect 7% isn’t anything to worry about, but this was my first drawdown experience.)

I can tell you my first instinct was to start closing the positions as fast as I could, and cut my losses. After sitting there a couple of minutes the initial shock wore off. At that point I was determined to see things through. So as I waited them out, things slowly started getting better. Long and short, while I didn’t make the TP on the RTS system (B1/S1), I was able to close out the three positions that had me down 7% into a 2% gain, and each position closed above BE, although one was just barely above.

Interesting thing is that if you asked me about 4-5 hours ago what I thought of the RTS system, I’d have told you I’d NEVER trade it again. Of course, a short memory is a good thing in this business as you can’t remember how good or bad your last trade was, and just continue to follow the system. So tonight when the close of candle comes, you know what I’ll be looking for - yup, you probably guessed it - more RTS trades :slight_smile:

I feel like I’m just learning to crawl in this Forex trading environment, and the market is a world class sprinter. I know that’s an exaggeration, but I’m sure that I’ll be “up to the speed” of the market in the next few weeks.

Hopefully everyone else has had some positive results with their trades.

Best of luck.

Craig

656

Good (Tuesday) evening everyone.

Craig:

All I can say is: GOOD ON YOU!!! Well done!!!

I just ‘popped in’ to leave a short note of ‘gratitude’:

I don’t know if anyone has been watching the 'goings on 'on Capital Hill this today??? I’m referring to Fed Chairman Bernanke giving his semiannual monetary policy testimony before the Senate Committee on Banking. Also present were Treasury Secretary Paulson and SEC Chairman Chris Cox. Of particular interest to me is the fact that the SEC is going to implement measures to stop the ‘naked selling’ i.e. the shorting of stocks without first without either owning the stock or at least ‘borrowing’ the stock before being able to sell it this done to bring back stability to the market. Also (of COURSE) I’m once again impressed with the fact the the government is prepared to step in and do whatever it takes to save the US economy and the dollar.

The reason for this post:

Aside from all of the above: what struck me many many times today while watching all of this was just how ‘lucky’ I feel and how fortuanate I am to be around in this business at this time. We’re seeing history in the making my friends!!! There are not many traders that can lay claim to this privilege!!!

Again: do not get discouraged when positions go against you and do not ‘panic’ when they do. They WILL turn and you WILL prevail. Sometimes: it MAY just take a LITTLE longer is all!!!

657

Hello Everyone,
Sorry I haven’t posted for a while as my internet connection time has been limited to say the least. I have been trying to keep up with the goings ons.

I have to agree Kaalilaatikko (That’s a hell of a nickname by the way:D) regarding the EPR (Extreme point rule). Regardless of if you are currently in the market or not, you have to wait for the EPR to be broken after a DMI crossover in the direction you want to take the trade. That is the way I interperet it. Am I correct? The only small issue that I am still unsure about on this is, when Wilder says the EPR must be broken, is he referring to a close or the EP is broken intraday? Apologies as I dont have the book with me at present.

Happy trading all
Boca

658

Hello chdorry,

Thanks for posting your trials and tribulations of going live. It’s making good reading and I wish you every success. Stick with the systems and try to not to get too emotional and make impulse trades. Easy to say, but harder to practice.

Your story reminds me of some mistakes I made when I first went live in Nov07. Two times I opened positions with an extra zero at the end of my lot sizes, hence I was in over my head 10x above my money management rules. One of these, I had to close for a big loss, luckily, the other one had bounced back to a break even level when I discovered what I had done. Always good to double check.

Best Regards
Boca

659

Ragarding the above, I took a look through John F Carters book again the other day and in Chapter 3 there are some tips and tricks for making your computer run smoothly.

Suggestions he makes are to download and install:-
CCleaner
Ad aware
Spybot Search & Destroy.

I just installed the last 2 on that list today.

