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

Trading Systems Free Forex Trading Systems
1794

Good (Friday) afternoon!!!

I AM TOUCHED by all the concern!!! I really am!!! Thank you!!!

Well:

As you have no doubt all gathered: things are NOT well at all. NOT WELL I say!!!

That being said: this is NOT the reason for my silence!!! I have been sitting here for close on two weeks now day after day and night after night working on these trading systems and indicators to see if I cannot SOMEHOW improve them and AVOID AT ALL COSTS the drawdowns that J.s backtesting showed WERE POSSIBLE. Now I JUST KNOW that NOBODY is going to be happy about my findings (particularly not J.) BUT it would AGAIN APPEAR TO ME, after ALL the justifications and doubts, that IF you trade these systems EXACTLY as per ‘the book’ you will be OK. My findings REALLY come down to this: the MASSIVE percentage gains that I have posted from time to time over the past year or so ARE NOT sustainable OVER TIME. These trading sytems will SLOWLY churn profits OVER TIME. To think that 50% or 70% per month is CONSISTENTLY possible I realise NOW is ridiculous. I have spent HOUR upon HOUR ‘manually backtesting’ the DMS using ALL the rules i.e. ADXR above 25, ADX not below the DI’s, taking profit at the first downturn of ADX, etc. etc. etc. I come to +/- 5 533 pips profit between 2005-04-29 and 2008-12-31. I’m now of the opinion that is FANTASTIC!!! The statistics DO worry me though i.e. on this pair, for example, between 2005 and 2006 you ALMOST broke even (2005 - loss of -80 pips and 2006 - loss of -570). The profit was made from 2007 to 2008. The ONLY thing I’ve NOT been able to check is whether or not I’d have been actually TRADING this pair during certain times as per the ADXR reading but this will be one of my very last tests here. I really got ‘spooked’ by J.'s backtesting results of the system and, of course, as ALWAYS tends to happen, I got ‘thrown off course’ again. J. will tell you that his backtesting did NOT TP when ADX turned down and as far as I know the ADXR readings were not factored in either (please DO correct me if I’m wrong) and EVIDENTLY this DOES make a HUGE difference!!! As you have no doubt read on NUMEROUS occasions in posts of NONE OTHER than MINE: I’ve said that using ADXR ‘gets you in too late’ or ‘causes you to miss too may trades’. Well: HERE IS THE LOW DOWN!!! YES: if you take a look at 2007 and 2008 INDEED requiring ADXR to be above 25 ‘got you in late’ or ‘caused you to miss trades’. What you’re NOT seeing is the HORRENDOUS number of BAD TRADES that it INDEED kept you out of between 2005 and 2006!!! And THAT is where my interpretation has been ‘flawed’ all along i.e. seeing NOW for what I WANT it to be!!! Now there is ONLY ONE THING I REALLY NEED TO KNOW and only Cody can answer this question: you say that you have now lost 100% of you demo account. I reallly need to know if you could post details of your trades and lot sizes and stuff like that if you don’t mind. Of ALL the posts that I’ve seen in the last two weeks YOURS is of the MOST concern. No: I am NOT doing well AT ALL BUT I ALSO know the REASONS for that and it’s NOT the trading systems!!! (I will be giving DETAILS of the REAONS in the very near future)!!! So if you could Cody: PLEASE could you give us details of your EXACT trades, lot sizes, etc. I need to know this to confirm what I am saying here. So for me: it’s BACK (ONCE AGAIN) to the ‘standard’ systems in ‘the book’. BELIEVE ME when I say that I’ve generated MANY MANY ‘systems’ based on ‘the book’ in the past two weeks and ALL of them COULD NOT SURVIVE the movements in 2005 and 2006. Sure: some of the made MORE during 2007 and 2008 but the potential losses during 2005 and 2006 were in the THOUSANDS of pips as well so at the end of the day I could NOT improve on the ‘standard’ systems in ‘the book’. OK: there is one slight ‘tweak’ to the TBPS and my FSS SIS ‘derivative’ I still stand by but other than that: if you do NOT trade the systems as per ‘the book’ then I’d go so far as to say that these systems are then not for you. And it WILL take ‘stamina’ and ‘courage of your convictions’ to be able to do this. I, for one, would have been HIGHLY upset had I worked for two years trading GBP/JPY and come out ‘even’!!! No question about that. As I say: the ONLY other test I need to do is backtest ALL the pairs from 2005 to current and get a nett overall result. Only THEN will I be sure of what I’ve said above. That being said: I CANNOT simply sit back and do nothing. For now: I don’t see any problems with the systems in the CURRENT markets (yes there have been losses of late but I DO suspect that people did NOT TP when ADX turned down and did NOT SAR as indicated by ADX and HAVE BEEN trading pairs where either ADXR was below 25 or ADX was below the DI’s and not following the money management rules). If I’m WRONG then I DO apologize but EITHER way I (we) need to know!!!

