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

Trading Systems Free Forex Trading Systems
967

Have you, folks, already had a look at the VSC1 signals for Monday? The set is even bigger than a week ago. I compiled a checklist for myself containing last week’s signals and candidates + a number of new pairs. Some of the pairs have already given a signal on Friday, but it is possible that we would be able to enter them after a retrace. Even my margins are again wide enough to enter a number of these.

I’m expecting a rough week, but this week was a good one after all. Forex covered almost all of my losses from stocks. If there is any resemblance in the coming week, these should yield profits. This time I’m after the retracements at entry. I may miss some trades, but there are a plenty of them, so at least some of the orders should fire.

There are long candles for AUD and JPY pairs. I’m not sure if this is signalling a big retrace or a big jump.

The most interesting charts for me seem to be EUR/NOK, EUR/SEK, GBP/NOK and NZD/CAD.

I ignored CAD/JPY, NZD/JPY and USD/CAD a week ago. Now these look better.

It is also interesting to notice that the sharpest turns also tend to form the most beautiful candlestick patterns. I didn’t unfortunately pay any attention to this with the EUR/GPB trade in the beginning of the month,
maybe I had taken that good trade then.

I commented that maybe getting such a set of signals even once a year might be good. But now there is another set within a week!!

The entry prices in the following list have been taken from Dale’s indicators. As said, I’m intending to enter at slightly better prices after these have been triggered. Please recheck the values before using them, I may have picked them with wrong style settings on the chart.

I also added dates for the AC setup and SIS signal. Last time none of my stop orders triggered if there was no SIS signal. This is one thing that makes me quite cautious with GBP/ZAR. It can be noted that the pairs that were already on the last list have not typically made new AC setups for VSC1, while there are more new SIS signals. The new pairs have fresher AC setups, which I think is a good thing.

PAIR            ENTRY                   AC date SIS date
 
Last week's signals
AUD/CAD Long    0.88255                 10.9.   19.9.
AUD/JPY Long    90.473                  8.9.    19.9.
AUD/NZD Long    1.21714                 -       22.9.?
AUD/USD Long    0.84151                 9.9.    19.9.
CAD/JPY Long    19.9. - retrace?        18.9.   19.9.
EUR/JPY Long    156.197                 8.9.    12.9.
EUR/USD Long    15.9. - retrace?        12.9.   12.9.
(GBP/CAD skipped) 
GBP/JPY Long    198.198                 8.9.    12.9.
GBP/USD Long    15.9. - retrace?        8.9.    12.9.
NZD/JPY Long    74.789                  17.9.   18.9.
USD/BGN Short   15.9. - retrace?        12.9.   12.9.
USD/CAD Short   19.9. - retrace?        ?       18.9.
USD/DKK Short   15.9. - retrace?        12.9.   12.9.
USD/NOK Short   15.&19.9. - 5.64255     12.9.   19.9.
USD/RUB Short   15.9. - retrace?        10.9.   16.9.
USD/SEK Short   15.&18.9. - 6.57454     12.9.   18.9.
 
Last week's candidates
USD/ZAR Short   about 7.8               16.9.   19.9.
EUR/AUD Short   1.7227                  19.9.   19.9.
USD/RON Short   2.50669                 11.9.   19.9.
 
New signals
AUD/CHF Long    0.9281                  19.9.   19.9.
CHF/JPY Long    18.9. - retrace?        12.9.   18.9.
EUR/CAD Long    retro? or going short? 
EUR/NOK Short   18.9. - 8.26362         19.9.   19.9.
EUR/SEK Short   9.49957                 18.9.   19.9.
GBP/AUD Short   2.18305                 19.9.   19.9.
GBP/NOK Short   10.3778                 18.9.   19.9.
GBP/NZD Short   18.9. - 2.66723         18.9.   19.9.
GBP/ZAR Short                           17.9.   22.9.?
NZD/CAD Long    0.73046                 10.9.   18.9.
NZD/USD Long    18.9. - 0.68415         12.9.   18.9.

J.

968

Good (Sunday) morning all.

‘Father Ted’:

Well it’s official: our President has been ‘recalled’ by the ruling party so there is bound to be a ‘knee jerk’ reaction to this. It makes me laugh though. This has NOTHING to do with any financial crisis (we’re not having one would you believe)!!! This has EVERYTHING to do with the fact that our President ‘fired’ his Vice President a while ago because of suspicion that the Vice President was involved in some corrupt dealings. Unfortuanately the Vice President is more ‘popular’ with the ‘masses’ here so he has all the support. The Vice President has managed (at GREAT cost) to ‘dodge’ all the charges against him and the week before last all charges were dropped against him and our National Prosecuting Authority is not sure whether they’re going to (or can) charge him again. This move yesterday is seen as nothing other than a way to ENSURE that he does not get charged again. We are the only country I know of where the FUTURE President is ALREADY suspected of corruption (and has been to court on a RAPE charge although he WAS found not guilty (I’ll keep my personal opinion to myself)!!! What makes me laugh is this: In Africa they NORMALLY WAIT to get into power and THEN the corruption starts!!! Not us man. Not us. Our ‘lot’ ‘get in early’!!! What this means for us I don’t know but the general consensus over here (at least among those with more than two brain cells) is that it cannot be good. This ‘new guy’ is far more ‘militant’ than the old regime (who I must say I respected) and has the support of the ‘masses’. What I CAN tell you is that he’d better not fool himself into thinking that the people (like me) here are going to just sit back and accept a ‘Mugabe style’ ‘operation’!!!

kaalilaatikko:

That’s a fantastic list I’ll tell you!! Very nice. I took a ‘cursory glance’ yesterday at some charts (although, as I said previously: I’ve PURPOSELY taken ‘time out’ this weekend to ‘lick my wounds’ and ‘get my head right’). What I DID notice is that with a lot of pairs the moves on Friday were extreme to say the least (AUD/??? as examples). To be honest: if ANYTHING I’d wait for the prices to retrace (and, of course, hope that they do).

