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

Trading Systems Free Forex Trading Systems
667

Good (Thursday - payday???) morning all!!!

Well:

At the risk of boring you CRAIG:

AUD/NZD is / could be an extremely INFORMATIVE trade for all!!!

For one thing:

Take a look at my previous post regarding the pair and what has happened since last night!!!

Although +DI crossed below -DI and this was SUPPOSEDLY a good signal ‘to go’ look what’s happened. Had I gone long at market I’d now be losing money again!!! I placed a stop order to go short after the close and of course that stop order has (as per usual) not been executed!!!

Also: I think I’m finally ‘getting’ the SIS the RIGHT way now!!! AUD/NZD AGAIN being a FINE example!!!

Take a look at the ASI. Now the way I’ve been trading the SIS (on the occasions when I have) I would have placed a stop order to go short ‘a couple of ticks below the low’ of last nights bar. WRONG!!! The stop order is to be place ‘a couple of ticks below the low’ of the bar that closed on 9 July 2008 which was the previous SIGNIFICANT LSP!!! THAT is your breakout (and entry) point!!!

Craig:

Interesting thoughts on your ‘DI Factor’. If there is ANY merit to this (which I’m sure you’ll inform us of if any) then I’d be inclined to say that the SMALLER the ‘DI Factor’ the better and not the other way around i.e. the GREATER the ‘DI Factor’ (again: if there is any merit to this) the MORE of the move you’ve already missed.

One bit of ‘food for thought’:

Brian (who for some reason or the other has not posted this) actually ‘discovered’ this some time ago:

Wherever there is a sort of ‘hard kink’ in either the +DI or -DI lines themselves there always seems to be a reversal or change in direction immediately following the ‘hard kink’ in those lines. Of course: the question again remains as to whether or not you’re missing too much of the move to warrant any action.

And as for my ‘Enron System’:

Like I said: don’t knock it!!! So far it’s ‘shaved’ nearly $700 of losses off of some losing positions and has therefore saved me the same!!!

668

Not boring me at all. I’m just kidding with you.

I agree, I’ve learned quite a bit about this trade. To be honest, the #1 thing I personally learned is to trust the systems. If they say SAR, either SAR or get out at the SAR point.

I’m not fully sure I follow this. If you look at AUD/NZD lows for the dates:
July 9 - 1.2581, July 16, 1.2611, July 17 1.2615. So while I agree about not going in at market, even if you went with a short order with yesterday’s low (which I did - even added an extra $1k lot for you Dale :smiley: ) you’d still be happily sitting on the sidelines in this trade. My entry criteria was the DMS signal (DI cross) and then applying the EPR (extreme point rule).

So while I’m in 100% agreement about don’t enter at market, I am not sure why you chose July 9th as opposed to yesterday as opposed to July 9th. I guess my point is, how far back do you have to go before the data is no longer a “significant” high/low point? This gray area is one of the things I personally don’t like about the SIS. If its working for you, continue on, but to me there’s too much left for interpretation which is why I will possibly demo trade it, but won’t live trade it at this point.

Another fine example of the extreme point rule saving your bacon, look at USD/NOK. DI cross closed last night to go long, and had you taken it at market you’d be down somewhere in the neighborhood of 160 pips (as of this writing).

Just my 2 cents (feel free to give me back change :slight_smile:

669

After some initial investigation into the DI factor, there’s only one thing I can really say conclusively. A large DI factor is indicative of a large move on the day of crossover. This isn’t necessarily a good signal (look at USD/NOK from yesterday July 16 cross on HUGE upward move)

Going to do some additional investigation into some other variables such as is there an optimal level of DI values for the cross for a strong signal (ie is it better if they are both in the high teens when they cross, or near 10, or less than 10), as well as maybe factor in the “DI Factor” on that as well.

Anyway, as of now my capital is up 4% (since last Friday) BUT my two current DMS positions are showing drawdowns of 5% (putting me at a net of -1%). I realize that DMS is going to have some times where you SAR and take a loss, but I’m going to try to find a few good DMS trades (thinking 3-4) and follow them for at least a few weeks. From all the historical charts, the DMS is a solid winner. Of course, having recently driven cross country from Arizona to North Carolina and trying to take pictures from the car, I do remember some of the best images where seen in my rearview mirror.

Seems to fit right along with Buffett’s quote to the effect of “In the business world, the rearview mirror is always clearer than the windshield.”