I’m sorry if this has ‘taken the wind’ out of some peoples ‘sails’. I really am. All I can say to you today is that in SPITE of my current circumstances I DO STILL believe in these trading systems. I HOPE that this is THE LAST TIME that I have to convince MYSELF that ‘the old man’ actually DID KNOW what he was talking about!!!

Regards,

Dale. (forexbrokersonline.net).

1795

Hi Dale,

Nice to hear from you again - with another excellent epic.

I think patience is the hardest thing with Wilder’s stuff. Daily charts do tend to feel slow to start with and some of his filters then keeping you out of trading a pair for MONTHS at a time it really does take iron discipline to stick with him.

I’m not really into all the kicky slappy martial arts thing but someone told me a story a while ago that maybe fits your journey.

When a student begins his or her study of the martial arts a white belt is worn, which symbolizes a stage of innocence. As training continues, the white belt becomes soiled and starts to turn brown in color. With the passing of time the belt becomes so soiled that it turns black in color, symbolizing that the student has reached the stage of the Black Belt. As the years go by and with more training the edges of the Black Belt begin to fray and turn white. Eventually, the Black Belt turns all white in color, symbolizing that the student has returned to the stage of innocence.

Maybe now you are the kung fu master trader grasshopper!!!

1796

J. will tell you that his backtesting did NOT TP when ADX turned down and as far as I know the ADXR readings were not factored in either (please DO correct me if I’m wrong) and EVIDENTLY this DOES make a HUGE difference!!!

You are correct! After my initial results with pure DMS, I have experimented as well with different filters and parameters, but this is how I started.

1797

Hey Dale (and all) - Just checking in and sensing a bit of a somber mood, so I thought this advice from a guy who knows a little bit about trading might help (his name is at the bottom, I think you’ll recognize it). All the best for the remainder of 2009.

========================================================

We begin this New Year with dampened enthusiasm and dented optimism. Our happiness is diluted and our peace is threatened by the financial illness that has infected our families, organizations and nations. Everyone is desperate to find a remedy that will cure their financial illness and help them recover their financial health.

Every new year, I adopt a couple of old maxims as my beacons to guide my future. This self-prescribed therapy has ensured that with each passing year, I grow wiser and not older. This year, I invite you to tap into the financial wisdom of our elders along with me, and become financially wiser.

Hard work: All hard work brings profit; but mere talk leads only to poverty.

Laziness: Sleeping lobster is carried away by the water current.

Earnings: Never depend on a single source of income.

Spending: If you buy things you don’t need, you’ll soon sell things you need.

Savings: Don’t save what is left after spending; spend what is left after saving.

Accounting: It’s no use carrying an umbrella, if your shoes are leaking.

Auditing: Beware of little expenses; a small leak can sink a large ship.

Risk-taking: Never test the depth of the river with both feet.

Investment: Don’t put all your eggs in one basket.

I’m certain that those who have already been practicing these principles remain financially healthy.

I’m equally confident that those who resolve to start practicing these principles will quickly regain their financial health.

Let us become wiser and lead a happy, healthy, prosperous and peaceful life�

Warren Buffet

1798

Finally a “normal” day here, with all showing up. And especially you old good hero! Dale: nice to hear from you (and also nice to hear your news about DMS).

It’s time for thinking, time for (day-) working…

That’s true for me too. So I do not add anything to the “brainstorming”, besides that I’m glad to be here, and glad that you all are, also.

Keeping in touch

Fabio

1799

Good (Friday) EVENING everyone!!!