To be very honest with you: for the first time in a long time I have no idea how to ‘call’ things!!! I’m confused about everything to say the least. I mean: these moves in AUD and NZD and GBP and EUR are ALL because of the Fed’s ‘intervention’ last week. Now some say that it’s the beginning of the end of the crisis (some even say it’s the end). If this is true then AUD and NZD should go DOWN again because the extreme moves in Gold and Silver last week supposedly occurred because people were selling equities and buying Gold as a ‘safe haven’. There are others that believe that this is only a temporary ‘reprieve’ and there is far more and far worse to come. If that happens and equities fall again then, of course, it will affect the GBP and EUR. And what about Oil??? As I said: for the first time in a long time I’m ‘apprehensive’ and I reckon the best thing to do (for me anyway) is just to sit back and see where all of this is going before doing anything (with stocks anyway). As I’ve posted previously: if Wilder’s ‘Delta Phenomenon’ is in any way, shape, or form even CLOSE to being ‘reliable’, then there are a whole bunch of people fooling themselves right now and there are MANY more ‘shoes to drop’ before this is all over. Oddly enough (and I remember posting about this AGES ago): credit card companies were going to be next and this week I saw on Bloomberg TV that credit card arrear payements and ‘chargebacks’ have started to soar. Maybe THIS is the next ‘shoe to drop’. I have been positive about all of this for some time now but I have to say that this last weeks moves by the Fed have dissapointed me and ‘taken the wind out of my sails’. I mean: I’m finding it very hard to find ‘reason’ in all of this. Something I did NOT mention is that this ban on short selling of financial stocks EXCLUDED about five or seven financial stocks who, at the moment, have the highest percentages of their float (the amount of stock available to the public) in short interest (people expecting this stock do drop). The short sellers are being targeted and blamed for the demise of Bear Stearns, Freddie and Fannie, AIG, and Lehman hence the ban. But then I ask you: HOW CAN YOU SIMPLY EXCLUDE THESE companies??? I mean: ONE of them is Fifth Third Bancorp!!! Something ‘smacks’ here of ‘wheeling and dealing’ in my opinion. That’s not a ‘free market’!!! TO be honest: I was ALL FOR the government ‘stepping in’ to help the market and ‘scoffed’ at some of the people (like Jim Rodgers who has always been critical of the Fed) who said to just let the markets sort themselves out and let whoever is going to fail, fail. Now, I’m afraid, I have to agree with this viewpoint. As I’ve said before: this ‘bailout package’ (or whatever you want to call it) appears to be EXTREMELY SELECTIVE and I’d really like to know why!!!

969

Right, well, moving on from my ‘whining and squealing like a pig’:

I’m busy trying to ‘finesse’ this VSC(1) / ‘Enron’ ‘system’ and here is what I’m becoming increasingly comfortable with:

Let’s use AUD/CHF as an example.

I’m sure you’ll agree with me that on 2008-09-11 we had our first close contrary to the VSC(1) (we’d been ‘looking to go long’ using the ‘VSFinalPrevEntry’ ‘indicator’ with date 2008-07-23 RIGHT).

We placed our order above the high of that bar and we then added the ‘VSFinalPrev’ ‘indicator’ to the chart using the date of the ‘contrary close’ as above i.e. 2008-09-11 (and, of course, the ‘VSFinalPrev’ ‘indicator’ would be ‘looking to go short’ and, the parameters of course, would be 2008-09-11/0/3.1/1).

Now the next day our order was executed and, ‘lo and behold’ the NEXT day the darn thing turned against us right??? This was the 2008-09-15. And, what’s more, on that day we had a close contrary to the ‘VSFinalPrev’ VSC(1) SAR (the blue SAR line). Right???

Now here is the ‘finessing’:

Your ORIGINAL ENTRY ORDER MUST BE A NORMAL ORDER NOT A LOGICAL ORDER. So at this point you’re in a NORMAL POSITION. Now: you would place a LOGICAL ORDER to ‘Enron’ the position below the bar that closed contrary to the ‘VSFinalPrev’ VSC(1) SAR (the blue SAR) (above).

Now look what happened the next day. The LOGICAL ‘Enron’ order was executed because price went against us. So at this point you now have a NORMAL POSITION showing of 1 lot and a LOGICAL POSITION showing the remainder of the position. In other words: your ‘Enron’ position is always a LOGICAL POSITION.

Now we move on to the next day where price continued to go against us.

The next day it turned in our favor but not enough to close contrary to the ‘VSFinalPrevEntry’ ‘indicator’ (which should still be on the chart).

