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

[pip_huntter]

Hello Dale,

You r right i agree on every thing that were saying.but it a human nature that u know u feel u missed allot and every body else tried the systems and the discovered that things r not worth it so it always come like a danger bell for u that ok let us not give it a try.

But as a mentioned before things are good and it is getting good every day the system put me in a good profitable trade USD/CAD and i am happy about it .although i am positive sure that every system has it is fall down and peak as well hopefully that the gains are more than the losses that is all what i am looking for i will try it more ad more and will post my feed back here.

Regards,

Akram

[dpaterso]

Good (Sunday) morning all.

An observation and an update:

Things ‘ain’t good’ again unfortuanately. I pretty much broke even this week and that’s NOT GOOD!!!

The facts of the matter are this:

EVERYONE is complaining about the current market volatility and, as I said in an email to my clients, I don’t care whether you’ve been at this business for 100 years or for 1 year or if you’re using indicators or candlesticks or our ‘Wilder stuff’: nothing prepares you for the moves we’ere seeing. The Dow, for example, ‘falls like a rock’ by 400 points two days in succession and then, without warning, rallies 500 points the next (and, of course, takes pairs like GBP/JPY and EUR/JPY along with it)!!!

Because of the above the ASI / SIS / FSS ‘falls over’ because prices never move long enough in a single direction to get to a profit situation before having to SAR and the VS I’m not using so I cannot comment.

ALL IS NOT LOST though!!! There IS INDEED a ‘silver lining’ here that I’ve now found:

The DMS.

Now:

(By the way: I actually cannot take all the credit for this because it was ‘pipgobbler’ who posted about his ADX oscillator for MT4 that gave me the idea to convert our ‘proper’ ADX into an oscillator. Had he not posted about this I would not have started working on it. Let me make this VERY clear however: I have checked the code of that ADX oscillator and it does NOT incorporate Wilder’s smoothing technique and it ONLY gives signals when +DI and -DI cross over each other so just be aware of this i.e. it’s not ‘pure Wilder’ ADX/ADXR).

The fact of the matter is the the DMS appears to be THE ONLY system (with the POSSIBLE exception of the VS) that can ‘hold it’s own’ in the markets of today. To make matter worse: the general consensus is that volatility is now here to stay so things are not going to change in the near future by the looks of things so we simply have to adapt.

I cannot speak for anyone else but I know for myself: the main reason why the DMS has never ‘featured’ with me is because it’s a real ‘pain’ to trade if you’re using ADX presented in its ‘standard form’. Now that I’ve coded (and finally completed) the ADX Oscillator it makes things MUCH easier and NOW it is REAL easy to see the merit of the DMS / ADX and once again ‘the old mans’ SHEER GENIUS becomes apparent!!!

I wish to draw your attention to the charts that I have attached (and I’m NOT ‘cherry picking’ here either i.e. no matter how far you go back in the charts it works. I’m not saying that there are always trends WHICH WE ARE ALL AWARE OF but it VERY ACCURATELY tells you WHEN and WHAT to be trading).

The DMS was good for 6 944 pips on GBP/JPY from 1 August 2008 up until Friday’s close without ONE SINGLE WHIPSAW.

The DMS was good for 4 776 pips on EUR/JPY from 29 July 2008 up until Friday’s close without ONE SINGLE WHIPSAW.

If you’ve got ‘large one’ and lots of capital:

The DMS was good for 23 982 pips of USD/SEK from 22 July 2008 up until Friday’s close without ONE SINGLE WHIPSAW.

EVEN THE DOW IN THESE CONDITIONS:

The DMS was good for 2 684 points from 15 September 2008 up until Friday’s close without ONE SINGLE WHIPSAW (and that’s NOT counting the money to be made during the preceding trading range where you would have used the RTS or TBPS when CORRECTLY INDICATED by the ADX Oscillator OR the money to be made in the downtrend prior to that)!!!

Now it’s a shame when a person looks at those charts for the simple reason that one has to ask: ‘what the hell was I doing back then to not see this’??? Well: the ONLY POSSIBLE EXCUSE I can make is that I had not ‘converted’ ADX into an oscillator (although that is a pretty weak excuse I’ll admit)!!!

The fact of the matter is: ‘sub-prime’ and the ‘credit crunch’ were GIFTS had you been trading the DMS!!!

The DMS requires ‘patience and restraint’ is all. I see a paradox: ‘do you want to TRADE or do you want to MAKE MONEY’!!! Sounds strange huh??? The fact of the matter is that I know I’m the kind of person who has to actually ‘trade’ and by that I mean ‘I have to be opening and closing positions daily’ otherwise I don’t feel like I’m ‘working’. Well: looking at the DMS / ADX Oscillator: it would appear that you have a choice i.e. ‘TRADE’ or ‘MAKE MONEY’. At BEST case (in the examples given) you were required to place about three orders in three / four months!!! Can you handle that??? If so: you’ll be ‘golden’ in a year. If not: you’ll be posting ‘shameful’ messages like I’ve have been posting for the past couple of weeks. I’d BETTER LEARN to STOP TRADING if I want to get anywhere!!! The only time you need to ‘TRADE’ is when the instrument / pair is trading in a range in which case you’ll be using the TBPS or the RTS.

