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hello everyone,
hope that last week was good for all of u.
Now i do have a point that i found through the chart it is for EUR/USD.the chart is attached and i think it is self explanatory to what we should do in this situation ( i think if i am not worng??)
Ok so now DI- was above DI+ then we took a postion to go short then what happened next is DI+ crossed above DI- then we followed the extreme point rule we put a stop loss 20 pips ( for instance) above the high made on the day of crossing
the following day the price didn’t touch our extreme point but what happened that DI- went again above DI+ (then we r back to our main trend)
Now do we have to stick to our last extreme point?? or we have to consider it as a canceled one coz our DI- went above DI+ (went back to it’s main direction)
I think or from the chart u will notice that we have to cancel the extreme point AFTER DI- went back above DI+ why? coz basically DI- went back to OUR NORMAL TREND .
What is going to happen next will back up what i am saying as the price went up penetrating our CANCELLED EXTREME POINT while again DI+ crossed above DI- forming a new extreme point as we will now take the high (20 pips above the high) on the day of crossing as a point of reversal if the following days the price is going to penetrate this point then this is our stop loss .
the following day the price didn’t touch the extreme point but it went down and down and down!!!
I hope i am clear on what i am saying
And i need comments on what i am saying Dale???sverigesson we need to have some benefits out of u the guy gave u all his signals for free!!!
Regards,
Akram
Good (Saturday) morning everyone.
Akram: can I ask you a big favor? Please either email me that chart or save a bigger version and ‘WinZip’ it and upload the WinZIp file. Sorry my man: I work off two very large monitors at very high resolutions so I cannot read your text. (That another reason why I no longer attach the charts themselves i.e this site compresses the graphic to a certain size no matter HOW big the original is and this makes it impossible in some cases to see the detail in the graphic).
Without the chart, however, I will attempt to answer you as best I can.
Page 47, last paragraph:
‘Stay with this point, if not stopped out, even if the indexes stay crossed contrary to your position for several days’.
First off: this is a TRUE REVERSAL SYSTEM. In other words there are NO STOPS and you only ever STOP AND REVERSE. I truly believe that the text SHOULD (for the purposes of clarity) read: ‘Stay with this point, if not STOPPED AND REVERSED, even if the indexes stay crossed contrary to your position for several days’.
You are quite correct in your interpretation of where to place the STOP AND REVERSE though.
I believe that you ‘stay with this point’ (‘The Extreme Point Rule’) (if not STOPPED AND REVERSED) UNTIL you get ANOTHER signal to STOP AND REVERSE and ONLY THEN is your previous STOP AND REVERSE order cancelled and a new one is placed per the current signal.
Now I DO KNOW that if you follow the above through on a chart you will see times when it would INDEED have been better to just STOP and NOT reverse as well because after the STOP AND REVERSE price went against you AGAIN (this has happened to me on GBP/ZAR this week). In my opinion: don’t worry about this and DO NOT ‘fall into the trap’ of trying to make 100% of the trades profitable. YOU HAVE TO BE PREPARED TO TAKE THE LOSSES!!! If you JUST STOP: you ALWAYS run the risk of taking the loss and then, to make matters worse, you are not in position if the trend has indeed reversed. You have to look at the ‘big picture’ here and take the result of an entire series of trades into account when evaluating the DMS. Using your example (EUR/USD): it is true that, using my logic (above), you would have been STOPPED AND REVERSED on 2008-09-22 (the STOP AND REVERSE order was placed on 2008-09-18), and you would have been STOPPED AND REVERSED AGAIN on 2008-09-30 (the STOP AND REVERSE order was place on 2008-09-29) and this would have resulted in a loss HOWEVER: ‘in the bigger picture of things’ this loss was of absolutely no consequence given the amount of pips that you’d ALREADY have made and the amount of pips that you DID make by the time this downtrend ended. You must ALSO remember that on those days: you had NO WAY of knowing whether the trend was going to reverse and keep going in the opposite direction or not. With hindsight it’s easy to see where the trade went wrong and what you SHOULD have done but remember that you did NOT HAVE that information AT THE TIME. As a matter of fact: when evaluating ANY of the systems you should rather ‘scroll the chart back’ and follow the trade ‘bar by bar’ as opposed to looking at the entire chart. And there is another good reason for doing this: you’ll note that Delta ‘scales the chat in favour of the most current bars’ which, when looking at an entire chart, makes it difficult to ‘correctly visualize and evaluate’ past trades. Looking at EUR/USD ‘full screen’: it APPEARS that between May and August of 2008 EUR/USD was trading in a TIGHT range. Now ‘scroll the chart back’ until one or two bars before the downtrend started. You’ll now see that the range was not as tight as you PERCEIVED. This also applies when looking at trends as indicated by the DMS. Sometimes, again using a ‘full screen’ chart, it appears that the DMS is not REALLY making ‘pots of money’ but ‘scroll back the chart’ and take another look. What may have APPEARED to be a very small trend suddenly becomes a HUGE ‘sweep’ on the chart and puts things into perspective.