Now the next day (Friday) we did INDEED have a close contrary to the ‘VSFinalPrevEntry’ ‘indicator’ so NOW we need to ‘Un-Enron’ the position at the price above this bar. So how do we do this??? On the LOGICAL POSITION i.e. the ‘Enron’ position you place a STOP LOSS at this value. If the price now continues on up the ‘Enron’ position will be closed and, hopefully, the price will now continue on up and nothing lost.

Now the SECOND part of the ‘finessing’:

I have noticed that sometimes (not on this pair or in this example), after a reversal in our favour, price will close contrary to the ‘VSFinalPrev’ VSC(1) SAR BEFORE it closes AGAIN contrary to the ‘VSFinalPrevEntry’ VSC(1) SAR. When this happens you place your ‘Un-Enron’ order AT THIS POINT i.e. you don’t have to wait for the price to close contrary to the ‘VSFinalPrevEntry’ VSC(1) SAR to ‘Un-Enron’ i.e. a close contary to the ‘VSFinalPrev’ VSC(1) SAR will do AND this allows to you ‘Un-Enron’ the position earlier.

To summarise:

Entry orders are NORMAL ORDERS.

‘Enron’ orders are LOGICAL ORDERS.

‘Enron’ positions are closed using a STOP LOSS NOT another order in the opposite direction.

You use the ‘VSFinalPrevEntry’ ‘indicator’ for ENTRY.

Once IN the position and IF the position has been ‘Enron’d’ you ‘Un-Enron’ at EITHER a close contrary to the ‘VSFinalPrevEntry’ SAR OR a close contrary to the ‘VSFinalPrev’ SAR WHICHEVER COMES FIRST.

And lastly: you always ‘Enron’ a position upon a close CONTRARY to the ‘VSFinalPrev’ ‘indicator’.

Now from this you can see that the VSC(3.1) (or VSC(3.0)) SAR is no longer necessary because we’re not going to wait for a position to go that far against us before placing an ‘Enron’ order.

One other thing that I’m not ENTIRELY sure about but am starting to ‘lean toward’ is actually ENTERING AT MARKET just after the close if you’ve just had a close contrary to the ‘VSFinalPrev’ VSC(1) SAR. (This, by the way, follows the ‘original’ VS if you can remember). Why??? Because we’re now limiting how far a position can go against us by using a closer SAR to ‘Enron’ it’s not really such an issue if the price turns against you almost immediately. As a matter of fact: this MAY be better than placing an order that is far away from price, then that order DOES get hit, and THEN the price turns against you. The loss that you’ll carry to ‘Enron’ in this instance will be far GREATER than if you had entered at market. What do you think???

Now following on from the above:

Using the above ‘Enron’ procedure could very well eliminate any losses that may be the result of a false SIS SAR signals as well. In other words: forgetting about the VSC(1) for a minute and ‘talking purely SIS’: the above ‘Enron’ procedure would guarantee that you’d not take a loss using the SIS.

I know that’s probably a whole lot to ‘digest’. Just work through it step by step and I’m sure it will become clear. If not: email me and we can set up a YM ‘chat’ and go through it.

Edit:

By the way:

I don’t know if any of you are following some of these trades through BUT take a look at two ‘textbook’ VSC(1) trades: GBP/NOK and EUR/GBP (BOTH of which I, of course, ‘bailed on’ early as you know).

GBP/NOK:

You got in at around 9.9398 (that’s the high of 2008-09-05 but of course it would depend on which of the ‘TrailingIndexSAROrder’ order values you used but that’s only a couple of pips either way) and only NOW do you have your first close contrary to the ‘VSFinalPrev’ VSC(1) so you’d place an order to TP tonight (OR you could even ‘Enron’ the position, let price go down again, and ‘Un-Enron’ and make AGAIN to the upside thus ADDING to you profit). Either way: if tonights order got executed you’d have made 4733 pips or thereabouts in 10 days and, even if you were getting $1 USD per pip movement that’s ‘not too shabby’ I’d say.

EUR/GBP:

You got in at around 0.8093 (the low or thereabouts on 2008-09-04) and you’ve not even had a close contary to the ‘VSFinalPrev’ VSC(1) SAR yet so, right now, you should be looking at roughly 207 pips (taken from your entry to Friday’s close of 0.7886) (not quite as good as GBP/NOK BUT HEY that’s profit)!!!

Now let’s face it: I suppose very FEW entries are going to turn out like these on a regular basis i.e. these were ‘easy stress free no BS trades’ i.e. price went straight up or staight down but STILL: using the ‘Enron’ procedure detailed above there is not reason why, over time, your profits cannot equal these two ‘textbook’ trades.

ODDLY enough: one COULD in fact argue that you’d have made exactly the same amount of profit using the ‘standard’ SIS of course!!! On the other hand: the SIS would have got you into your short EUR/GBP a day or two later than the VSC(1) and, if price now turns, I’ll ‘wager’ that a lot more profit will get ‘eaten away’ if you’re waiting for a close to trigger the SIS Trailing Index SAR. We’ll have to see how this trades concludes!!!

What else is interesting to note is that with both of these trades the DMS was absolutely USELESS and, as a matter of fact, you’d either have waited DAYS only to BE OR you’d have lost money big time.

Good 'ol Parabolic SAR worked on these trades as well but that’s only because of the clear trends.