I can say though I’m seeing the power of leverage and also seeing the “forest from the trees”. I would personally say that if you’re going to trade these systems, I’d recommend committing a decent timeframe to them (ie 6 months or so) as I see it taking a couple of weeks to get your feet under you with them (I don’t feel I’m fully there yet) and then you need time to let them do their thing. For example, I was up 4% this week, and now I’m down (on paper) 1%. So to me, trading a single week while learning the systems (you may know the systems but once you get on the live market you’ll learn some more) and seeing that I’m down 1% is by no means conclusive. To date I’ve had one bad SIS trade (with some errant entries as we’re seeing with Dale’s recent news), and now I’ve got two DMS trades that are going against me at the moment, although I haven’t seen the reverse cross (and EPR) so there’s a chance they could turn for me as well. I will try to post my DMS trades (charts showing entry/exit) at the end of the month as well as my results for the month.

Just a quick note as well - even though Dale has pointed it out (at least to me), I am a bit of a “smart arse” sometimes (to use Dale’s term :slight_smile: so please realize that its all in good fun (ie “Enron system”) with the goal to try to reduce stress and contribute to helping refine the systems so we all can make profits.

670

Hello again,

Now Craig:

Even after THIS short time of us ‘knowing’ each you TO should now that I know YOU’RE only ‘kidding around’ WITH ME and visa versa!!!

Now BACK TO AUD/NZD!!! LOL!!!

(Before I start JUST REMEMBER ONE THING everyone: I MAY have coded these systems and I MAY be making money out of them using my ‘versions’ BUT it DOES NOT necessarily mean that I am understanding them ‘perfectly’ so do please understand that I ‘just post’ what I see and I could be wrong AND IF I AM I’d appreciate someone ‘jumping in’ and letting me know. THIS is what the point of starting this thread was in the first place)!!!

The reason I go back to 9 July 2008 is because I’m looking at the ASI NOT the price. In other words: the last SIGNIFICANT LSP (as a matter of fact there are no ‘insignificant’ LSP’s on the ASI for this pair in this range) was formed on 9 July 2008 (remember that if you look TODAY you’re seeing an LSP BEING FORMED i.e. last night there WAS no LSP BUT the ASI had closed FOR THE FIRST TIME below the previous (SIGNIFICANT???) HSP that was formed on 9 July 2008). Comments???

Having said ALL of that though:

This is where the (my) confusion is STILL ever present:

Take a look at Figs. 8.6, 8.7, 8.8, and 8.9 (pages 97 - 98).

The way I look at those diagrams we’re being told that your entry orders are AT THE EXACT POINT where the ASI PASSED the previous (SIGNIFICANT???) HSP or LSP. Right??? In other words according to these diagrams the ONLY WAY you get ‘get in’ at the entry points indicated would be if you had already placed your orders the day after the previous (SIGNIFICANT???) HSP or LSP had formed. In other words: NOWHERE on these two pages does it say anything about waiting for the CLOSE of the ASI above or below the previous (let’s forget about SIGNIFICANT??? here i.e. I’m tired of typing it but you know what I mean) HSP or LSP. Nor does it say anything about ‘for the first time the ASI exceeded (passed) the previous HSP or LSP’.

This is ‘significant’ (DAMN!!!) BECAUSE:

Now turn to the work sheet example on page 103.

‘Day 10’ SPECIFALLY (another DAMN!!!) says: ‘… On Day 10, the ASI exceeded 104 for the first time. We therefore entered an order on Day 11 …’.

Now my point is this:

Take a look at the associated chart.

Yes I agree that on ‘Day 10’ the ASI DID INDEED exceed 104 for the first time and I can see where the order was placed on ‘Day 11’. NO PROBLEM SO FAR EXCEPT FOR THIS: WHAT IF the price had gone WAY PAST the high on ‘Day 11’??? At that point the ASI WOULD STILL have ‘exceeded 104 for the first time’. However: there is no way that if that had happened you would have been able to ‘get in’ at ‘46.05’ UNLESS you had ALREADY PLACED YOUR ORDER on ‘Day 7’ i.e. the day after the HSP was formed!!! Do you see the difference??? Do you see the ‘issue’ here??? Which is it??? Do you place your order the moment a previous HSP or LSP has been (completely???) formed and is clearly visible OR do you place your order THE MOMENT the ASI exceeds (passes???) the previous HSP or LSP OR do you wait for the ASI to CLOSE above or below the previous HSP or LSP and ONLY THEN place your order???

Take a look see!!! I’m DYING to get and answer on this because I believe this is where the ‘issues’ with this system lie.

671

OMFG!!!

FOR ONCE I did not take ‘New Concepts In Technical Trading Systems’ with me to the ‘crapper’!!!

However:

There was a magazine lying there with an article about Bill Gates and his retirement and THIS is what just ‘jumped out’ at me:

‘Success is a lousy teacher. It seduces smart people into thinking they can’t lose’!!!

Now HOW IS THAT for a quote folks!!!