I hope this answers all of your questions. If not: email me your chart or attach a larger (zipped) version and we can go through it together.
Now an update:
I took profit on a number of positions yesterday. These were all ‘counter’ trades though i.e. my ‘pure’ DMS trades are still running and intact. I took profit on these trades because I had a downturn in the momentum indicator and, as I said, because these were ‘opportunistic trades’ and I had not been given a signal by the DMS to be trading in the direction of those trades as yet, I believe that it was the right thing to do because, for all I know, the current trends may now continue. I COULD have just left the trades (as there were STOP LOSS orders set as you know) and assumed that sooner or later the DMS was going to ‘fire off’ a signal to confirm my trade direction but this really is a personal choice I believe i.e. higher risk, higher POSSIBLE reward. Anyway: the ‘booked’ profits represent a 16% gain on capital. HOWEVER: the ‘booked’ profits are offset at present by a nett loss on the still open (‘pure’ DMS) positions resulting in a nett current (paper) loss of -6%. I’m not too worried about this though ESPECIALLY given the fact that the NYSE was closed on Thursday and yesterday was ‘Black Friday’. I’ve also only been given one signal to place an SAR order (on GBP/ZAR AGAIN would you believe which, according to ADX, is now trading in a range) which is also encouraging i.e. it essentially means that my ‘pure’ DMS trades are all still in the right direction. Also, as I mentioned previously, most of the trades that I’m currently in were on ‘exotics’ or ‘not so popular’ pairs so I’m pleased to be out of the trades with profit i.e. I had promised myself at the outset that when I got a signal on a major pair I would TP on an exotic and use that margin for the trade on the major pair. I am now eagerly awaiting signals on GBP/JPY, EUR/JPY, GBP/USD, the Dow, Nasdaq, and S&P, and Oil.
I’ll tell you something: it’s easy to see just WHY the DMS works so well. Take a look at the DAX for example (if you can) or Citigroup. How many traders do you think have simply gone long on these two instruments simple because it ‘appears’ that they’re now going to trend up??? These are the ‘Johnny come latelies’ and I’m prepared to wager more than just a little bit of money that if the DMS does not fire off a signal to go long soon: these traders are going to get burned BIG TIME as there is a L-O-N-G way down again to support!!! As a matter of fact: WE ALREADY KNOW that EVEN IF the DMS fires off a signal to go long there is a better than average chance that the prices ARE INDEED going to fall again (remember ‘The Extreme Point Rule’)??? ‘Sheer TECHNICAL poetry in motion’!!!
I’m ‘tellin ya now boyz’: NEXT YEAR we’re going to challenge ‘The Delta Society’ to an annual competition i.e. ‘us’ against ‘The Delta Phenomenon’!!!
Regards,
Dale. (forexbrokersonline.net).
Edit:
By the way ‘Son of Sweden’: I’m sorry but I just kept forgetting to respond to you queries regarding my ‘Range Factor’. You appear to understand my concept fully. It’s just a (very simple) test to see if there is any merit in taking the number of days in a chart for a particular intrument or pair and dividing this number by the number of days that the instrument or pair traded in a range (as indicated by ADX i.e. ADX was below both +DI and -DI OR ADXR was below 20) and arriving at my ‘Range Factor’. I ‘figure’ that this will simply tell you which instruments or pairs have spent more time trading with good strong directional movement (which I interpret as trending) and which instruments or pairs have spent more time trading withoug good directional movement (which I interpret as trading in a range). So far, by just looking at the charts, it would APPEAR to have merit e.g. VERY FEW TIMES did Oil trade in a range and when it did it was for very short periods. Then take a look at CHF/JPY (which has the lowest ‘Range Factor’) and you’ll note that it spent MUCH time trading in a range and for MUCH longer periods as well. If nothing else: my ‘Range Factor’ should at least be telling you which systems will work better for different instruments or pairs. This really is not that different from Wilder’s ‘Commodity Selection Index’ except that the CSI will tell which is the best instrument or pair to be trading and which system to be using to trade that instrument or pair AT THE TIME whereas my ‘Range Factor’ is taking a more ‘global view’. Theoretically: an instrument or pair that is ‘tops’ on my ‘Range Factor’ SHOULD also be indicated as the best instrument or pair to be trading AT THE TIME by the CSI more often but we shall see. Having said that though: the CSI also takes margin requirement, $ value per pip or point movement, as well as commission into account, so my assumption may or may not be correct but this ony due to the ‘financial data’ that the CSI takes into account.
Greetings from Bangladesh! Ah, the joys of field work. Hopefully I can get back home in a week or two.
Its good to see my old mucker Akram back on the thread. It’s like a PSAR reunion going on! Good to see you here again man.
I haven’t had the chance to catch up with posts over the last couple of weeks but glancing though I have to say that I am glad that we are talking about the DMS again as I this is one of my favourites.
Dale, I will need a quick YM once I’m back in the real world to go over your recent indicators update. I like the oscillator that you have, looks great.