So again: my faith is restored in the SIS and, of course, our VSC(1)!!!

And what is even MORE exciting is this:

Had you been trading either the SIS or the VSC(1) since about 2008-04-18 and using the above ‘finessed version’ of the ‘Enron’ ‘system’ you’d have made an absolute fortune on GBP/NOK (for example). EVEN although you’d have been ‘kicked out’ of the long trades about four or five times you’d have made profit on every long price movement right up until today without ever taking a single loss whereas using the ‘standard’ SIS with NO ‘Enron’ you’d have taken quite a few losses (as a matter of fact, just looking at that chart, the SIS with no ‘Enron’ would have actually resulted in a nett loss I think up until this last long uptrend).

970

Good (Monday) morning all.

I was just sending an email to someone and it ocurred to me that I should post this message in an effort to make everyone (who may not know) aware one ‘pitfall’ of trading stocks or, shall I say, the one thing that is ‘against’ you and I as retail traders and it is something to watch out for.

As you may or may not know: the big investment firms have special permission to place orders and trade one hour BEFORE the NYSE opens and one hour AFTER the NYSE closes. This is the premarket and after hours trading that you may have heard mention of. This, of course, gives them the ability to either buy or sell stock when we CANNOT i.e. we have to wait for the NYSE to open before we can do anything. Now this COULD be a HUGE problem under ‘abnormal circumstances’ such as the previaling market conditions (‘credit crunch’) e.g. when a firm announces over a weekend or after hours that they are filing for bankruptcy e.g. Lehman Brothers. The big investment firms can start selling off that stock one hour before you and I can start doing the same thing. By the time that you and I are able to ‘act’ it’s too late i.e. by the time we are able to trade (during ‘normal hours’ i.e. after the NYSE has opened) the stock has already dropped. And, if you can remember, placing a stop loss order before the close of the previous day is not going to help you either i.e. the stop loss order becomes a market order when triggered and is executed at the first available price after the NYSE opens which, in these types of cases, will always be ‘after the horse has bolted’.

This is something very important to bear in mind when trading stocks (particularly) and commodities (such as Soybeans which are also only traded at certain times).

971

Afternoon all,

Good to see the thread alive and well and sorry for my lack of contribution.

I agree with you Dale on the money management and using a % of your margin to select position size. But even though you do this, I think you still have to have a mental stop in place where you will say enough is enough and get out of the trade. And when you get out, your loss should only be x% of your account balance. That x% should be a value that you are comfortable with and accept as part and parcel of trading.

Lets take Silver as an example. Lets say silver is at 12.00 and I buy. Lets also assume that I have a mental note that at 10.00 I will exit if it all goes ass for tit. That is 2.00 to the downside in risk so I would have to select a postion size that should that event happen, that 2.00 x number of lots, is not such an amount that it is going to cause me to have heart attack or worse.

That’s the way I do it anyway, but each to their own.

Over and out for now. a big 10:4
Boca

972

Hey Boca,

Nice to hear from you.

You know what I’ve started doing (just a suggestion as is yours):

With Gold, Silver, and CFD’s:

I now use EUR/USD as the ‘standard’. In other words: if, based on our money mangement rules, a single pip movement in EUR/USD will ‘equate’ to say $5 then, using Silver as an example, I’ll buy 500 units of Silver which will ALSO equate to $5 per cent movement on Silver. That’s the ony way I can ‘rationalize’ this for myself.

To be honest: I started wondering about this when I took such big losses on those stocks (16% is a fair whack in any terms). I mean: I was sticking RELIGIOUSLY to our money management rules but somehow I just felt that those losses, EVEN GIVEN their violent moves, were ‘out of kilter’. Only afterward did it occur to me that this was the reason. I mean: if you buy ‘cheap stocks’ and you use our money mangement rules you COULD VERY WELL end up with a ridiculous $ per cent movement on those CFD’s EVEN ALTHOUGH you’re sticking to our money mangement rules and Silver is even worse given the fact that a single unit of Silver only costs about $0.17!!!. If you’re trading with big lots sizes that a WHOLE LOT OF SILVER!!! Anyway: This is what I now believe happened. Yes: there would STILL have been losses but they’d never have been that big.

We’ll NEVER stop learning will we!!!

Good trading!!!

973

I meant to post this:

I was listening to an analyst from somewhere or the other and they mentioned something like: ‘well on the monthly chart with a 16 period moving average …’. This made me think of something i.e. Wilder’s ‘Delta Phenomenon’ is ALSO based on ‘fours’ e.g. four days, four months, four years, that type of thing (and 16 is 4 X 4 for those who have not made the connection. :stuck_out_tongue: )!!!. So I ‘slapped’ a 16 period EMA onto the monthly charts of the Dow, Nasdaq, and S&P and WOW: if you just took long positions when price closed above the EMA and stopped and reversed upon a close below the EMA you could not have gone wrong. Then I had a look at GBP/JPY and saw the same thing (interestingly enough on both the monthly and the weekly chart but it does not work so well on the daily charts).

Now of COURSE the above (well when using the monthly charts) is L-O-N-G term and would require LOADS of patience and you’d have to be even MORE careful with money management BUT it would be a ‘safe bet’ to only go long using ANY system if price was above the EMA and only go short if the price was below the EMA when trading daily.