Thanks for the reply J. Don’t get me wrong: I’m NOT questioning your backtest results. As you ALL know I compared my ORIGINAL backtest results with J.'s and his were 100% correct AS ALWAYS BUT at the time I was still convinced that factoring in ADXR was a waste of time / pips / points but as my past two weeks of work have confirmed I was AGAIN wrong. As I said: on any CURRENT Delta chart it would APPEAR that ADXR is ‘costing you’ but SCROLL BACK a few weeks / months and THEN see JUST HOW MUCH NOT having ADXR above 25 WILL cost you!!! I THIS is the trap that I so easily fell into and basically what sparked this LAST deviation i.e. J.'s (AND my) original backtesting gave me ‘cold feet’ BUT THAT SAID: if nothing else it’s made me realise the importance of ADXR and all of the other rules detailed in ‘the book’.

As you say ‘Father Ted’ (and thank you SO much for what I take to be encouragement): the DMS in particular could keep you out of trades for MONTHS. As a matter of fact: during my manual backtesting of the DMS ‘by the book’ (GBP/JPY) I had 3 ‘trades’ in 2005, 3 ‘trades’ in 2006, 7 ‘trades’ in 2007, and 8 ‘trades’ in 2008!!! PATIENCE is ‘the word’!!! But I THINK I’ve ‘got it now’ FINALLY (if ONLY I had $1 for every time I’ve typed THAT phrase here)!!!

And THANK YOU CRAIG!!! You’re post has come at a very good time!!!

Now there is just ONE OTHER VERY IMPORTANT THING that my last two weeks worth of work has AGAIN identified and this is now NO LONGER a matter of choice!!! Whatever instruments / pairs that you are trading ABSOLUTELY HAVE TO BE ‘weighted’ against each other!!! I would go so far as to say that THIS is even MORE important than the money mangement margin percentages. What I mean by this is the following: EVEN IF the money management margin percentages ‘allow’ for a particular lot size then you HAVE to ‘weight’ the instrument / pair against some sort of ‘baseline’ like EUR/USD for example. In other words: JUST BECAUSE the money management rules would allow you to margin let’s say $1 000 on GBP/ZAR for example that DOES NOT MEAN that YOU CAN SIMPLY BECAUSE the ATR for GBP/ZAR is WAY ‘out of kilter’ with EUR/USD!!! This HAS been discussed before but I don’t think that any of us (well me anyway) realised the actual importance of this. Even something as ‘basic’ and ‘harmless’ as GBP/JPY can ‘bowl you over’ if you’re not watching carefully!!! This is of MAJOR importance ALL ROUND i.e. NOT JUST for the TBPS and RTS but for the trend following systems as well. The point is: there is NO point in riding a great EUR/USD trend for days on end and being ‘wrong’ on GBP/ZAR or USD/RUB for a few days!!! The NETT EFFECT is ALWAYS going to be ‘VERY BAD’!!! I know that somewhere on the thread I did post ‘the beginnings’ of a formula to weight instruments / pairs using NOT ONLY their $ value per pip per lot but ALSO factoring in the ATR(14). I am just busy ‘finessing’ this formula and I will then post it on the thread (as a matter of fact I’m EVEN trying to create some sort of ‘indicator’ to save us time so just bear with me on this one).

BY THE WAY: I SUPPOSE EVERYONE saw the email from Delta!!! METATRADER??? I’m also REAL curious as to why they’re stopping the ‘blinking prices’!!! I LIKE THEM!!! And BY THE WAY: the fact that they are also including a ‘Spread’ column for the forex pairs IS PROOF of what I’ve said before i.e. that they DO LISTEN to their clients and make changes upon request WITHIN REASON!!! I KNOW this because I requested a ‘Spread’ column for the forex pairs some time ago and they assured me that it would be included in the next update!!! (In case you’re wondering WHY I asked for this: the spreads change now and then and I CONSTANTLY find myself having to calculate the spread using my FINGERS whenever I set up a chart with one of my indiciators that requires the spread to be input)!!!

Anyway: it’s Friday night and we’re almost ‘done’ for the week. I know I’m ‘bushed’ after the past two weeks!!! One way or another I intend to ‘come out fighting’ from Monday!!! See you then!!!

Regards,

Dale. (forexbrokersonline.net).

By the way Cody: PLEASE if you have the time could you post the details of your demo account’s ‘demise’. It’s NOT to ‘pry’. I REALLY need to know if I’m missing something here in my ‘back to basics’!!!

Edit:

Sorry Fabio. You ‘sneaked in’ while I was typing this post!!! HELLO!!!