I bought Alexander Elders book a month back and in it he has a section on Wilders Directional system. Just for info I will post his comments here. Interesting to note that Elder makes no mention of the extreme point rule, though personally I would use it faithfully. Elder also uses 13 periods instead of 14. Elders rules for the DMS are as follows:-
1, Trade only from the long side when +DI is above -DI and vice versa for shorts. The best time to be long is when both +DI and ADX are above -DI and ADX is rising. Stops are places under the last minor low.
2, When ADX points down, take profits and dont follow and trend following system.
3, When ADX falls below both DI lines it identifies a sleepy market. Don’t use a trend following system, but get ready as major trends can emerge from this.
4, Elder states that the best signal from ADX comes from item 3 above, after ADX has been below both DI lines for some time. The longer it stays below the DI lines, the stronger the base for the next move. When ADX rises by 4 steps from its low (eg 9 - 13) buy if +DI is on top. Opposite for shorts.
5, When ADX is above both DI lines, it identifies an overheated market. When ADX turns down from above lines it is a good time to take profits. If multi lot trading, take partial profits.
One more comment by ELder that is not directly related to the DMS is his idea for identifying trending or ranging markets. Plot a 13 period EMA on a daily chart. If that EMA has not made a new high or a low in a month, then that market is in a range. Food for thought fellows.
Ok back to work, but hope to get back to this once I get home. keep up the good work all.
Cheers
boca
Hey Bocajunior!!!
I LIKE the post!!!
Hell: I could have written that book!!! LOL!!!
I don’t see to MANY differences between Wilder’s ‘original’ or Elders’ but the one or two that I DO see are MAJOR.
I do agree, however (as you probably know), that the best time to actually TAKE an ADX (DMS) trade (well at least place an order) is WHEN +DI and -DI are below ADX.
Wilder’s ‘Extreme Point Rule’ is also, in my opinion, a ‘key element’ when trading the DMS. As an example: it makes me feel quite ‘smug’ that we ALREADY KNOW that there is a better than average chance that price WILL retrace when a new ADX (DMS) signal is fired off (as I mentioned above in my previous post) and this ‘key element’ is good for both ‘scalping’ (I SUPPOSE would be the word) some small profits on the pullback AND keeping you from getting into a trade that would otherwise go ‘pearshaped’ on you if you simply entered ‘at market’ on every signal.
I sincerely hope that THIS thread has a better and FAR more profitable outcome than the Parabolic SAR thread though!!! Having said that (I touched on this in a previous post as well not too long ago): none of us picked up on the the ‘subtle entry rule’ for Parabolic SAR. I’ve spent much time ‘visually backtesting’ what a difference the CORRECT entry rule makes and I can tell you that it changes the performance of Parabolic SAR in leaps and bounds!!! For one thing: you mostly miss those DISASTROUS trades where you have entered at market on the first signal and the trade goes against you right from the outset until you’re forced to stop and reverse at a loss. Combine this with trading only in the direction as indicated by ADX and actually TAKING NOTE if ADX is telling you that you it’s ‘safe’ to be using Parabolic SAR and you have yet another ‘Wilder winner’!!!
Anytime you’re back: send me an email or text message and we can ‘YM’!!!
Regards,
Dale.
Guys,
Well, I’m aiming to ‘get down to business’ today. Target of my studies? The DMI system. I’m going to make sure I get how Wilder does it, and then I’ll check back in and see about how we’ve modified it (if at all). Wish me luck, everyone! If I get it down, hopefully I’ll be in some of those trades you’re watching for, Dale. Catch you all later.
Happy Pips,
Son of Sweden
Edit: Oddly enough (since we’re talking about PSAR again), I made about 60% in one day on PSAR a couple weeks ago! Though, I’m positive that it was just dumb luck, and could have easily gone the other way in a heartbeat. Regardless, I don’t think I’d be likely to follow PSAR again, even if you think you’ve got it working now. 
Edit: By the way, Dale… when you challenge the Delta Society and the Delta P… am I on your side or theirs? 
ok Dale
I think i wasn’t clear enough to express my thoughts.i emailed u with the chart please have a look
by the way i never intend to change the extreme point rule as per the book and yes i agree with Dale and Mr. wilder that “stay with this point,if not stopped out even if the indexes stayed crossed contrary to your position for several days” (i know that and i understand what it means)
but what if the DI’S crossed back again to it is main direction for me (from the chart) it means cancelling the last extreme point and holding our position and waiting for a new one when it crossed back to the opposite direction (to get a new extreme point to follow).
without the chart u will never understand me i think.I emailed u with the chart plz have a look and tell me what do u think it is really very important this situation that illustrated in the chart.
hey boca (MA MAN) thanks my frined i am back on the track please have a look on this system it is really have a merit .just check it out my friend.
Regards,
akram
Good (Saturday) afternoon all.
I’ve just awoke from a great afternoon nap (although I’m sure I could sleep until tomorrow night NO problem. My life is passing me by folks)!!!
sverigesson:
The phrases ‘aiming to’ and ‘hope to’ ain’t gonna make you money and I know from experience: ‘the signals wait for no man’!!! I realise this is your Thanksgiving weekend but I hope you find the time even if it is to just go through the DMS / ADX so that you’re ready for next week as I believe that we WILL get SOME signals on some of the major pairs which are far better to trade ‘first time around’ to build up a bit of capital that some of the ‘huge spread exotics’ that I tend to favour and trade (when I get lucky and get a signal)!!!