Just something I noticed.

974

Good evening all,

As I’ve been away and all I have not been keeping up as much as I should. I have some question relating to VSC1 and VS indicators in general.

1, Which VS indicator are we using? There are a lot now on the platform (thanks to you Dale of course:D). I have been using the one where I type, Swing date, 0-1 for short long, and the constant.

2, Wilder uses ATR (7) for the VS. Are you using ATR (14) now Dale? Are all the VS indicators now using ATR (14).

3, Lets assume a downtrend and we are using VSC1. The VS in the book adds ATR(7) to the most favourable close in the direction of the trend. In this case the lowest close. So using Delta indicator I should add the date of the lowest close (The SIP) and use 1 for looking to go long? Correct?

The reason I ask is that I was looking at a chart of EMC and I can see a downtrend at present. I put up my VSC1 on the chart, but when I put up ATR (7 or 14), I can not get the SAR point of VSC1 from the indicator to match what it would be if I calculated it manually.

4, When SAR is penetrated. You are uing the extreme point rule before taking the trade… So if the VSC1 SAR is broken to go long, I only go long if the high point of that day is broken? Correct?

I hope somebody can put me right on the above. That’s all for now. I have read the thread so apologies if these answers have been discussed before.

Thanks all
Happy trading

975

Good (Wednesday) morning everyone.

Hey Boca:

One by one:

  1. I’m using the very last two under the ‘Volatility System’ section i.e. ‘VSFinalPrevEntry’ (for initial entry) and ‘VSFinalPrev’ (to track the trade, 'Enron, or TP).

  2. Yep: ALL the Wilder indicators are now using ATR(14) and not ATR(7) (not that it makes that much difference to be honest). Please ALSO note that NO SMOOTHING is applied to ANY of the Wilder indicators INCLUDING ATR.

  3. How much is it out and could the difference be because of the details in 2) above??? Let me know if you don’t mind so I can check. I know the ORIGINAL VS was ‘spot on’ with ‘the book’ but this thing has ‘morphed’ so many times I hope I’ve not ‘lost track’!!! Having said that though: it works (WELL)!!! One other thing: REMEMBER that the ‘VSFinalPrevEntry’ and ‘VSFinalPrev’ are showing you YESTERDAY’S SAR value NOT todays (this done so that you don’t have to be sitting and watching to see if price indeed closed contrary to the SAR TODAY i.e. if you look at your chart any time the next day after the close you’ll be able to see whether price closed contrary to the SAR or not).

  4. That is how we’ve been ‘playing it’ up until now but, to be honest, because we’re going ‘Enron’ positions instead of stopping and reversing or taking losses I’m really NOW of the opinion to simply go long or short at market upon a close contrary to the SAR BUT this is a personal preference. The problem OF LATE (not I say ‘OF LATE’) is that with these HUGE swings in price: many times the bar will have a HUGE long shadow and, in some cases, a HUGE long body as well. This, of course, has the effect of pushing your order price WAY away and, of course, if your order is executed at these levels and price turns against you the potential losses that you’re going to carry are increased somewhat. You need to go back a few pages on the thread and have a look at some of the entry idea that have been expressed. One of them (suggested or noted by ‘Father Ted’ (Derek)) is to NOT place an order upon a close contrary to the SAR but to WAIT for price to retrace FIRST and only then place an order. This I like.

Please let me know how ‘out’ the calculations are when compared to ‘the book’ (I’ll take a look myself now as well I think). Put it this way: the figures should be even easier to reconcile with ‘the book’ for the simple reason that the ATR is no longer ‘smoothed’ so you should be able to put the ATR onto the chart and just use that value i.e. no longer do you have to worry that the ATR that you’re seeing on your chart is ‘carrying with it’ previous values. Let me know.

976

Hello all,

Thanks for the reply Dale and for clearing that up for me.

I had a look at the chart that was bothering me and to be honest the difference is not much, so I dont see it is a problem at all. Just for your info though if you look at the chart of EMC provided the lowest close is at 12.12 and the ATR is at 0.89. So the SAR for VSC1 would be 12.12 +0.89 = 13.01. With the VS indicator the SAR is placed at 13.13. This difference is small so I dont see a problem.

May I just ak again, once the VS indicator is on the chart, I do not need to adjust it every day. I mean, its position will change Automatically as the daily range changes?

I like the methods discussed for entry and take your point with the long candles piercing the SAR, in which case to wait for an EP of that long candle, you could be getting in to late.

As far as “Enroning” is concerned, I am still not totally clear on this method. Would you care to elaborate more on this? In your own time of course.

Cheers
Boca

EMC chart.jpg700×516 69.1 KB

977

Good (Thursday) morning everyone.

Boca:

Just to put yours (and everyone elses) mind at ease: I just checked the ‘VSFinalPrev’ and ‘VSFinalPrevEntry’ against an Excel Worksheet that I created ‘from scratch’ (so as not to repeat previous errors if any) and they’re both ‘spot on to the cent’ (I used your CFD ‘EMC’ to check).

The difference that you saw was because you were using the ‘standard’, ‘original’ version of the VS. This was using ATR(7) and not ATR(14) and this accounts for the difference. As I said previously: it does not appear to make THAT much difference at all (at least not to entry and exit points).