672

Hello Akram. Nice to hear from you again as well. How is Canada, did you manage toe recover your copy of the book and are you still trading? Hope all is ok with you.

I have never bought a Computer in my life before as all the ones I have had have been issued by my work, but you sound happy with the Mac. Another one of my friends spoke highly of MAc to.

Cheers
Boca

673

Good day all,

Regarding the recent “possible short” on AUSNZD and the DMI crossover, by my interpretation of the system I dont think the short signal was ever generated was it? The DMI did cross but the Extreme price was never hit. I am currently losing on this position on one of Carters systems but that’s another story. Stop has not been hit yet though.

On to the RTS. I mentioned a few days ago I had 4 positions open that were in the red, well 2 of those positions turned around as expected for profit. I still have two open that are in the red. I will report how they turn out.

A quick question to all, would you open up a new RTS position on a Friday what with weekend events, rollever etc? I know each may have a different opinion on this, but was just wondering how you would play it.

Cheers all
Boca

674

Hey Boca - I had a short order on AUSNZD, but you are correct it was never hit. For a DMS system entry short, you have to hit an entry point that is a few ticks below the lowest point made on the DI cross. (There are other variations such as spread x C + 5 or whatever cushion you want to build in there.)

On the day of the cross the low was 1.26110, so as long as you set your entry AT OR BELOW this point, it wasn’t hit as the low of the next day was 1.26150. So unfortunately Dale hasn’t gotten his chance to “exorcise that demon” yet, but his day is coming.

Personally I’d open up a position over the weekend (I put in about 12 RTS orders tonight, so far none have been executed) BUT because of the weekend I’d keep it straight up with ADX<25 (preferably under 20) and I’d be looking for something outside the channels entirely (assuming you’re using Dale’s enhancement to the system). Of course, you can ask and receive different opinions on this matter (some guys trade inside the channels), so the right answer is what works best for your personal stance on level of risk you’re willing to take on.

Glad to hear your two trades turned. I’m having a much better day now than I was earlier as my drawdown has been cut in about half, but still waiting for these trades to finally pop green on the screen.

Best of luck with your trades.

Craig

675

hey boca,

i am fine yes and still trading our old methods!! i am doing my best to go back to canada very soon still have some old jobs that make me stuck here for a while.as for the book i still don’t have the time to read it i have it here but i don’t have the time to read it as living with to monsters at the same home is something will drive me crazy!! i am really looking forward to read it and share the experience with u guys but excuse me for a while i will be doing it very soon!!

so it seems that every one is satisfied with the numbers with this book i wish u all good money every day!!

Akram

676

Ok, I’m a little confused… so this book offers trading systems that you can actually follow and use for forex right? I was thinking of buying it, or any book really (I have none) for some help or guidance, cause I’m still really new and I’ve blown out my first real live account already, unfortunately.

677

Zerix - Welcome to the thread. Sorry to hear about your first live account. One of the biggest things that I’ve learned both from the book and discussions with others about the book is that money management is one of the biggest problems that new traders have.

To answer your question, this book has several trading systems that have been applied to Forex with good results. I’m relatively new to Forex myself, and these systems and the group of folks working here have been a great help. I’d recommend buying the book and studying before you get back in the game. If you check Dale’s website (forexbrokersonline dot net) as it offers a discount code to purchase the book. Also, the book is available online at most (if not all) booksellers.

I can say I’ve personally thought the book was a great read, but let me tell you up front there’s not a lot of “fluff” in this book, he cuts right to the chase and “gets down to business”. I’d recommend getting a copy, reading it and reading through this entire thread. Once you’ve read through the book, feel free to post any questions or contact some of us via YM if you have any additional questions.

Best of luck.

678

Good (Sunday) morning folks!!!

Zerix:

I’m not quite sure what you’re confused about to be honest. This book contains trading systems developed by J. Welles Wilder Jnr. back in 1978. Wilder traded commodities and precious metals with these systems. I have adapted them for the forex market is all. To date (since February of this year anyway for most) I’m not aware of anyone who has not realised a minimum 20% gain per month trading these systems (at least not once the ‘fear and greed’ factor has been removed from the equation)!!! Don’t worry about ‘blowing’ your first live account: believe me it’s happened to the best of us. Fortuanately for you: you’ve ‘stumbled’ across this thread so it will be the LAST live account you ‘blow up’!!! Basically: you buy the book (email me for the discount code if you’re interested), and if you open an account at either GCI Financial or Deltastock (seeing that you’re in the USA you’ll only be able to open an account at Deltastock) and specify me as the Introducing Broker then you will get the trading systems in ‘the book’ which I’ve ‘coded’ as indicators and of course free support and backup for them (see my website for further details) as well as mentorship using Yahoo Messenger (to the best of my ability) and of course you’ll be ‘welcomed to the club’. Just one thing: do NOT be fooled into thinking that it’s ‘easy money’ because it’s not. The people who are making money here are spending a good many hours every single day trading these systems so if you’re not prepared to put in the effort then you’re going to be wasting your time (as well as ours) and money. The trading systems in ‘the book’ are NOT a ‘quick fix’ i.e. they are tried, tested, and proven trading systems that IN THE LONG RUN will make you money.