1800

Guys - While I’m happy to hear about the Metatrader, here’s one thing that kinda has me concerned a bit. It appears you run Metatrader to another broker (ie demo) and then when something happens there it is duplicated at Delta. Here’s the part that didn’t sit well with me personally at least:

Taken from point #5 -

You can trade with MetaTrader and/or start a strategy. Every order sent will be duplicated in Delta Trading and will be executed by Deltastock. The STOP and LIMIT orders are not send to Deltastock. They get executed by Deltastock once they are executed in MT.

The fact that I need to ensure I have a connection open to both MT4 broker and Delta in order for stop/limit to be triggered concerns me a bit. One of the things I like about Delta is that I can set my stop/limit (or trailing stop) and then log off and wait for SMS/email to confirm the position closed and at what price. While this isn’t a major dealbreaker, it just makes things a little less than desirable for me as any type of internet access or broker connectivity issue (MT4 or Delta) could interrupt a trading plan (think TBPS). Again, I think this is a great step forward, just wish there was some additional developments planned to help close some of these gaps.

Hmmm… Maybe we should start our MT4 bridge application wish list now, eh? :slight_smile:

Hang in there guys, its always darkest before the dawn.

1801

Good (Saturday) morning.

Craig:

That’s an intersting obvservation and one which I cannot comment on. I will say that it sounds like a ‘messy’ arrangement so ASIDE from all the work I’ve done for Deltatrading it’s not something I’d look at anyway. Also (I don’t know if any of you are aware of this or even if it would affect us at all): ALL Metatrader brokers tell you that if you set TRAILING STOPS those TRAILING STOPS are ONLY going to be recognised if MT4 is OPEN on YOUR side. In other words: if you CLOSE MT4 and you’ve set TRAILING STOPS they WILL NOT BE HONORED on the broker side. I’ve yet to see an exception to this at a broker. And aside from that: I cannot honestly tell you that I’m a ‘fan’ of these ‘strategy testers’!!! This past two weeks has taught me ONE THING of importance: there is only ONE WAY to BE SURE of your ‘strategy’ and that is to sit down with a pen and paper and a calculator and paper trade whatever system you wish to use. This accomplished two very important things (well it has for me anyway): it allows you to fully understand every nuance of your trading system and in doing this I’ve constantly found ‘exceptions’ where I’ve had to ask myself ‘now IF I WAS trading this NOW what would I do at this time’ and this forces you to ‘get your act together’. It IS A PAIN there is NO question but I honestly do believe that it’s the only way. I’d NEVER backtested any of these systems until two weeks ago. By that I mean: I was quite happy with the results presented to me on the chart IN FRONT OF ME and that is what I’d always based my assumptions on. Now, having HAD to backtest them manually going BACK to ‘what was’, I see a totally different picture!!! Put another way: the work I’ve done in the past few weeks I believe has made my expectations of the trading systems far more realistic. I fear that I may have spent a whole LOT of time making these trading systems out to be something that they’re not and for this I apologise although it WAS done ‘in good faith’. I STILL DO believe in them and, as I’ve said, I don’t belive that I have the capability to improve on them. I NOW just have to accept the fact that these trading systems will make you ‘get rich slowly’ as it were. If I ‘hit a luck’ now and then and I make 100% gain in a month then this IS THE EXCEPTION and NOT THE RULE anymore. To be honest: my sights are set on around 20% per month right now. I don’t expect to make less than that although I realise it is STILL quite high. Put it this way: at least I will be HAPPY with 10% - 20% per month NOW as opposed to being TOTALLY ‘put off’ because I’ve not achieved 70% or 80% for a given period!!! That in and of itself is an accomplishment and a step forward for me psychologically!!!

Regards,

Dale. (forexbrokersonline.net).

1802

Hi Dale,

Absolutely that little story was for encouragement and for the fact that all us Wilder fans respect and admire the effort that yourself, J. and all the other regulars have put into this work and openly share with the Babypips members. It really does help those of us who may be a little slower to work things out.

I know pippin doesn’t deliver nice smooth returns but I for one would be delighted with a monthly return of around 10%. A quick search of the currently available savings rates in the UK turns up about 4% annual return at best - where 10% a month turns into over 300% annual return. That will turn 5000 into 15000 in one year, into 50000 in 2, and into 150000 in 3 years. Thats getting rich pretty quick in my book. Not bad for a little extra work before going to bed.:slight_smile:

Derek

1803

Hallo friends!
Yea, Derek and Dale. I would be already more than happy with a monthly 5%, as probably I said sometimes ago.