As far as my ‘Enron’ ‘system’ is concerned:

All ‘Enronning’ a position means is this:

If you open a position (it does not matter which system you’re using) and the positiong goes against you: instead of using a stop loss or stopping and reversing at a loss you ‘Enron’ the position. By doing this you never realise a loss and you keep the position open so that you can get back in at a better price eventually. It probably has more of a ‘pschycological’ than a ‘financial’ benefit i.e. you never take a loss. Having said THAT though: if price does move VERY MUCH against you then you WILL get in at a far better price than your original entry price.

Now I did attempt how to explain this in my previous post but let me try again:

(Again: this is NOT trading system dependant i.e. it does not matter whether you’re using the SIS or the VS or anything else. It IS specific to Delta’s trading platform however).

You open a ‘normal’ position as indicated by your trading system. By this I mean there is no ‘tick’ in the ‘Trades with logical orders’ and the prompt should then read ‘Trades with logical orders (No)’ at this time.

Now let’s say that the trade goes against you from this point. At some point your trading system is going signal to you that you need to place and order to stop and reverse. Under ‘normal’ circumstances you’d take a loss at this point. You now ENABLE the ‘Trades with logical orders’ by putting a ‘tick’ in the checkbox and the prompt should then read ‘Trades with logical orders (Yes)’ at this time BEFORE placing this order to stop and reverse. If that order gets executed a new position will be opened but it will be a ‘logical’ position. Now assuming the price continues to go against you for some time you will be making profit on this ‘logical’ position. Once you are signalled to do so by your trading system to close THIS position you’d have this position stopped out at a profit and be back in the trade in the original direction.

Remember that your ‘logical’ order (and thus the position that will get opened if it’s executed) will always be for the ORIGINAL NUMBER OF LOTS LESS ONE LOT (otherwise you’ll realise the loss immediately anyway just as if you’d closed the position totally in the first place).

In other words: if a position goes against you then you will make profit on the position going against you and you will take this profit when signalled to do so my your trading system to stop and reverse again so that you’re trading in the direction of the original trade again. This benefits you by a) you’ve freed up margin while the trade is going against you, b) you’re making profit on the trade that is going against you and this in turn ‘improves’ the price at which you opened the original position so that when you start trading back in the original direction your ‘Average price’ at which the original position was opened is ‘improved’ thus allowing the original position to get to a profit sooner.

I hope that explains it (because I don’t know of another way of putting it)!!!

If not: send me an email with a time and we can ‘YM’!!!

978

Good day all.

Dale,

Thanks for the reply on “Enroning” and the VS SAR. Very well put and I can see what you’re doing now. I would say it takes a degree of courage to carry it out.

On another note, I saw a pop up message appear on my Delta plaform regarding the limited shorting of the following companies etc. Did you see this? Most punters on CNBC / Bloomberg do not see this as a good idea. Will be interesting to see how this pans out.

Cheers and thanks again

979

Hey Boca,

I’d say it takes MORE courage to take a loss!!! LOL!!! At least doing it THIS way I KNOW that I’ll never close a position out at a loss although it may take a bit longer to do so at a (albeit greater) profit (eventually)!!!

Yeh: I saw that list. You’ll note that my ‘obituary list’ from last week is a ‘perfect subset’ of that note from Delta!!! Well: if nothing else I SURE know ‘how to pick them’!!! But hey: you live and learn!!! What’s REALLY ‘pee’d me off’ is that you’ll notice that Freddie and Fannie have actually been GAINING over the past two or three days (and if this bill is passed they’ll probably gain some more). To make matters worse: Delta sent one of those notes out last week saying that Freddie and Fannie (amongst others) were to be suspended the next day from trading at Delta. That was when I closed out those positions at a loss. NOW I see that they are STILL on Delta’s platform (I ASSUME they can STILL be traded) and, as I’ve said, now gaining. Come to think of it: did anyone else (that can trade CFD’s at Delta) get that note??? Let me know. (I just tried to go back in the news but it only goes back a day or two). Do YOU remember seeing a note like that from Delta anyone???

980

Hey Dale,

The dynamic duo, Freddie and Fannie can still be traded from what I can see. Which is good, as you need a bit of fanny every now and then.:smiley:

Scott

981

Hello again,

Yeh but that’s what I’m saying. I received a ‘News’ from Delta last week saying that Freddie, Fannie, AIG, and Lehman were being suspended from trading at Delta the next day (I cannot find the news item now because the history only goes back 24 hours). What I want to know is if anybody else received this news item AT THE TIME??? I closed out those positions at the time because I was worried that the prices may even drop further before the suspension but now, it would seem, all of those CFD’s (with the obvious excpetion of Lehman) are still tradeable and it THEREFORE means that I took those losses for nothing based on the fact that I received this information from Delta that, it would appear, was inaccurate. See what I’m getting at???

Now ANOTHER VERY IMPORTANT POINT TO MY ‘ENRON’ SYSTEM:

I’ve just discovered an ‘error’ or ‘mistatement’ in my previous messages regarding the ‘Enron’ orders.

It would appear that you CAN NOT open a ‘normal’ position and then open a ‘logical’ position in the opposite direction i.e. the system will not accept that. So: ALL orders have to be ‘normal’ orders or ALL orders have to be ‘logical’ orders. Other than that the ‘Enron’ ‘operation’ is the same i.e. you ‘Enron’ ALL LOTS LESS ONE. Sorry about that. (To be honest: I’m sure it USED to work but I just tried it on a certain CFD and it did not work i.e. it would not accept the ‘logical’ order).