(Sorry: I have no idea where the above comes from. I think I’m still ‘smarting’ from the trends I misssed)!!!
Parabolic SAR appears to have the same effect on everyone!!! That’s what happened to me too last year i.e. my very first trade made more in a few days than I made for months before that I thought I was the smart one and everybody else was simply complicating matters!!! Well: 2 000 or so pages of thread later: we finally realised that there was more to it (and I believe I NOW know what it was and everybody with ‘the book’ should see it too)!!!
You’ll be on OUR side of course. We’ll all do this together!!! Although we all have the same trading systems at our disposal we will not all make the same percentage gains so whoever makes the highest percentage gain will be our delegate for the judging at the end of the year and believe me: that could be any one of us!!! I doubt, honestly, that they’re going to go for it, but then again: WHO THE HELL KNOWS!!! Stranger things have happened in MY life up until now I’ll tell you!!!
Oh and by the way: we have not in ANY way modified ADX. My ADX Oscillator simply displays ADX in a different way. There WERE different ‘versions’ floating around at one time but thanks to J. and ‘Father Ted’ (midulster): I ‘saw the error of my ways’ so, with the exception of the FSS, all the indicators that you have are ‘pure Wilder’ CORRECTLY calculated as per ‘the book’. I double checked them ALL before I sent out this latest version so I’m sure this time!!!
Akram:
I received the chart (as you know). IF I understand you correctly: I belive you’re 100% correct. Well put it this way: I believe that an order placed as per ‘The Extreme Point Rule’ should STAY where it is UNTIL you get ANOTHER signal to place ANOTHER order as per ‘The Extreme Point Rule’ in the same direction (for the reasons I mentioned earlier). I THINK that’s what you were trying to say???
I know you were not trying to change ‘The Extreme Point Rule’ but let me say this: please remember that I am only able to give MY interpretation of what I read in ‘the book’ and I’VE BEEN KNOW TO BE WRONG (otherwise I don’t think this thread would be quite as long as it is)!!! I know that I MAY come across as the ‘Wilder authority’ here but IF I DO it’s ONLY by virtue of the fact that I DO believe I’ve spent more TIME with all of this stuff than anyone else (which sometimes I don’t think is a good thing because sometimes I cannot ‘see the wood for the trees’) but it does NOT MEAN that my interpretations are always correct!!! ALWAYS remember that. If I’m making money then I can only ASSUME that whether my interpretation are correct OR incorrect: things are working and that’s why we’re all here i.e. to make money!!!
Regards,
Dale. (forexbrokersonline.net).
Dale,
yes that was exactly what i wanted to say and as the book never talked about it (or wasn’t clear) so i wanted to pointed at it to the FOLKS.and again it was my personal understanding as well and the days will tell me if i am right or wrong let us see!!!
Have a great week end
N.B.Today i do have a barbecue the weather is -1 can u imagine that???!!!
Regards,
Akram
Dale,
Trust me, I’m gonna be ready to roll come Monday. Now, we’re trading these on the daily charts, right? I never can tell what you’re up to at any given time… but I think I remember you posting recently that you were back to daily only. Just curious, since we’re back on the “pure wilder” train.
We’ll I’ve gone over the DMS, and I have to say, it seems almost deceptively simple. But hey, simple is good, eh?
Happy Pips,
Son of Sweden
Hello,
Pleased to hear that you’re ‘knuckling down’.
FORTUANATELY for you: it really CAN be THAT SIMPLE especially given the ‘indicators’. I think what’s important is to just understand what you’re looking at is all and it’s those ‘tiny details’ in the text of ‘the book’ that ‘make or break’ these systems. I always get upset when I see an ‘online help file’ that came with a trading platform or a ‘trading systems website’ where only very rudimentary instructions are given as to how the trader should use one of ‘the old mans’ indicators. Invariably what happens??? Those rudimentary instructions are followed, the trader loses money, and a new thread on a site like this appears telling the whole world that Wilder;s indicators are ‘crap’!!! And this is NOT to mention the incorrect methods used to calculate ‘the old mans’ indicators which are freely distributed globally!!! I MYSELF am guilty of this and have over 2 000 pages of ‘Parabolic SAR - that’s all!!!’ to prove it!!! TWO YEARS it took me to notice WHERE YOU ENTER a Parabolic SAR trade AND I HAD ‘THE BOOK’!!! (In ALL fairness to ME though: I think my VERY LAST ‘version’ that I posted on that thread actually said to use ‘Fractals’ to determine the entry point. It turns out that a ‘Fractals’ indicator is indicating nothing other than a SIP but, by that stage, I was ‘Parabolic SAR’d out’ so I never pursued it any further). For those of you who ‘stuck with me’ through that period: take a look at the chart on page 12 (Fig. 2.2). NOTICE THE ENTRY POINT!!! It’s NOT the ‘first dot’!!! And, ironically, that entry point is ACTUALLY a valid SIS HSP so there’s ‘the easy way’ to determine the CORRECT entry point for a Parabolic SAR trade. Do yourself a favour now and call up the SIS (FSS) with Parabolic SAR. ALMOST ALWAYS: this entry method stops you getting into those Parabolic SAR trades that turn against you from the very moment you open the trade and then have to SAR at a loss (and invariably SAR at yet another loss just shortly after that)!!! Now look at Parabolic SAR trades where the direction is confirmed by ADX AND the above entry rule is used!!! $$$!!!