I must stress one thing though:

The above is ONLY possible if you’re trading the DMS CORRECTLY and following each and every ‘subtle’ signal given by ADX (ADX Oscillator). In other words: simply going long when +DI crosses above -DI and short when +DI crosses below -DI simply won’t ‘do it’ i.e. you have to use the ‘Extreme Point Rule’ and, when signalled to use either the RTS or TBPS, you do in fact change over to one of those systems and, as I said, ensure that you ‘know’ the nuances of the ADX signals ‘inside and out’ and obey them. That was why in my comment to ‘pipgobbler’ I stated that simply using his oscillator / ADX and not following or understanding the ADX ‘rules’ would get you ‘chopped up’ in a ranging market and I stand by this.

The VERY short version of this story:

There is only ONE system that is able to withstand the current market volatility and that is the DMS ON THE DAILY CHARTS!!! The fact that ADX is now presented in oscillator form makes it useable and accurate and a pleasure to trade with and this is what I’ll be doing until I’m ‘back on track’. As a matter of fact: it’s ironic that it’s the only system in the book where Wilder actually gives a ‘hint’ as to the overall profitability of a system. As he also quite correctly states: the DMS can withstand HUGE market reactions (volatility???) and this is now obvious.

I’m sorry I’m ‘jumping around’ again with systems but it’s unfortuanate i.e. I cannot keep trading the same systems simply to prove that they DON’T suit the current market conditions. If you’ve lost money (as I have of late) trading the ASI / SIS / FSS then I do apologize. Having said that: judging by the current interest in the thread it would appear that nobody other than myself is trading anyway!!!

Anyway:

Have a good week. (You know what I’m going to be doing)!!!

Regards,

Dale. (forexbrokersonline.net).

Edit:

By the way:

I’ve ‘done away with’ my ‘supa dupa mistake double smoothed’ ADX Oscillator. It turns out that it was NOT such a ‘good mistake’. While it was INDEED ‘easier’ to trade because of the ‘double smoothing’ it ‘missed’ quite a few signals and got you in too late and out too late when compared to the ADX Oscillator based on ‘standard’ ADX (which is all we have now). OTHER THAN THE SIS (I stand by my modifications which have resulted in the FSS) you CANNOT improve on the original versions of ‘the old mans’ ideas I’m afraid. Once I ACTUALLY GET THIS IN MY HEAD I’ll be FAR better off!!!

You’ll also note that I have a new ‘TBPS’ indicator on the attached charts. What’s amazing is that when the ADX Oscillator tells you to be using it: it really IS profitable ESPECIALLY when used with the ‘Momentum Oscillator’. I think many of us (well me anyway) have used the TBPS at the WRONG times i.e. I know when I tried it I ‘second guessed’ ADX and, I suppose, to be brutally honest, did not quite understand the ‘nuances’ of ADX at the time. Basically: the ‘new’ TBPS ‘indicator’ will generate a signal based on the MF (as per ‘the book’) BUT ADX ALSO is being taken into account. Using a simple momentum oscillator to filter the TBPS trade direction also seems to ‘target’ the trades far better. I may or may not include momentum into the TBPS ‘indicator’ itself. I’ll see. What I’m TRYING to do is ‘keep seperate’ the ‘orginal Wilder stuff’ from any additions.

dmstbpsdailycharts.zip (177 KB)

[dpaterso]

Hello again (Sunday),

You know:

I thought I’d ‘vocalise’ this in a sort of ‘note to self’ and hopefully it will help YOU:

I’ve spent much time analysing where I’ve ‘gone wrong’ in the past two years and where I’ve been ‘making dough’ and it’s become very apparent to me that:

When I’m ‘making dough’:

I’m ‘rating’ the instruments DAILY using ADXR.

I’m only trading the daily timeframes.

I’m trading the CORRECT system at the CORRECT time as indicated by ADX (and to a lesser extent ADXR).

It’s that simple.

When I’m ‘messing up’:

I’m trading instruments ‘at random’.

I’m trading ANY timeframe SHORTER than the daily timeframe not realising that although the intraday movements ‘give’ more they also ‘cost’ more because of whipsaws and ‘market stalls’.

I’m trading instruments that someone like me should not even be considering until I’m a BILLIONAIRE (e.g. the Bovespa Index).

I’m spending more and more time jumping between trading systems and not following trades through.

I’m trying to make up for losses instead of treating each trade individually and following through on the system being used.

Fortuanately the ONLY ‘rule’ I’ve NOT managed to break this year is Wilder’s money management otherwise I’d ‘be in deep’ right now.

It’s a crazy business.

Somehow or another it’s possible to actually fool YOURSELF that you’re doing nothing different from before UNTIL a hefty reduction in capital and confidence forces you to ‘take stock’ as it were. Only THEN do you realise that all is NOT ‘what it seems’!!!

I know you’ve heard ALL of this before. I also know that I need to be reminded sometimes!!!

(By the way: to those who I said to read my last post for today on this thread it was NOT THIS post to which I was referring i.e. it’s the one above this one).

Regards,

Dale. (forexbrokersonline.net).