Has anybody else noticed that babypips site sometimes seems to take for ever to load up a page. One other thing that is really getting my goat is that “Freshpips” ad that keeps on appearing at the bottom of the screen. Even though I click on “dont show again”, every new page it just keeps on coming back. A real pain.

Over

660

Good (Wednesday) morning all!!!

Well I never!!! Boca is alive and well and ‘speaks’ to us!!! (I was just wondering about you yesterday funnily enough)!!!

I just want to share something with you all here as a few people seem to be ‘battling’ with this.

As you all know I’m waiting for AUD/NZD to ‘turn’ right??? Now: if you see this post in time take a look at the daily chart. As I type this post it’s plain to see that it has in fact turned right??? WRONG!!! And this is the point of the post. There isn’t a ‘new trader on the block’ that would not have ‘jumped in’ on this short trade the moment they saw what was happening to the price (and what has BEEN happening to the price for the past three days). Hell: after ALL my past ‘mess ups’ and ‘hefty kicks in the you know where’ EVEN I am tempted. HOWEVER: there is NO SIGNAL WHATSOEVER FROM ANY SYSTEM IN ‘THE BOOK’ being given to go short this pair at present. I’ve had a short position on this pair since 2 May 2008 (and yes: I know all the reasons why so don’t go reminding me) so for me it would ‘seem’ even MORE like a good ‘idea’ to ‘sell back’ my lots at this point. BUT NO!!! Wait for the signal!!! This is the most difficult thing to do I know but I assure you that being able to ‘hold’ when required is yet another contributing factor to success.

I’ll give you another example:

On my ‘comm account’ I’m long USD/RUB. This trade was opened based on the RTS when AT THE TIME ADX was below 20. WHEN I GOT A SIGNAL FROM THE SIS I ‘dumped’ all my lots except one lot (which as you know effectively does not realise the loss and keeps the position open the idea being that if the price continues to go against you a larger potential loss is averted and your free margin is protected). Again: just looking at the pair this morning it has rebounded somewhat right so why not just ‘buy back’ my ‘dumped’ lots now and have done with it??? WRONG AGAIN!!! AGAIN: NO SIGNAL IS BEING GIVEN BY ANY OF THE SYSTEMS IN ‘THE BOOK’ that indicates that the pair has INDEED rebounded!!!

Now while it IS true that in both of the scenarios above I COULD be wrong and the price of both pairs will continue in my favour thus costing be valuable pips. THE POINT IS THIS: I WANT TO BE MORE THAN 50% ‘SURE’ that these are INDEED either valid breakouts or valid reversals and the only way of ensuring this is to WAIT for the confirmation signals and NOT to just ‘jump in’ on a ‘whim and a prayer’!!!

661

Hey Dale,

Looks like the markets are finally lining up with your AUD/NZD short tonight. While its still too early to make a final call on it, the charts are shaping up nicely for a DI cross (+DI moving below -DI) which means we can all short it this evening :slight_smile:

Boca - Thanks for the encouragement. So far I’ve managed to keep my cool. Of course I have the occasional “panic attack” where seeing the negative values makes me want to start closing out all positions, but so far its been just a fleeting thought.

Right now I’m sitting in 4 positions (2 RTS entry based, 1 DMS and 1 SIS) and 3 of them are going against me, but the tides will turn and they will move back my way given some time. Of course 3 of them are newly opened, so I have to “wait’em out” for a bit. The SIS position is a couple of days old, and is the one that worries me the most at this point. I’ll probably continue following it with DMS and use that to make a SAR at the appropriate time.

The way I see it, you can jump into the DMS system at any time with any pair, the only thing is that if you get in late (which I did using SIS entry) per the DMS system, the first trade prior to the DI reversal will not be as profitable as it could have been had you gotten in earlier.

In any event, its 4AM, my TPs are set so I’m going to get some sleep. Will be back in a few hours to check on things.

Best of luck to all.