I am only trading using the daily charts NOW AND FOREVER!!! You will note that all of ‘the old mans’ trading systems and indicators heavily weight the closing price and there is a very good reason for this i.e. the CLOSE is ALL IMPORTANT when it comes to equities and commodities (and I believe when it comes to forex pairs as well but I’ll get to that shortly). NOBODY (traders) is interested where the Dow is at 11h43 ET!!! But they’re REAL interested WHERE IT CLOSED (actually where it SETTLED which is sometimes different from the CLOSE but this is not too important for the trading of forex pairs so I’m not going to elaborate here) i.e. did it find support or resistance at the CLOSE because this very fact is important in determining market sentiment for the next trading day. Now the major forex pairs follow the Dow (equities) (I’ve been having this very same discussion on another thread TODAY oddly enough) so I firmly believe that because our trading plaform (Delta) closes at exactly one hour after the Dow (NYSE) closes (as a matter of fact the Dow SETTLES in this hour i.e. ‘aftermarket trading’ which unfortuanately we’re not privy to) we are at an advantage. Thinking logically about it: a pair like GBP/JPY ‘dies’ until the Asian session opens later on so our CLOSE is the CORRECT close to be using for our trading systems (even although forex does not actually CLOSE)!!!
And one last thing: WHY IS IT THAT WE PERCEIVE THAT TRADING MEANS THAT YOU NEED TO BE OPENING AND CLOSING POSITIONS EVERY TWO MINUTES??? I know that I used to believe this and I’ll tell you that I’m not the only one. There are probably hundreds (if not thousands of posts) on this very website that assume that trading means you are placing orders, taking profits, and clicking your mouse, every two seconds. I WILL agree that this DOES apply if you’re a trader on the floor of one of the exchanges. I DO NOT believe that this applies to what we do i.e. retail traders. Just think about this (using some of the past trades that I’ve gone to great lengths to highlight this past week): those trades (and the ones that are coming our way!!!) are good for THOUSANDS of pips (or points). I fail to see how you could make ANY MORE out of those trades if you were taking positions every five minutes. Not only are you making your broker (well ME as well) rich: but you always stand the chance of being ‘wrong’ on a trade MULTIPLE TIMES!!! I sit here 18 hours a day but unless I’m trading the RTS (which I’ve not looked at for a while) I’m not touching the trades (I’m too busy being on my ‘Wilder soapbox’ anyway)!!! I’ve said it before and I’ll say it again: I am able to attribute my past successes to three things: daily charts, ‘pure’ Wilder, and money mangement (Wilder’s Capital Management). There have been times when I’ve traded the shorter timeframes and made HUGE profits in a few hours and it’s very exciting but you know what: over time I’ve given ALL that profit back (and it did not take a LONG time either)!!!
OK, one LAST LAST thing: I truly believe that I (we) have INDEED OVER COMPLICATED matters so don’t worry TOO much if it APPEARS ‘simple’. Of course: the ‘indicators’ DO make it a whole lot easier to trade the trading systems in ‘the book’ but I assure you that either way: ‘pure’ Wilder if UNDERSTOOD CORRECTLY will generate GOOD gains from the day you start. The ONLY obstacle that you will face is YOU i.e. I believe (as I’ve said before) that this business is probably ‘10% trading sytem and 90% trading psychology’. Master the psychology and the sky is the limit. We have ALL the other tools necessary!!!
Regards,
Dale. (forexbrokersonline.net).
Dale,
You won’t get this till tomorrow, but thanks for the reply. I’m really glad that after all the tweaking and modifying and over a hundred pages of thread, and we’re finally ‘back to the basics’, so to speak. Pure Wilder, on daily timeframes… very appealing to me, especially since most of your true and consistant success has been under these conditions. And, unlike you, I am perfectly content to let my trades ride, checking them every hour or so (I don’t need to be sitting there every second like you ;)) until I’m satisfied. Of course, I also believe that I will be prone to taking profits a little earlier than you sometimes… When I’m satisfied that I’ve made a significant contribution to my account balance, I’m more than happy to jump out of a trade. We’ll see how that works for me (or against me, perhaps :p).
Anyways, it’s 9:00 here, so I’m approaching ‘bedtime’. I’ll talk to you tomorrow.
Happy Pips,
Son of Sweden
Dale, Akram, Sver, All
Good Sunday afternoon to all.