[pip_huntter]

Hello Dale,

man i think u did allot this year if i am in your position right now i ill really go banana!!.

It is always good were u stop and analyse things that u did in the past .and use different methods to try to achieve success.

i didn’t use the DMS yet i just read it 3 days back but i think the most example that will tell u if what u r saying is right or wrong .if u applied the DMS on the Oil i am using the Oil example coz it has been trending aggressively and the volatility was so huge from 4 month back till now.i am really interested to know if it gives u a signal from 4 months back till now or not? (i am not sure about the 4 months but i think it should be not less than 4 or 5 months)

Regards,

Akram

[dpaterso]

I’m SO glad you asked!!!

Take a look at the attached chart of Oil for the period that you specified. No more needs to be said!!! And that is EXCLUDING the profits that were made BEFORE the downtrend i.e. the DMS ‘got you in and kept you in’ ALL the way up as well!!!

Regards,

Dale. (forexbrokersonline.net).

Edit:

Let me say this though:

The SIS (and / or FSS) would have worked too given the trend EXCEPT for the fact that you would have made FAR more trades and I suspect that many of them would have had you SAR at losses. Parabolic SAR would also have behaved similarly. I suspect that the VS would have got you in a LOT later but you’d still be in profit as of right now. The true ‘test’ of the VS is to see WHERE AND WHEN it gets you OUT!!! THAT is ‘key’ to the VS and where most of the problems stem from.

I’d strongly suggest that everyone start ‘keeping an eye’ on GBP/??? and EUR/??? for long trades and USD/??? for short trades. Also NZD/??? for long trades and AUD/??? for long trades. If this new ADX Oscillator is anything to go by (which I’m sure it is): all of these pairs should reverse in the next few days to a week and hopefully we’ll all be able to catch the trends in the opposite direction (unless of course they all start trading in a range in which case I’m SURE that we’ll be using either the TBPS or the RTS not so???)!!!

By the way:

I think I’ve found a rather ‘crude’ but far easier way to place orders for the RTS without having to use the rather ‘more crude’ ‘BOS’ sequencing method. If you look at the attached chart I have the ‘new’ TBPS ‘indicator’. Simply put: it gives me a green line or a red line which is based on the current position of ADX relative to +DI and -DI, the current value of ADXR, the TBP MF, and takes into account the Momentum Oscillators. Long story short: on a green line you place a LIMIT ORDER BUY for the RTS and on a red line you place a LIMIT ORDER SELL for the RTS. This is based on the ‘logic’ that both the TBPS and the RTS are ‘good’ for trading ranges and theoretically SHOULD make / take the same trades not so???

Last edit:

I thought I’d try to find a chart where it was NOT so easy to trade using the DMS and I found one: GOLD!!! (See attached chart). It’s interesting to note that although there has not been such clear trends as in my previous examples you would STILL not have lost a cent and would STILL have made money. OK: it would not have been as easy and would have required a lot more work than say Oil or GBP/JPY or the Dow BUT had you taken all DMS (ADX) signals AND used the correct trading systems when signalled to do so by the ADX there is no WAY you’d have been ‘out of pocket’ and would have made some very handsome gains. (ODDLY enough I think that the SIS / FSS would have served you better as far as profits are concerned BUT there is always the chance that the SAR’s at losses would have ‘eaten away’ at your profits. I believe that the VS would have proved slightly ‘useless’ on the Gold trades).

crudeoildms.zip (75.7 KB)

goldadxdms.zip (95.6 KB)

[pip_huntter]

Hello guys,

I am just having a quick question about the the DMS

now we go long if+DI14 crosses above -DI14 and the vise versa for the short positions.
Baring in mind 2 factors:
1-Trading the top 5 or 6 commodities that are high on ADX Scale (that have a higher value)
2-ADXR VALUE IS ABOVE 25

is that right?are there any thing more to this system??

Dale as for the oil it become clear that this system is showing profit and keep u in this trade for long time.that is good well done

i do have a feeling that the moment i am taking the book serious every one is not posting any more as before i think i should leave the thread!!
although i was glade to see that people was bothered to see Dale’s chart for the oil and the gold

Regards,

Akram

[dpaterso]

Good (Monday) afternoon.

Before I begin Akram:

I don’t know which broker you’re using by BEWARE (there is a discussion about this earlier on the thread):

We have proved beyond a doubt that neither MT4, Delta’s ‘standard’ ADX, nor GCI’s ADX DO NOT use ‘Wilder’s smoothing technique’ and it DOES make a WORLD of difference I assure you. I would strongly suggest that if you’re going to trade the DMS (ADX) and you don’t have a live account at Delta or GCI (and therefore will not have our ‘correct’ version(s) of ADX) that you use the ‘Excel method’ to trade i.e. set up ADX on an Excel worksheet, make SURE that your calculations are IDENTICAL to the example in the book (using the prices from the book initially), and trade that way. One MAJOR shortcoming of NOT using ‘Wilder’s smoothing technique’ is the number of whipsaws and it’s the LACK of whipsaws when using ‘Wilder’s smoothing technique’ that makes the system so effective.

As for the system:

You’ve got it quite right.