662

Hello Dale,
No problem my friend. I’m still alive. Just working and living on the road the last few months makes it hard to keep up. But I’m commited to the thread and the systems. Have no fear.

Yes, it’s well documented the pain and suffering we’ve had on AUDNZD. The DMS does not show a signal, yet, but if it could cross to today if the price continues downwards, so if that extreme price is broken tomorrow, there could be a signal short. A lot of “ifs” and “buts” there, but it is possible.

A know it is a bit off topic but there was a short signal on this on Carters LOHP system, which I took on my demo, as I am still testing this system. I have already lost on the last short signal on this pair, but I see this as part and parcel of trading… You win and you lose some, hopefully winning more.

Boca

663

No problems Chdorry. I’m still learning the ropes as I go as well, so 'm far from being a proffesional dishing out the advice. But we’ll make it with discipline and hard work.

I also have 4 RTS positions open at the moment and each one is showing a loss right now. But I am sticking with it. My last 3 positions on this system were winners, so we’ll see how it goes.

Cheers
Boca

664

hey boca nice to hear from u back well hello dale and hello every body here as well!!

well as for the computer issues that every body is facing guys i switched to mac and if the truth to be told here u will never face any problems apart from how to run any file that has the extension of exe into mac but this is possible u can do such a thing with no fear i am enjoying it big time!! and i do have a peace of mind .

Akram

665

Hey Boca, hopefully those 4 turned. I had two open last night, and I’m kicking myself over it this morning. One is showing a profit, and the other is down a bit. Of course, had I read the entry point CORRECTLY it would be showing a profit. In any event, I’m planning to hold these and try to ride them to the S1 exit point. And to boot, I had orders in for more RTS that I cancelled last night (it was late when the bad entry hit and seeing a loss made me leery of letting the others hit too). Needless to say had I actually left them be each would be up about 50 pips now as well.

Of course (you can ask Dale on this one), yet again this morning I was looking at a drawdown (nothing major) and “swore off” the RTS system. Now of course, I’ll be doing the same hunting for RTS trades but will be EXTRA careful to make sure I don’t mess up the typing.

And sorry Dale, but I had to mention this - your last post you stated:
“WHEN I GOT A SIGNAL FROM THE SIS I ‘dumped’ all my lots except one lot (which as you know effectively does not realise the loss and keeps the position open the idea being that if the price continues to go against you a larger potential loss is averted and your free margin is protected).”

While I’m no accounting expert, I didn’t see it in the book, is that the “Enron System” of trading? :smiley: Sounds like cooking the books to me my friend :slight_smile:
Of course, I’m sure I’ll contemplate that when the time comes where I get a SAR on DMS and I’m in a losing position. As of this time I think I’d just take the loss and move on, but we shall see when we get there…

Anyway, I am getting to the point where checking my positions first thing in the morning isn’t really a good thing, since they always seem to be down a little early and then climb as the day progresses (mostly during the US/London overlap).

666

Hi All,

As I’m looking at a few potential DMS trades this evening (the signal for Dale’s AUDNZD may have finally come - I for one hope he can work his way out of it so we can hear about something else for a change :wink: Ok, so I really hope he gets out of it as its been a boat anchor on his account, besides the story is already legendary around this thread).

Anyway, I was thinking if there is any type of correlation between the “DI factor” as I’ll call it. Here’s my thinking of the DI factor, its the sum of the absolute value of the differences between DI values on the day before and day after the DI cross (ie day before and day confirming DMS entry).

For example if +DI goes from 5 to 10 and -DI goes from 7 to 6, the “DI factor” would be ABS (5-7) + ABS (10-6) = 6. My thinking is the magnitude of the changes in this particular factor will be directly related to how far the DI values have moved, and a higher “DI factor” might correlate to a better signal. While I can’t say for sure on this, I’m planning to look at some charts as well as track this some as I get into some DI trades.

Would be interested in anyone else’s thoughts on this.

Thanks.
Craig