Great couple of posts there Dale and I must say that I am glad that we appear to be back on track with a more pure and simple version of Wilder with DMS and PSAR. Good to see.
I would just like to discuss the extreme point rule (EP) for a while if I may. I just want to clarify that I understand the interpretation correctly. I notice Dale that you mentioned �not entering at market� and I just want to see if I understand this.
I have attached a chart of EURUSD daily. Lets focus on just the EP just now and not on the values of ADX or anything else. This is ADX(13) just for info sake.
OK so we can see that just a couple of days back there was a DI crossover signaling a long trade. I have marked the extreme point on the day of the crossover. The very next day this extreme point is broken so if we were short we would now SAR to long. If we were flat the market we would enter and go long. So we would now be long but currently sitting at a bit of a loss as since the EP was broken, the price has retraced a bit.
This how I have been interpreting the EP rule. I invite all comments on this. Am I correct? Dale, what do you mean when you say don�t enter at the market?
One more thing, I have never been able to figure out how to write on the charts at Delta. I only get these annoying yellow or transparent labels popping up and I don�t know how to write in them. Another thing that needs looking at.
Thanks in advance
Boca
eurusd.zip (51.2 KB)
Good (Sunday) morning Boca!!!
(It’s just ocurred to me how weird it is that I’ve just woken up and you’re probably getting ready for dinner. I’m usually AHEAD of everyone else)!!!
And by the way: I sincerely hope that all of this ‘mumbo jumbo’ going on is not affecting you??? If so: get on back to Scotland for cryin’ out loud!!! (There are few enough people trading here now: we could not afford to lose another. Besides: we need to increase our chances for the competition)!!!
When I say to not enter ‘at market’ I mean to not enter by placing a market order the moment the bar closes and +DI and -DI have crossed each other (or the oscillator has changed color). But you know what: as I typed this last line it ocurred to me that it could be my interpretation of the text before we even GET to ‘The Exteme Point Rule’ i.e. when I read the very first paragraph of the DMS (under the main DMS heading) on page 47 I am just assuming that HE is saying to ‘enter at market’ i.e. simply open a position at whatever the current price is. For all I know he COULD ALSO mean to enter the market by placing stop order!!! EITHER WAY though: there is NO WAY (excepting on rare occasions) where opening a position immediately by simply placing a market order when the signal bar closes and +DI and -DI cross can be correct. From what I see: you MUST enter the market using ONLY stop orders. My logic is this: a new signal IS INDEED nothing different than a STOP AND REVERSE signal not so??? As you say: if you’re ‘flat’ in the market it’s your entry signal but if you’re ‘in’ already then it’s your STOP AND REVERSE signal (at which point ‘The Extreme Point Rule’ should be noted). See my point??? And I can also attest to the fact the price DOES retrace MOST times as per ‘The Extreme Point Rule’ so if you ENTER one of these trades ‘at market’ i.e. by simply opening a position immediately when the signal bar closes and +DI and -DI have crossed then I believe you’re simply opening a position KNOWING that it’s going to go against you almost immediately (which, ironcically, is EXACTLY the same thing that I was trying to point out and / or discovered with regard to Parabolic SAR)!!!
Now OF COURSE: ‘MURPHY AND HIS LAW’ are ‘alive and well’ this morning i.e. the entry (extreme) point that you’ve noted on your chart is one of the NOT TOO MANY TIMES that price has INDEED moved through your order price (that you placed as per ‘The Extreme Point Rule’) one or two days later and only THEN retraced!!! As a matter of fact: with EUR/USD it’s now the SECOND time this has happened!!! HOWEVER: MANY MANY more times (on other pairs???) price does NOT reach your order and if you were already in a position it continues in your favour without you having to first SAR at a loss and only THEN be put back in the direction of the original trend.
As far as writing on the charts is concerned: there IS a way to do it IN the platform but it’s more trouble than it’s worth. I just save the chart as a bitmap (.bmp) file, open the bitmap file using Windows Paint, put in all my comments and drawings and stuff using Windows Paint, and then save the end result as a Portable Network Graphic (.png) file (this done because a *.png file is normally a fraction of the size of a ‘raw’ *.bmp file thus cutting down on upload times and amounts of data and saving a bit of space on our beloved babypips server)!!! I also compress the file using WinZip before uploading (as you have done) so that babypips does not compress the size of the chart (it’s a fair tradeoff I think i.e. we upload the smaller *.png files in WinZip format and they don’t compress them any further making them unreadable)!!! On the other hand: if you want to use those label ‘things’ in the plaform you create the label from the ‘Instruments Panel’ and then to edit the text and color of the label and such you must open the ‘Property Grid’ (two buttons to the right of the ‘Property Grid’ button) and from there you have one GAZILLION options to change the text, appearance, color, font, etc. Creating a chart and using this stuff always looks PERFECT but I think it’s too much trouble to go to for our purposes. Those fancy labels and the like will be nice when we get around to completing our FINAL DOCUMENT (although now that we’re back to ‘pure’ Wilder I’m not so sure there is any need for some or the other ‘New Concepts’ summary)!!!
Regards,
Dale. (forexbrokersonline.net).