I MUST mention these two points however:

1 - DO NOT go long or short ‘at market’ as the book would have you do. If you read VERY carefully in ‘the book’ you’ll note that you stop and reverse as per ‘The Extreme Point Rule’ which dictates that you place a STOP ORDER and do NOT stop and reverse at market and the reasons given are quite clear. You have to IMAGINE that you’re ALREADY IN the previous trade and that your ‘entry’ is what WOULD have been a stop and reverse as per ‘The Extreme Point Rule’. Trust me on this one. MANY times price will move in your favour after entering at market but then turn against you. If you use the STOP ORDER method of entry you’d not be in the trade and no harm done.

2 - I STILL have to disagree that ADXR being above 25 is necessary. I have checked MANY MANY charts in the past few days and by only getting ‘in’ when ADXR has risen above 25 you’re wasting LOADS of pips / points. There is a sort of ‘tradeoff’ here though. If you get ‘in’ when ADXR is below 20 to 25: price may ‘hang around’ for a while before going in your favour. If you get ‘in’ when ADXR is above 20 to 25 the chances are that price will move almost immediately in your favour. The difference: in the first instance you got in at a FAR better price even although the position did not IMMEDIATELY turn to profit. In the second instance you got in later and the trade showed profit almost immediately but not as much.

These are ‘subtleties’ that only become apparent after you ‘analysed’ ‘the book’ ‘word for word’.

I’ll give you one other example of a ‘subtlety’ that’s NOT apparent and it involves ‘good old Parabolic SAR’!!!

You’ll note that NOWHERE does Wilder say to enter a Parabolic SAR trade AT MARKET THE MOMENT THE FIRST ‘DOT’ APPEARS!!! Entry is ONLY made at the SAR WHICH IS the previous HI SIP or LO SIP!!! (Unfortuanately the text contradicts itself here because the first line of the ‘system red page’ actually says that a position is entered when a price penetrates the SAR. I believe that the text SHOULD say something along the lines that when price penetrates the SAR then START LOOKING for an entry point). I KNOW I don’t have to ask YOU how many times you’ve entered a Parabolic SAR trade that’s gone nowhere (at best case) or reversed on you not too long after entering. Well: THERE’S the reason why!!! And what is a HI SIP or a LO SIP??? Nothis other than the SIS equivalent of a HSP or LSP!!! If you think I’ve ‘lost my marbles’ then do yourself a favour and put the SIS (ASI) onto a chart with Parabolic SAR. Then look for the Parabolic SAR trades that went against you from the start. You’ll not that in 99% of those trades: NO HI SIP or LO SIP was given and you therefore would not have even bothered about the trade. But, having gone in ‘at market on the first dot’: you’d ALWAYS have lost money.

As far as the thread is concerned:

I don’t know why interest has ‘waned’. Maybe people are just WISE ENOUGH to stay out of the markets right now. Maybe I’ve made people a little more ‘cautious’ of late with my posts. Should I have kept quiet about my most recent ‘messes’??? I don’t think so. One ‘rule’ I’ve always kept on these threads is to ‘tell it like it is’ so if this has caused some ‘nervous ripples’ then I apologize for that but at least I know I’ve been ‘straight’ about what’s been happening with these systems. I for one blame myself and NOT the trading systems. Sure: some work better in certain instances and others work better in other instances but, at the end of the day, I believe they all DO WORK and WELL so people just have to ‘filter out’ MY shortcomings when forming an opinion is all. Who knows??? Maybe people are just getting ‘sick and tired’ of me posting my ‘Wilder holy grails’ and then things turn to ‘sh*t’ not too long after that!!! As I said: it’s MY shortcomings and impatience that have led to my ‘disasters’ NOT the trading systems. And I WILL overcome my shortcomings and trade the very same systems until I am physically or financially no longer able to do so.

Regards,

Dale. (forexbrokersonline.net).

[pip_huntter]

Dale,

thanks for your reply i now understand THE EXTREME POINT RULE when u pointed at it it is now clear for me .

well i am using the excel sheet like the old guy i know it is not practical but i would like to calculate so that i do understand the system quite well as when i do that manually i think i will get the feelings more .

Regards,

Akram

[dpaterso]

Some ‘good stuff’:

Now that I’ve nothing to do in the day i.e. until the close tonight I’ve been utilizing my ‘hunger for knowledge’ in a different way (actually it’s a ‘crass’ attempt to STAY AWAY from my positions which, as always on this timeframe, are all in profit)!!!

I came up with an interesting fact (one of those ‘did you know’ things):

According to Delta’s charts:

Crude Oil (West Texas) has only traded in a range on two occasions since 15 August 2007 (which is when Delta started offering Oil as a tradeable instrument) for a total of five days only according to ADX when +DI was below -DI and / or ADXR was below 20. Could this MEAN something??? In other words (at least according to ADX): it’s been trending in one direction or the other for just over a year which looks right to me.

And, of course, ‘the old man’s’ ‘wisdom’ comes in here too i.e. you can have HIGH volatility with LOW directional movement and you can have LOW volatility with HIGH directional movement. In other words: JUST because an instrument is volatile does NOT mean that it’s trading in a range NOR does it mean that it has directional movement and THAT, my good and trusted collegues, is what ADX is FOR!!!