I wanted just to comment about Dale’s:

And aside from that: I cannot honestly tell you that I’m a ‘fan’ of these ‘strategy testers’!!! This past two weeks has taught me ONE THING of importance: there is only ONE WAY to BE SURE of your ‘strategy’ and that is to sit down with a pen and paper and a calculator and paper trade whatever system you wish to use.

I perfectly understand the “added value” of this work, as you explain further, Dale. But I think there are also good ways and good reasons for backtesting with a “strategy tester” like MT4’s. MT4 has [B]a lot of[/B] limitations, and also the strategy tester has its own. Especially dangerous are the indicators, coded by the (mostly Russian) team of developers, that made a great job in creating a better-than-average software package, but sometimes not as good for technical analysis (yes: DI’s/ADX is [B]absolutely wrong[/B], pSAR is [B]just near to[/B] Wilder’s and I have not checked ATR and RSI…)

That said I think there is a quite serious way of using the strategy tester, and at least for me it is trying to catch up with a “surrogate” of the long experience and dedication that people like you, Dale, had the time to accumulate in these years of constant chart observation, and also with the (time-consuming) hand and paper-made backtesting you are speaking about. For the “poor guy” like I am, the strategy tester can be quite educational, giving me a sort of “accelerated” experience.

The example is the following: I managed to make the EA (and then the backtesting) for the TBPS. The way I made it was [B]FIRST[/B] to build up my “brave old” Excel worksheet corresponding to p. 61-62 of the book, and then substitute the values for the first month of 2005. Making then “my” trade decision based on the book and simulating for these first 20 days my trades.
Then I went back to the MT, and coded something that is really making what I would have done in my excel. I’m really sure about it, because the trades of these first 20 days made by the script EXACTELY correspond to the ones I “manually” made on the excel (actually this backtesting allowed me to discover two mistakes in the manual procedure, because with just high-low-close data I overlooked two stop losses I would have incurred).
This means I now have a tool that exactely makes what Wilder was making in the p.61-62 worksheet. And, I don’t know if I get it correctly, but when the old man speaks about “technical systems”, I normally understand it like “mechanical systems”: follow the rules and “you even do not need charts”. I also think that, in the case I would make other decisions during “live trading”, these could be justified by some other “human brain integration”, but would not be “THE” system as laid out in the book. I can also imagine that there will be a lot of exceptions, during long times. But I am also convinced that they would not SEVERELY modify the overall results of the system.

Now, for what is worth, I want to tell you that, after the first checks, with GBPUSD and EURUSD, this “pure” TBPS (without tricks, tweaks, filters, and other) from 03.01.2005 to date [B]was not profitable[/B]. I have no time now to go into details, and will eagerly make it [B]if[/B] anybody is interested and as soon as I have a bit more time. But, generally speaking, it gave about 60% of winning trades, but, due to the low “risk:reward” ratio (well: the “classical definition”: SL if hit gives a loss that is much bigger than the gain in case the TP is reached), at last it was “sucking”.
Looking back to Rekaatz’s posts a few days ago, I must now definitely try with GPBJPY (not yet done: in the next few spare time available!).

Suggestions for fixing it are welcome. I’m thinking two things but like to hear your opinion. First: apply an ADXR filter. Problem: I must first recode the ADX indicators for MT4 (also the “corrected version” I posted about sometimes ago is not completely “right”, though quite “similar” to Wilder’s). Alternative: make the SL closer to the entry. But this is of course risky, because it is true that, when losing, you’re losing less; but also the SL will be hit more often, and therefore the % of winning trades will be lowered.

Bye

Fabio

1804

Hi All Investors in Fintrans,

I am an investor in Fintrans-managed investment plan.

On 24 Jan 09, 12:21GMT, I received an an email from Dale that contained some EXTREMELY shocking news.

I am writing this post to check with all other investors of Fintrans-managed accounts whether you have received similar emails. If you have, could we contact each other (privately through emails first, not on this thread) to see what has exactly happened? I have created an email for this: fintrans.check at yahoo dot com dot sg

I am at a total loss after reading Dale’s email.

Thanks for all response.

Regards,
John

1805

Hi all Fintrans Investors,

So far I have received one response who reported that he had also received a disturbing email from Dale.

I urge all Fintrans investors who have similar experiences to email me. I am trying to get all affected investors like myself to group together to approach Dale.

Once again, my email is “fintrans.check at yahoo dot com dot sg”. [Please note there is a “.” between fintrans and check, and it is yahoo dot com [B][U]dot sg[/U][/B].]