By the way:
I was thinking about this:
MOST indicators use a period of 14 as a default. I’ve always wondered why??? I mean: 14 is not one half of anything is it??? We have a MAXIMUM of 22 trading days so it’s not one half of that??? Anybody want to hazard a guess as to why the number 14 is so popular??? Just one of those ‘intersted to know’ things really.
Having said that: I notice Boca is ‘hell bent’ on using a 13 period ADX and I’ve seen other ‘instructions’ where ADX is 10 or 11. I’d be interested to backtest the different periods because I’ll wager that each instrument will have it’s own ‘sweet spot’. Could 14 simply be the closest to ‘one size fits all’ i.e. a sort of ‘ideal mean’???
Thoughts???
It’s funny you know: it always amazes me when someone says that indicators are useless. OK: some MAY be of course. But I’ll tell you this: I’ll bet that had we all caught those last downtrends using ADX(14???) on a few pairs we’d have done better than ANYONE on this site has done this year (as a percentage gain on capital). (Come to think of it: that’s ANOTHER possible competition although the major problem with THAT competition will be having to rely on OTHER people’s honesty I suppose)!!! Then again what I sometimes forget (and other people who ignore our thread don’t know) is that we’re really NOT ‘trading with indicators’ are we??? I mean: ADX is an ‘indicator’ but ‘DMS’ is the ‘trading system’. Parabolic SAR is an ‘indicator’ but ‘The Parabolic Time/Price System’ is the ‘trading system’ (although with Parabolic SAR I suppose it’s possibly harder to make the distinction)!!!
(Just ‘thinking aloud’)!!!
I know one thing for sure though: ALL I WANT FOR CHRISTMAS is to catch the start of one of those L-O-N-G ADX(14???) trends that I’ve just missed. At a few USD per pip that’d do me FINE!!! Remember: I am able to multiply every USD I make by a factor of 10 and it’s a LOT of ZAR i.e. R10 000 ZAR is worth MORE to ME than $10 000 is worth to a US Citizen i.e. our cost of living ain’t anywhere NEAR what it is in a lot of other places in the world (believe it or not) (and if you don’t trade for a living we have a fantastic quality of life here)!!!
Regards,
Dale. (forexbrokersonline.net).
Edit:
LOL!!! Did anyone see the new advertiser??? ‘Spot the Deltastock banner ad’!!! (I had nothing to do with it by the way)!!!
Here (I thought I’d make it easy for ya)!!!
Take a look at the attached chart!!!
Hell: I may even open a logical position when I get a Parabolic SAR signal to go long (which is OK i.e. this is NOT a ‘hedge’ as both my current DMS long and the Parabolic SAR trade will both be in the SAME direction so the Parabolic SAR trade can be managed independantly of the DMS long). Of course: I’ll ENTER CORRECTLY!!!
AND BEFORE anyone posts and says ‘yes but just LOOK at all the profit you’ll miss on a Parabolic SAR trade by using that entry method’. LOOK AGAIN before you’re tempted to make this statement!!! Remember: your trade does not open AT THE VALUE OF PARABOLIC SAR!!! A lot of people look at these HUGE Parabolic SAR sweeps and say ‘just LOOK at the profit’. LOOK AGAIN!!! A Parabolic SAR trade starts at the PRICE OF THE BAR where you OPEN THE TRADE and it ends AT THE PRICE OF THE BAR where you CLOSE THE TRADE. The profit is NOT made between the PARABOLIC SAR VALUES themselves!!!
Regards,
Dale. (forexbrokersonline.net).
BY THE WAY (another one): I found a ‘neat little trick’ the other day. If you need to use the ASI ‘indicator’ i.e. you’re not TRADING THE SIS so therefore do not need the TRAILING INDEX SAR then simply input a ‘WAY OUT’ value for the ‘LIMIT’ (I use 30 000 as the ‘LIMIT’ for example). The ASI ‘plot’ is correct then for an instrument that HAS NO ‘LIMIT’. As I said: if you’re actually using the ASI to TRADE THE SIS you cannot do this i.e. for equities and commodities you must then input the CORRECT ‘LIMIT’ (or use the FSS for trading forex pairs).
Correct chart now attached!!!
parabolicsaradxasi.zip (86.7 KB)
Evening all,
Thanks for taking the time to answer my question Dale. The example I posted is currently not profitable but I just wanted to be sure that the EP aspect of it was correct and I think that it is. Thanks for confirming.
Regarding ADX(13) or (ADX14). The reason I had (13) up there was that I brought Elders book along with me for the ride and he seems to like (13) for a lot of things. EMA(13) is used by him on numerous ocassions. 13 is also a Fibo number and if you recollect Carter likes to use Fibos as well, 8 and 21MAs in the propulsion plays for example, and he is always using the 512 tick chart as well. I think at some point in the book he mentions the use of these numbers as he likes to “keep it clean”. Personally I have no real opinion on this either way at the moment.