In my ‘spare time’ i.e. during the day: I’ll see if I can find some more interesting statistical facts!!!

Regards,

Dale. (forexbrokersonline.net).

Edit:

COME TO THINK OF IT:

This type of information could be very important i.e. I’ll ‘wager’ that you’ll find that certain instruments trade in ranges far more often and for far longer periods of time than others!!! Now wouldn’t THAT information be ‘handy’???

[dpaterso]

Good (Tuesday) morning all.

Well: it would appear that I’ve found something to keep my ‘idle hands’ busy during the day!!! Statistics!!! (Although: I’m sure you’ve all heard the anecdote: ‘There are lies, damn lies, and statistics’)!!!

Well: I’m not sure if this information means anything or not BUT, using ADX as a guide, I thought I’d try to see whether or not there is any merit to the statement (question???) that I made in my post earlier i.e. do some instruments ‘trend’ better than others???

Well (simply put):

I coded an ‘indicator’ that counted the number of days that ADX was below +DI AND -DI OR ADXR was below 20. This ‘indicator’ also counted the total number of days (bars) on the daily chart. By then simply dividing the total number of days (bars) on the daily chart by the number of days that ADX was below +DI AND -DI OR ADXR was less than 20: I arrived at what I called the ‘ADX Range Factor’. The theory here was: the HIGHER the ‘ADX Range Factor’ the LOWER the amount of days that the instrument traded ‘sideways’ i.e. had little or no directional movement which, as we know, is what ADX indicates to us.

Now before I discuss the results and before you look at the attached document:

In certain cases the results MAY be ‘skewed’ for the simple reason that some instruments have not always been available for trading at Delta so the numbers of days (bars) in the daily chart is LESS than a ‘full’ chart (which is 999 bars). Now whether or not this, in the long run, will make any difference to these results we shall have to wait and see. In other words: it’s glaringly obvious from the results that a lesser number of days used gives higher ‘ADX Range Factor’ results. Having said that: it’s the RON/TRY/RUB pairs that have fewer bars than the rest BUT they have the SAME number of bars as EACH OTHER so THEY are being compared to EACH OTHER ‘like for like’. I HAVE previously mentioned that those particular pairs appear to ‘trend much better’ and my results appear to confirm this FOR NOW i.e. given a ‘full’ chart I don’t know if this will still hold true.

I used ADX(14). I am happy, however, that no matter what period you use, because ADX / ADXR is calculated INDEPENDANT of PRICE, you would get the same results.

Now for the results:

(As I said: I don’t know if they mean anything because I’m not a statistician. Having said that, according to ADX anyway, certain instruments really do appear to behave differently over the same given period of time).

For all the instruments where there was a ‘full’ chart of data i.e. 999 days (bars) in the chart:

AUD/CHF, EUR/NZD, and (would you BELIEVE) AUD/NZD are ‘top of the pops’. The ‘ADX Range Factor’ for each of these pairs was calculated to be over 4 (the HIGHER the ‘ADX Range Factor’ the LESSER the number of days that the instrument had little or no directional movement).

Next on the list were USD/SEK, EUR/ZAR, GBP/ZAR, EUR/SEK, NZD/CAD, and EUR/NOK. The ‘ADX Range Factor’ for these pairs was calculated to be over 3. Oddly enough: when I was ‘playing around’ with the ‘Commodity Selection Index’: these paris were ALMOST ALWAYS ‘top of the pops’ with the CSI so I guess that this ‘test’ (at very least) confirms the CSI.

Then we get to the ‘other’ instruments:

The ‘ADX Range Factor’ for most of the instruments (forex pairs) that had ‘full’ daily charts i.e. 999 bars / days in the chart was calculated to be between 2 and 3. To be honest: I was quite surprised that the ???/JPY pairs fell into this category. CHF/JPY (it would appear) spend MUCH of it’s time trading with little or no directional movement. Oddly enough: this is the one pair where the ‘look of the chart’ has always ‘put me off’ i.e. far too many swings in opposite directions on alternating days as well as LONG shadows. I dont’ know why but this pair has always ‘spooked me’ and maybe this is why.

Next we have Gold and Silver:

Unfortuanately they have not been offered for trading at Delta for too long a period so whether or not that fact that they both have HIGH ‘ADX Range Factors’ (above 3) means that they in fact have the same directional movement as the forex pairs that are ‘top of the ADX Range Factor pops’ I cannot say.

Then we have NZD/CHF and AUD/JPY. Both have VERY high ‘ADX Range Factors’ BUT very few daily bars on the chart. I SUSPECT that by just looking at thse two pairs: you cannot really compare them with the others. NZD/CHF has a very high ‘ADX Range Factor’ but, as I said, the ‘sample data’ was lacking. Again: whether or not this makes a difference I do not know. I suspect that it DOES make a difference.

Then we come to my ‘beloved’ ‘exotics’:

Again: very few daily bars when compared to the other instruments (forex pairs). Each of them do, however, have the SAME number of daily bars so it’s safe to say that when comparing THEM to EACH OTHER: EUR/RON spends more time that the others trading with good directional movement.

Last: we have OIL!!!