679

Thanks for the replies, I’ll definitely think about it, I think I might just buy it. I’m on vacation from school right now so putting in some time into this won’t be a problem at all.

680

Hello everyone,

so Dale that means that we have to have delta or GCI as a must to trade with these methods? or we can have our own broker who is using the MT4?

Akram

681

Last week was missed by me because of a holiday excursion, but this week it is time to continue with a refreshed mind. I have been thinking some money management issues today after getting live trading experience from a couple of days so far. I initially thought to use the smallest lot sizes for all trades for a while, but that is a bit too close to demo trading - you use lots of time just to see how you make or lose an � or two. I still think to practice with tiny trades with those systems I’m not yet comfortable enough.

But now I am facing the question how to weigh the trade sizes against each other, when several systems are in use at a time. Dale has stated that none of his positions exceeds 1.875% margin of the total capital. This is a decent rule. But do you folks use this kind of a rule as a lower limit as well opening each trade with about the maximum margin? I have been thinking to use the potential maximum loss as another factor in counting position sizes. This would mean that longer-term systems, i.e. VS and DMS would be used with smaller position sizes than the shorter-term ones. In addition, those pairs that have higher volatility would be reduced in trade size. Does anybody apply these kind of money management rules, or how do you balance your trades? chirules54 presented his method in post #83 for weighing the pairs within one system, and I wonder if somebody has invented something like that for concurrently used systems.

J.

682

Dale,
do you place a stop for a VS trade according to VSSTOP immediately when the position is opened, or only then when VSSTOP is above BE?

J.

683

Akram - There is no requirement for having a delta or GCI account for trading, as these systems apply to the market, not a specific broker. The benefit of using delta or GCI is that once your account is opened, Dale will give you the indicators for these systems FOR FREE. If you want to use these systems with MT4 trading interface, you will need to either do the calculations offline or code the indicators for MT4. (Note: There are many MT4 indicators out there with the same name, but they are much different than the Wilder version of those same indicators.)

Hope this helps.

684

J - That green line you see on the chart is the same as the pink with the exception of the constant multiplier being 2 instead of 3 (or 3.1). My understanding of how its used is two ways:

1 - To get in earlier
2 - To get out earlier

As the VS is somewhat analogous to an “intelligent trailing stop”, you will always see the green line SAR closer to the close than the pink line. So this can be used to SAR when the price breaks through the green line (instead of waiting for it to reach the pink). Using this on entry or exit can change the results you will get, as if you’re long and you use the constant of 2, you’ll be more responsive to a pullback that might not be a reversal of the trend.

Or in theory you could use the VSSTOP green line for exit, but use the pink line for entries into positions. The combinations are endless, and different approaches will yield different results with different pairs at different times :slight_smile:

Hope this helps (some).
Craig

685

Thanks yes that helped me to understand it i really appreciate your great help

Akram

686

Craig, thanks for your view! My experiences on VS are based on my initial studies on VS, about which I posted bactesting results a while ago. Then I did not have any idea of using VSSTOP, but experimented with different C factors and ATR period lengths. I also have messed a bit with VS when demo-trading, and I did not utilise VSSTOP then either.

I would say that at least do not do it for both at the same time! A factor of 2 simply does not seem to work alone for VS. I have been considering VSSTOP for exit only, and I have been thinking to do some re-backtesting by using VSSTOP as a trailing stop. It might be interesting to look at the entry as well, but personally I have the gut feeling that it would not be a good idea.

Anyway I firmly believe that a trailing stop is a good idea to use. I just don’t have any experience when to place that stop, and therefore my original question: would you prefer using the “standard” SAR for exiting when VSSTOP would still yield a loss, or would you rather take a loss at VSSTOP right at the beginning, should the trade go against you right ahead?

My backtesting indicated that each pair seems to have some level above which it would be quite reasonable to lock the profits, as it is more probable that the trade will turn against you after that level, if you use the standard SAR for exit. I think that VSSTOP works quite in the similar way and it might be good to take it into use only when the trade is well on profit. On the other hand, if you use the standard SAR in the beginning, it might be better for the whole trade, but then you’d better have the famous “titanium balls”. But again, I have no data to back my thoughts as far as VSSTOP is considered, and therefore I would be most interested to hear real-world experiences about this.

J.