First, welcome (back) thegeek and welcome Rekaatz from me too.
The forum is REALLY quite lastly! What is it all about? Dale, J: sick or too busy???
Well, from my side, too, there was no much “open” activity here, but quite a lot in the background. Now I think it is good putting something forward, to hear your wise suggestions and comments.
After having spent a good month in catching up and taking quite methodic notes about all what happened here in the last year, I must say I was really a bit dissappointed coming to the end of this work [I]exactely[/I] in the moment new serious doubts about the merits of the DMS “as per the book” were put forward.
I must “confess” that I started doubting quite a lot about the merits of the �old man��s systems, in the sense that it looked to me that the effort here became to find the �hidden� truth behind the systems in a sort of �exoteric� interpretation of the words of the book (like in a sort of �initiates religion� LOL!).
�The� question for me was: �why did Wilder lay out FOUR different directional systems (PTP, DMS, VS and SIS) [I]if[/I] they are so good and working�? I mean: was anyone of them the �holy grail�, I think he would have �stuck� to it and forgot about the others. The answer to this question can be manyfold:
� He did not really want to disclose the good one (but then: why writing such a book? Just for confusing others?).
� He did understand and had clear rules for switching from one to the other system on different instruments or in different market conditions
� He had a much deeper understanding of them.
I tendentially exclude the first hypothesis. The second can be, but unfortunately I fear that nor I nor �the thread� has discovered, yet, the clear-cut rules for the application of one system or the other in the appropriate conditions. The third hypothesis can also be true, but in this case I propend to believe that this is due to his eventual scarce ability to explain things rather than on the insufficient efforts made here (and probably also elsewhere) to ponder one by one every single word of him (Dale: do you ALREADY know the whole book by heart, don�t you??? LOL 
).
Whichever the reason, I think that the experience conducted so far by you all demonstrates that there is no such a thing like the Wilder�s system �good for all times/instruments�, and the wonderful results obtained by Dale and you in the course of the last year are largely due to: perfect money management (limiting losses when they�re incurred), experimentation (changing the systems in different periods), good market experience and feeling (how many times you were following or refusing �signals� based on your good market judgment and similar), sometimes good decisions also �against� the systems (take profits or stop losses, fruit of the old good �common sense�).
Now, and this is the third time (the first is the FSS, the second is the �correct-till now" form of the DMS), apparently Dale and J are �elaborating� some indicators and ideas on the DMS for �fixing it up�. I can eagerly believe that this is done by following and deepening �Wilder�s wisdom�, but anyway is something going [I]beyond[/I] his 1978 achievements! Good luck, and hopefully we will get some more insights about your findings soon!
I also tried to follow my road in these days. And started thinking that, perhaps combining some of the �partial truth� contained in each of the trending systems it could be possible to find something a bit more �robust� and reliable than the single systems themselves.
My observations (which I hope somebody would eventually criticize) started from pSAR, because I have the impression that in a strongly trending market this is one of the best �trend following� indicators. The problem with it are the famous whipsaws, and the need to use a good �extreme point rule� for entering the trades. I furthermore noticed that DI�s and ADX, if followed together with pSAR, nicely indicate the strength of the trend, and that, avoiding to take pSAR signals in a period when the DMS indicators signal a weakening or an absent trend, looked quite good!
So: three �good things� from the old man. Extreme Point (or LSP & HSP� I�m no more so keen to definitions); DMS as a �trend strength� indicator; parabolic SAR as a mean for following the trend.
Coming to the end of this infinite post and to the start of a discussion. I�m currently building an EA for metatrader. It is also useful for trading, maybe, in the future. But the real reason I�ve made it is that it is the only tool I have access to for backtesting and experimenting.
On the �bad pair� GBPUSD that J used for the demonstration of the limits of the �classical DMS�, my method of entering in the direction of the pSAR, but only when ADX is above a threshold (20), and with the �extreme point� chosen for setting limit entry orders, and closing the open trades when ADX turns down being above the DI�s or PTP SAR (whichever comes first) I must say that the system made real $$ over the last 3 years (01.01.2005 to date).
I�m unfortunately using the �standard� MT4 Wilder�s indicators, and this can strongly influence the results. What I�m now making is correcting the indicators also for MT4. By the way: is there anybody out there which can confirm that “Wilder’s smoothing” mathematically corresponds to an exponential moving average smoothing with period = (2*n)-1 (where n = number of periods of ADX/DI’s?). I read a mathematical demonstration of that which seems quite convincing.
The aim of this post is to kick-off a possible experiment about this method with you. I will for sure put forward more details in the future (I don�t want � and haven�t time � to write a novel right now). But perhaps you all can already start looking at some charts and make your considerations.
Good! Hope to hear from anybody quite soon!!!
Bye
Fabio