982

Hey Dale,

The only message I recieved at Delta was the one saying that certain CFD’s would have shorting restrictions. I didn’t see anything relating to Fannie or Freddie being suspended from trading.

cheers

983

The short-term history is repeating itself this week, except that there hasn’t been any good recovery rally yet. Next week maybe. I’ve already got my first VS SAR victim (CFD) that survived the previous drop. While watching my position list that is blinking red day after day, an idea has occurred to me. I’m not the first one to think about this, but here it is anyway. It has been a rule for me that less than 10% of my positions are red, and most of the time none. Only on a couple of occasions I remember seeing more than half of them green. So: had I opened all my positions in the opposite direction than what our systems have told me, I should have made more than 20% in the last two weeks only. It seems that an overwhelming majority of the trades initially go some distance in the wrong direction, so why fight against this? I have already seen several negative stellar trades, but the first positive one is still letting me wait itself. Well, there could have been a couple, but I have not dared to ride them far enough. There is one caveat here, though. This would turn the mental model upside down, and looking at a SAR/SL point would change to looking at TP, and vice versa. Even if this strategy worked initially right after entering, it might be still tough to exit correctly here.

  • Sorry, Dale, I cannot for my part confirm nor reject that supposed item of news from Delta.

J.

984

Good (Saturday) morning all.

Well I’m not going to lie to anyone here: everthing I touch of late appears to ‘turn to sh*t’. While I’ve now (this month) managed to double two managed accounts (opened in April) I’m not feeling any sense of satisfaction at all unfortuanately. I don’t know if it’s just these markets right now or what but really: I’m getting more and more frustrated as the days go by of late. On the other hand it’s what I suspected would happen given the humungous gains that I’d gotten so ‘used to’ making. When they’re NOT there or when you’ve had to take a ‘knock’ it just makes it that much harder to ‘get up and go again’. Obviously I have no choice BUT to ‘get up and go again’ but man: it gets harder to do every time!!!

On the other hand I suppose I could not expect much more at the moment given that I’m (for the most part) just ‘sitting out’ and waiting to see where all this goes and, of course, this only leads to more frustration. And I thought that these markets were difficult to trade in a month ago??? Oh boy: since this business in Washington started it’s made trading these markets as they were at the very beginning of the ‘credit crunch’ look like ‘childs play’!!!

Anyway: on with it!!!

At least this ‘waiting on the sidelines’ has given me a lot of time to analyse our trading systems, well, in particular the VSC(1).

What’s become VERY apparent is that the ‘standard’ VS would have ‘killed you off’ by now. Using the ‘standard’ constant of between 2.8 - 3.1: you get in VERY late and get out VERY late and, for the most part, every time you SAR it would have been at a loss. The only reason that the ‘standard’ VS worked so well for me is because I always took profit early. I see that now. HOWEVER: the VSC(1) is another ‘ball game’ altogether. It gets you in ‘on time’ no question. In my ‘never ending quest’ for ‘VSC(1) perfection’ I’ve ‘stumbled across’ YET ANOTHER way of limiting losses and locking in profits which is the ‘utopia’ I would imagine. What’s more: it’s an even simpler method.

You use the ‘VSFinalPrevEntry’ for entry (as we have been doing up until now or, at least, as I have been doing up until now). However: YOU LEAVE this initial entry point on your chart. You then use the ‘VSFinalPrev’ to track the trade and lock in PROFIT as we have been doing. HOWEVER: you only ‘Enron’ the position if it goes against you upon a close contrary to your initial entry point i.e. contrary to the original ‘VSFinalPrevEntry’ SAR. This cuts down on ‘whipsaws’ BUT limits the losses that you carry. You then re-enter or ‘Un-Enron’ when you get yet another close contrary to the original VSC(1) SAR (the one that you used for your initial entry). Again: almost always these entry points are in the exact same place as the SIS entry points so they act as confirmation of each other. Take a look.

Anyway: again the best thing I can do at this time is ‘step away’ for the weekend and ‘clear my mind’ as it were and, of course, wait in anticipation for the outcome of the ‘shinannigans’ on Capitol Hill. I WILL tell you THIS much though: this whole thing has become EXTREMELY entertaining. What with all the ‘political posturing’ and stuff you’d not get this many laughs watching Cartoon Network!!!

My ‘take’ on all of this for what it’s worth: I don’t see HOW EVEN this ‘bailout package’ (oops, sorry, we’re not supposed to refer to it as that) is going to change things. YES we may get a short term equities rally (which, of course, will move the currencies) but then: nothing’s changed. I’ve called the ‘Dow bottom’ at around 10 000. NOW there is even talk of it being at 9 000!!! The ‘plus’ of THAT of course: BUY GBP/JPY when the Dow is at 9 000!!! What I fail to understand is this: this whole current ‘issue’ is because nobody can get credit. Not you, not I, not the banks and financial insitutions, not businesses. So now: the government ‘steps in’ and takes all of those bad debts off of the books. Now I ask you this: if it was me and I was in the business of lending money then EVEN ALTHOUGH I no longer have this bad debt on my books I’m NOW not just going to start giving credit again ‘willy nilly’ now am I??? I’d rather just ‘sit on the cash’ and the loans that I DID grant would STILL be ONLY to those with top credit ratings. In other words: I’ve now ALREADY ‘messed up’, I’ve been given a ‘reprieve’ by the government, so I’m CERTAINLY not going to go and look for MORE ‘troubled’ loans!!! This is just common sense to me (or maybe I’m just not a good businessman or maybe I’m just oversimplifying things here). Having said that: there have been a whole bunch of congressmen and congresswoman expressing the same thoughts so I can’t be THAT ‘thick’ (UNLESS being ‘that thick’ is a qualification for becoming a congressman in the first place)!!!