Again: the number of daily bars available for the test was low but it has the highest ‘ADX Range Factor’ of all. Can this be compared with the rest of the information??? Would you be comparing ‘like for like’ or ‘apples with apples and oranges with oranges’??? I don’t have a definitive answer yet. I suspect that you cannot compare it with the rest of the information. Having said that though, on the other hand: the ‘ADX Range Factor’ DOES INDEED take into account that there are fewer daily bars in the sample data so who knows. I don’t!!!

Then I moved on the the indices (I have not bothered to include them in the document). They ALL have a ‘ADX Range Factor’ above 3. Can they be compared with the forex pairs that have a high ‘ADX Range Factor’??? They DO all have FULL charts (same as the forex pairs at the top of the list) so I’d say yes.

I then took a look at a few individual stocks. This (I think) is where is CAN get REAL interesting (these details are not in the document YET either as I have not completed any results). Interestingly enough: MOST stocks that I tested had the SAME ‘above 3’ ‘ADX Range Factor’ as the major indices (which, of course, does make sense). They also all had ‘full’ charts so I’m happy that I’m comparing ‘like for like’. There ARE, however, certain stocks, that have EXTREMELY high ‘ADX Range Factors’ i.e. some tested had ‘ADX Range Factors’ above 5!!! Now THIS could become interesting ESPECIALLY if one then looked at certain SECTORS!!! I’ll ‘keep going’ with this. You NEVER know what the end result could indicate!!!

As always: ALL comments are MOST welcome!!!

Regards,

Dale. (forexbrokersonline.net).

Edit:

I decided to attach two additional documents.

In ‘ADXRFRoundedSort’:

I rounded the ADX RF but still kept instruments seperate by the number of bars available for the sample.

In ‘ADXRFRoundedRFSort’:

I sorted the same rounded work sheet but ignored the fact that there was a different number of bars available for the sample i.e. this one is purely sorted on the ADX Range Factor.

Take your pick!!!

I SUPPOSE that ONE interpretation of these results could be that the instruments with the HIGHEST ADX Range Factors will generate greater profits when traded with the DMS???

By the way: I know it would APPEAR that I’ve now gone ‘dilly’ about ADX. I probably have BUT think about this: EVERY SINGLE SYSTEM in ‘the book’ REALLY is dependant on, or references, the current ‘state’ of ADX and ADXR not so???

As I know I’ve also said before: MORE DIRECTIONAL MOVEMENT EQUALS MORE PROFIT so it’s now very logical (to me anyway). If the markets did not move we’d not make any money??? Right??? And the MORE they move DIRECTIONALLY the MORE OFTEN we can use a TREND FOLLOWING SYSTEM and AS WE ALL KNOW (to coin that ‘inane’ phrase again): ‘The Trend Is Your Friend’ (I cannot stand it. It’s so ‘cliched’ but hey: am I willing to argue with it??? Nope)!!!

As I ALSO know (and have stated this week): when I’ve just been able to break even or lost money I’ve not bothered about the ADX ‘state’. When I’ve ‘chosen’ my trades based on the ADX ‘state’ I’ve always made good profit. There MUST be SOMETHING in THAT statement!!!

ADXRangeFactorCalculation.pdf (10.2 KB)

ADXRFRoundedSort.pdf (10.1 KB)

ADXRFRoundedRFSort.pdf (10.1 KB)

[pip_huntter]

1 - DO NOT go long or short ‘at market’ as the book would have you do. If you read VERY carefully in ‘the book’ you’ll note that you stop and reverse as per ‘The Extreme Point Rule’ which dictates that you place a STOP ORDER and do NOT stop and reverse at market and the reasons given are quite clear. You have to IMAGINE that you’re ALREADY IN the previous trade and that your ‘entry’ is what WOULD have been a stop and reverse as per ‘The Extreme Point Rule’. Trust me on this one. MANY times price will move in your favour after entering at market but then turn against you. If you use the STOP ORDER method of entry you’d not be in the trade and no harm done.

Regards,

Dale. (forexbrokersonline.net).[/QUOTE]

Dear Dale,

u mentioned above the extreme point rule so that means whenever i will have to start on trading with this method then i have to imagine that i already in the previous trade and i already have an open position let us say it was long so when the -D14 CROSSES ABOVE +D14 then i have to go short and put a stop order on the high made on the day of crossing.? and the vise versa?

Sorry but when i tried to trade i came up with this question

Regards,

Akram

[dpaterso]

Hello.

No. If you were long and then +DI crossed below -DI (or -DI crossed above +DI i.e. whichever terminology you prefer) you’d place a stop order to go short ‘a couple of ticks below the low’ of the signal bar AFTER THE CLOSE (the signal bar being the bar that generated the crossing of course).