Regarding all this nonsense in Mumbai and Bangkok, so far I have not come across any troubles on my travels other than the occasional mishap on drunken nights out in various bars but it is a worry that these things are going on round the world. Gunmen storming hotels is totally uncalled for. Bangkok airport is still closed I think and this will have messed up a lot of peoples holliday plans. Thanks for the concern good buddy, but we are all safe here at time of writing.
Cheers
Hello again.
Well I’m pleased to hear that this nonsense has not affected you. As I said: we cannot afford to lose another ‘Wilder trader’!!! LOL!!! (Only kidding: I’m sure you know by now that my concern runs deeper than that)!!!
Yeh: this ‘period’ thing is something I’ve always wondered about but never bothered to discuss really. I know that different people favor different periods for different systems but whether or not the choice of period is based on ‘fact or fiction’ I have no idea. You know: ‘The Turtle Traders’ and Donchian and Keltner … They all ‘swear’ by the ‘ideal period’ but whether or not it’s been backtested thoroughly I do not know!!!
Anyway: if I can make tens of thousands of points / pips (like THOSE trades that I detailed earlier) using ADX with a period of 14 and someone else makes twice as many with a period of 13 or 18 or 100 I don’t really care to be honest i.e. I’m ‘good’ with the ‘tens of thousands’!!! But (as you know): I have that kind of mind!!! I like to know WHY!!!
(I don’t know if I’ve posted this before BUT: usually on electronic components and the like there is a BIG RED STICKER that says ‘DO NOT TOUCH: HOT SURFACE. ACHTUNG!!! DANGER!!! DEATH!!!’. Well: I’m one of those people who NEED to touch it to see JUST HOW HOT IT IS)!!! NOT always a good thing!!!
Regards,
Dale. (forexbrokersonline.net).
OK (in case you were waiting in anticipation): I’ve attached the CORRECT chart to the Parabolic SAR post above. Sorry about that.
Regards,
Dale. (forexbrokersonline.net).
Good (Sunday) evening everyone.
Well: it’s the end of November and the beginning of a new month.
Have a great December!!! We’re not going to retire by the end of this month but I assure you: we’re going to have a FANTASMAGORICAL 2009 because we START the year with 100% of our trading systems working perfectly!!!
Unfortuanately though: I see that ‘Murphy and his law’ are having a ‘MEGA party’ of late!!! I see only ONE new DMS signal and, to make matters worse, I missed it last week (this is what happens folks i.e. you HAVE to be alert and go through the instruments methodically and daily)!!! The signal is (was) long GBP/CHF. OK: not TOO serious because the rate has dropped a TINY bit over the weekend (OzForex Interbank Rates) so there may still be a chance to place an entry stop order. If not, however, IN THIS CASE ONLY, I’ll go long at market because price has moved only a few pips past where my order price SHOULD have been on Thursday night.
There are a few signals ‘in the making’ and one or two valid ones for the Parabolic Time/Price System USING THE CORRECT ENTRY RULE so scan through your instruments and see if you can pick them out. Remember: you need the ASI (or FSS) and you WAIT for a SIP (ASI or FSS HSP/LSP) to be formed AFTER you have the first Parabolic SAR signal and only then do you place your stop entry order. (I’ll help you out here and this is a trade I intend taking as well as always: GBP/USD has already given a Parabolic SAR signal to go long AND, in this case, the SIP, as well as the ASI HSP, completed forming the very next day so you are now able to place and entry stop order ‘a couple of ticks above the high’ of the very same bar that generated the first Parabolic SAR signal. Note that this does not happen very often i.e. very seldom is the bar that generated the Parabolic SAR signal the same bar that forms the SIP or ASI HSP/LSP i.e. the SIP or ASI HSP/LSP normally always forms a few days after the initial Parabolic SAR signal so just bear this in mind of course).
The only other signal I see (HORROR OF HORRORS) is that GBP/ZAR has now started trading in an (ADX(14)) range which REALLY upsets me!!! I MAY just place a stop loss for my current trade on this pair i.e. I’ve already stopped and reversed once at a loss on this pair in the past week and it would certainly appear that I’m very close to having to do this again!!! Of course: there is ALWAYS the risk that THIS time the pair will trend in the direction NOW being indicated by ADX(14)!!! Nothing is perfect I’m afraid. If it were any other pair I’d think twice about NOT stopping and reversing when indicated to do so but the sheer magnitude of the daily movement on GBP/ZAR just ‘blows you away’ if you’re in a bad trade. For the last two weeks: GBP/ZAR has consistently accounted for at least a 25% loss every time I’ve posted the current daily result. It’s a GREAT pair to trade if you ‘hit it right’ but it can also frustrate the living ‘sh*t’ out of you when it trades like this!!!
I have ‘a good feeling in my bones’ about many of the majors right now i.e. if ADX(14) (NOW I HAVE TO SPECIFY THE PERIOD EVERY TIME THANKS TO BOCA) is ANYTHING to go by (which I STRONGLY believe it is) then we’re right on the brink of some very nice and MAJOR reversals so keep your eyes WIDE open!!!
As I said: have a fantastic month!!!
Regards,
Dale. (forexbrokersonline.net).