Anyway: I’ll leave you all with my ‘inane drivel’ to ‘ponder’ for now.

Have a nice weekend.

985

Dale - You hit the nail on the head. Taking away the bad debt won’t fix anything, as there is money available, it just costs more to get it these days. Few examples from my personal experience (friends/acquantances)

  1. Two friends of mine are refinancing their houses with NO problems at all. They had good mortgages from the beginning, have 20%+ equity in their house, etc and now they have multiple offers of lending.

  2. Toy store owner looking for a “Christmas Loan”. By that I mean, every year around this time they borrow money to load up the store with Christmas toys. This year, no one will lend them the money as they don’t have any collateral for it (they only had the promise of Christmas sales) and no lender is willing to bet on the buyers this Christmas season.

  3. Many companies trying to get loans are having no problem finding lenders, BUT if their balance sheet is poor (which most are) they aren’t able to get favorable terms on their loans. By that I mean, most of them were getting 5-6% offers a couple of years ago, now most lenders are looking for at least 9-10% and possibly higher, as well as typically some sort of “physical asset” to help offset the lender’s risk.

So as Dale stated, there is money available, its just that lenders today want to ensure they’re taking a safe risk. I’m of the belief when it comes to housing, the US is heading back to the 20% downpayment days of old. Reason being is when I buy a $500k house with $100k down, I stand to lose $100k, and odds of the property dropping more than 20% isn’t very great. I’ve even read articles where 192 economists said the “bailout” is a bad idea, and that list consists of Nobel Peace Prize winners. Of course this should mean the USD is gonna tank, unless things are worse elsewhere.

On another note - this is a great article to read (especially for you Dale :slight_smile:

http://www.reuters dot com/article/marketsNews/idINN2733210920080927?rpc=44

986

Good (Sunday) morning.

Hey Craig:

I was concerned about you!!! I even asked Brian about you yesterday!!! Glad to see you’re around and OK.

Thanks for the article!!! I’ve stayed away from ‘all things financial’ since my last ‘kick in the financial nuts’ so I’m good (well better anyway).

You know that ONE thing that I HAVE thought about since all of this started: what happened to the days where you bought something only when you had enough cash??? Come to think of it: were there EVER such days??? I mean: when and how did we get to the point where we cannot survive without credit??? In my computer business I would never buy anything on terms because I knew that all it was ‘buying’ me was thirty days. Once those thirty days have passed you’re really back to cash not so??? Same with overdrafts and credit cards. They really only help you the first month that you get them. Once you’ve spent that money you’re back to cash (and now paying interest). Don’t get me wrong: I’d never have been able to buy a house or cars or anything else for that matter without credit but I’m just interested to know how we as a people got here!!! Reaearch into this could be quite interesting I think. And what’s more: if you think about it even what WE do is on credit!!! Leverage??? That’s credit!!!

Anyway: I hope that this month has treated you well. I for one am glad this month is over (which is really dissapointing to me given the fact that I was so ‘fired up’ at the begining of the month)!!! I’m not even sure I WANT to work out the performance for the month. At a cursory glance I’ll be lucky to have just broken even (on average across all accounts that is) but I have a sneaky suspicion that I’m ‘down’ for the month. I’ll see. If the results are not TOO embarrasing I’ll post them!!! As I said: the only ‘shining light’ is that I’ve manged to (slightly more) than double two managed accounts but, if the truth be told, they really did not have that far to go so even that’s ‘no great shake’!!! All I know is that I need to ‘come out fighting’ again from this week. And can you believe this: Lawmakers have apparantely been able to ‘kiss and make up’ and finalise a bill for signature. Paul Newman died. I get an alert from the New York Times about the death of Paul Newman but nothing about the ‘kiss and make up’!!! Now as much as I liked Paul Newman: I would have thought that at VERY least the New York Times would have deemed the ‘kiss and make up’ of FAR more importance!!! (Note to self: stop being so bitter and twisted and stop complaining and just ‘get on with it’)!!! Having said that though: I made, what I feel, is an interesting point to a friend of mine yesterday. I have ‘romanticised’ this business and it’s taken the events of these past three or four weeks for me see it ‘for what it is’. In my opinion: you may as well have been gambling in a casino with a ‘system’. You’d probably have done better. And now I constantly find myself asking just how much manipulation goes on in the course of a ‘normal’ trading day??? I mean: it’s only the sheer SCALE of THIS manipulation that’s made it impossible to ‘cover up’ but, during the course of a ‘normal’ trading day: who knows.

AGAIN: I hope this next month will get us (me) ‘back on track’!!! Good and HAPPY trading everyone!!!