You CAN if you want (from what I see) place a STOP LOSS ORDER (or a STOP AND REVERSE ORDER) ‘a couple of ticks above the high’ of the bar mentioned above. However: I have spent DAYS now looking at this and doing that appears to sort of ‘circumvent’ the system’s design. In other words: under NORMAL circumstances you actually do not trade with a stop at all (at least not after entering and only once you’ve received a signal to stop and reverse would you then have a stop and reverse in place as per the extreme point rule). Your only stop, which is actually supposed to be a stop and reverse, is placed when the DI’s give the signal. MOST times: this signal is given BEFORE any stop loss order that you MAY have placed anyway. From what I see: placing STOP LOSS orders as decribed in this paragraph appears to only cost you money i.e. price will hit your stop and then turn and go back in your original trade direction so, of course, you’ve now realised a loss AND the trade that you WERE in is now going in your favor again!!! Remember: the DMS is designed to handle these HUGE swings in the market. By placing stop loss orders you’re limiting it’s capacity to withstand these swings.

I’ll tell you this:

There are a lot of other signals given by ADX which, now that I can see it in oscillator form, are much clearer. I’d even go so far as to say this: of ALL of the chapters in ‘the book’ it is the one that requires the most effort and time for sure. Read it 1 000 times if you have to and make a list of the different signals that it generates. You’ll be quite amazed.

Dale. (forexbrokersonline.net).

[pip_huntter]

Hello,

thanks again for your help and sorry for asking too many questions.

As for the vs so far it is a winning system for me although i close my position early with profit.

u might call me a chicken u can but i feel by that it gives me more confident o n the system and on my self as well. i am still holding 2 positions one with 300 pips gain and the other is 49 loss hopefully the loss will be covered shortly!!

by the way your statement when u asked if we (I) want to trade or make money for sure we all want to make money that is why we all trade!!!

Regards,

Akram

[dpaterso]

Hello again.

No problem.

For what it’s worth: the best way to build up confidence in the VS NOW would be to keep following those trades through (the ones that you took profit on) and see where they ‘landed up’. That way you’ll be able to see what WOULD have happened, for better AND for worse!!!

As far as the comment that I made to which I refer:

What I was getting at was this I suppose:

Let me explain it another way:

There are people in this world that are ‘in love with the IDEA of being in love’ as opposed to ACTUALLY WANTING to be ‘in love’. Make sense???

In other words:

For too long I’ve been ‘in love’ (for want of a better expression) with the business of trading and investing and creating indicators and creating ‘the next best thing’ and, without realising it, it’s been a contributing factor to the losses that I’ve made on occasion. In other words: I’ve ‘romanticised trading’ instead of ‘JUST TRADING’.

I mean: if you take a look at those ADX examples that I posted not too long ago (about a ‘page ago’):

WHY was I not in those trades??? I know ONE THING FOR SURE: I was, WITHOUT A DOUBT, sitting in this chair, in front of these screens, when those trades started. There is no question about that because I’ve been sitting in this chair, in front of these screens, ALL DAY EVERYDAY for at LEAST twenty months now (the odd ‘hangover morning’ aside of course). The fact of the matter is that there is NO excuse for missing those trades. But (I’ll wager): on the morning those signals ‘fired off’ I was probably off at some or the other ‘tangent’ which PROBABLY took the form of me looking at another system, or ‘tweaking’ an indicator’, or something along those lines. As I said: it DEFINITELY was NOT because I was not sitting here!!!

I hope that makes sense.

Again I come back to the words of ‘the old man’ (this used to be my signature but we no longer have signatures. Actually: THERE’S a thought!!! It’s the ADMIN’S fault for my last bout of losses!!! He removed my signature so I didn’t see it every day!!! Do you think I’ve ‘got a case’??? Only kidding of course!!!):

[I]‘I know traders who can never seem to hang on and follow a good system because of a compulsive need for action. I know other traders who have a greater need to be right most of the time than they have a need for the money they can make’ (J. Welles Wilder Jnr. from ‘New Concepts In Technical Trading Systems’, 1978).[/I]

[pip_huntter]

hello,

well it is good to love what u r doing but it is not good i think to fell in love of what u r doing!!

but i think it is always not good to relate every thing to a certain action like u blame your loss coz u felt in love with mixing and matching some of the oscillators or making new signals and observing new stuff . coz basically u have to loss especially with market like that u have to have some losses that is one bad thing that should happen to any trader. believe me it is a part of the game!!!

i know i do have a luck that always come with the newbie!!u know when u follow a new system u always succeed for a while and then u will fall down so don’t worry i am coming with very shortly!!

Any ways just a small notice i don’t know if it is right or wrong but after trading with the VS and DMS i just noticed that the DMS is faster than the VS what i mean it gives signals earlier than the VS like when the candle closed yesterday i got 3 positions to open and all involved the USD/?? with them and all gives a short position i am still a bite don’t have the confident to press the buttons for selling but hopefully i will after i write this massage!!

Regards,

Akram

[dpaterso]

Hello (again) my old (and only) friend by the looks of things!!!

‘In keeping’ with my INSATIABLE desire to ‘perfect’ these systems here is something ELSE that I found in ‘the book’:

Pages 47 and 48:

‘Notice that this indicator can only occur at favorable points in the direction of the major trend’.

And the next paragraph that begins with ‘Sometimes in a rip-roaring bull market …’.

Now taking the above into account:

I’ve noticed that MOST times, almost 99% of the time in fact, the moment ADX turns down, a reversal of the current trend is imminent and DOES indeed turn a few bars later.

On the attached chart I have the ADX Oscillator and it’s REAL easy NOW to see where these points are (and I’ve also included the ‘standard’ ADX indicator for explanation purposes).

I think (hope) the chart is self explanatory.

Basically you’re trying to buy or sell a ‘pullback’ with LIMIT ORDERS. These orders will not always get hit i.e. sometimes price does NOT retrace and, in this case, you’d just take the next ADX signal that’s fired off ‘as per normal’ (I suppose you could even double your position at this point because you’re already in profit by the time ADX ‘fires off’ the signal).

IF one of these orders DOES get executed: you’re in profit even BEFORE ADX fires off the first signal. If the trade does, unfortuanately, happen to go against you then you’re trading with a STOP ( NO STOP AND REVERSE at this point for these trades) anyway (and it’s a BIG stop sometimes so the chances of getting stopped out for nothing are ‘pretty slim’)!!!

It’s not going against, or adding anything to, what’s ‘in the book’. From the way I read it the phrase: ‘you MAY want to wait for the crossing’ I (you) have the choice i.e. higher risk, more profit, lower risk, less profit as is always the case of course!!!

This is just one of those little ‘nuances’ that become clear after the 1 000th read!!!

Regards,

Dale. (forexbrokersonline.net).

audjpyadx.zip (88.7 KB)

[pip_huntter]

woow ok ok

that is something amazing.

so now the moment we spot the ADX going above both -DI and +DI then what will happen next is that the ADX will form a turning point and this will happen when we see the first down turn now u can place your order as the price will go down or up depends on the DI’S location rules (which one is above the other one) and u can even double your position as it is time to pocket some profit.

And that means (for me) that when this happen then u should neglected the DI’S rule u r just following the ADX only.AS u and wilder stated that (u like that ha??!!!)

ohh boy i am reading it allot and what amazed me is that u r an expert in the book and u still discover some new stuff every day.!!

Regards,

Akram

[pip_huntter]

Hello again

Attached is the chart u sent before but i marked in it 2 different black points where i can see the turning point on them and they can be the first down turn

why u didn’t point at them?

i know the first point is the same like what the book mentioned (or do i miss something here) coz the ADX is now above both DI’S and it has been seen to be have a turning point

may be the second black point i put is not like what the book mentioned as the ADX went down the -DI and formed a turning point what do u think?

Regards,

Akram

[dpaterso]

Why didn’t I point them out??? Well: I had to give you SOMETHING to pass the time!!! LOL!!!

By the way:

One OTHER way to ‘play this’ is to set a profit target on these trades (remembering that REALLY you’re not supposed to be in this trade as it were so whatever you make is a ‘bonus’). The reason I say this is because at the point where you get the ‘downturn’ it CAN, of course, always turn up again (as detailed in ‘the book’) which, of course, is right back in the direction of the trend. If you take a look at both the points that you pointed out (which were quite correct by the way) you’ll note that this is EXACTLY what happened. The only reason I’m ALMOST 100% confident that this is not going to happen with the CURRENT downturn is because these things have trended down nicely for a very long time and I’m almost certain that they’ve reached strong resistance. Of course: you COULD just stick with your STOP LOSS that you’ve set i.e. if it gets ‘hit’ it gets ‘hit’, too bad, so sad, but the possibility also exists that you make 100 pips before you’ve even got the first signal from ADX!!!

Regards,

Dale

[dpaterso]

OK, well, seeing that I now know that SOMEONE is at least interested in my latest work:

Here is my final bit of ‘inspiration’ for the day:

It’s another little ‘twist’ and it involves ‘The Extreme Point Rule’.

Page 47:

The paragraph that starts with ‘I have noticed that the equilibrium point…’.

Take a look at the attached chart.

It’s details what I suppose you could call ‘The Extreme Point Counter Trade’.

Basically:

When ADX fires off a signal: you place your SAR order as per ‘the book’ and as per ‘The Extreme Point Rule’. HOWEVER: at this time you ALSO go long or short AT MARKET.

Once again, the ‘logic’ behind this:

As ‘the old man’ says in that paragraph:

‘Often’ the extreme high or extreme low will not be penetrated again and, in the attached chart, that’s exactly what happened i.e. you went in at market CONTRARY to the signal that ADX was giving you and the trend then continued on down!!! What’s ALSO nice about THIS trade is the fact that AGAIN: you have a stop in place (represented by your STOP AND REVERSE ORDER) so IF the ADX signal IS valid then very little harm can be done i.e. you’ll realise a small loss and be put ‘right back in the direction of the trend’ which, in this case, would be the NEW trend in the opposite direction (had this trade ‘gone’ that way). This ‘methof’ can also be used for ‘getting in late’ i.e. where you’ve missed the beginning of the trend but have been given a signal by ADX to ‘enter in the opposite direction’ but this never happened.

Again: NOTHING is being ‘taken away’ nor ‘added to’ the original system.

Can you see NOW (and I AM only realising it now) just how important this chapter can be to you???

Regards.

Dale

Edit:

BY THE WAY:

Even ‘getting in’ the way described above: the trade was STILL good for +5 101 pips up until today (from 17 September 2008)!!!

gbpjpycountersxteme.zip (96.2 KB)