Regards.

1806

I for one can argue that EVERY email I receive from Dale is disturbing…:smiley:

But from the sounds of things I’m guessing I didn’t get the one you are referring to. Hope everything is alright with Dale.

1807

Hi,

I sent you an email via babypips. Please let me know if you do not receive my email.

Regards.

1808

fsprea, just one quick question, when you do your backtesting are you checking adxr? Also one observation i made (going against the book), and i may be wrong, but at the time do not sar. If i have a long then i keep that trade open until it hits sl or tp but i do change sl and tp everyday according to the system. have you found it to be more profitable to sar? maybe in “normal” conditions it helps, but it seems with how the market is now you get whipsawed around quite a bit. When i tested backtested previously, i tested it on 07-08 so as dale mentioned earlier really isnt a good year to test on because of the major trends. My results on gbpjpy disregarding adxr and sar are as follows.
2005 2,093
2006 1,274
2007 3,239
2008 9,953
2009 up to this day - 30

if you were to utilize sar as per the book these are the results
2005 2,175
2006 751
2007 563
2008 1,216
2009 up to this day 1,913

i haven’t filtered using adxr yet but i will asap

1809

Good (Sunday) morning everyone.

Well it’s quite obviously NOT such a good morning but let’s clear the air so that we can all just get on with it.

As most of you know: I started trading around November 2006. At the time I had NO experience, NO system, did not know how to SPELL ‘money management’ let alone implement it, and up until then I’d been ‘scalping’ the ZAR on a demo account and had made a ‘demo fortune’. My first live account lasted exactly thirty minutes!!! I then spent the next ten months or so losing around $70 000 and only when I was down to the last $700 that I had ACCESS to (by that time my credit was ‘done for’ as well as my savings from a previous business as well as most of my assets) did I ‘step back’ and start learning the trading systems in ‘the book’ and once I felt satisfied that I understood them I then started coding them into Delta’s platform. This took me the better part of four months i.e. between November 2007 and February 2008. At around that time a very dear friend of mine gave me $2 000 to trade for them/ Between February 2008 and around July 2008 I not only managed to turn that $700 into $15 000 of my OWN money but I was able to double the $2 000 as well. By this time and due to my OVERWHELMING success I thought I’d ‘finally cracked it’ in this business and realised that given my success: if I found some investors not only could I promise them some HUMUNGOUS gains but I’d also make my ‘fortune’ a lot quicker and be able to get out of my OWN financial situation. Between August and September last year I raised, from eight investors, the (equivalent) sum of $71 564 USD (I say ‘equivalent’ because some of the investments were made in EUR and GBP and BELIEVE IT OR NOT at THIS time the EUR and GBP have moved in my favor against the USD). The ‘investors’ (with the exception of ‘blueskies’ up until NOW) are ‘old timers’ on this very thread. No sooner had I taken in these investments but things started going ‘pearshaped’ from the start. Instead of trading the same systems that had enable me to get ‘this far’ i.e. the trading systems in ‘the book’ and instead of keeping my accounts at Delta I decided to ‘move on to bigger and better things’. I think that having ALL of this money almost AT ONCE in my trading account made me feel as though I was ‘big time’ now. This mindset was further reinforced by my success to date. I moved most of the money to GCI Financial and started trading instruments like the DAX and the Bovespa Index (to name but a few) that I had NO business trading NOT EVEN with that amount of money. To make matters worse: I was nowhere near to completing the coding of the trading systems in ‘the book’ for GCI’s platform. In effect: I started trading not only $71 564 of OTHER peoples money but $15 000 of my OWN hard earned money in exactly the same manner as I’d started out i.e. NO system and NO money management and, to make matters worse, an EXTREME false sense of MYSELF and my own capabilties. Using a combination of Pivot Points and my own ‘intuition’ I proceeded to lose all of that money between August 2008 and November 2008. I’d always believed that given ENOUGH BIG MONEY that you could not ‘go wrong’ in this business i.e. no matter WHAT you did WRONG you’d be able to recover because of this HUGE ‘cushion’ of funds behind you. This was a big mistake. The only REAL difference between having little to NO funds and HUGE amounts available to trade with are the stakes is all i.e. if you’re working on percentages of margin to be trading with then it all becomes relative. Something else that I’d never even THOUGHT of at the time is how I would ‘handle’ having such huge amounts of money. In other words: I did not realise that actually HAVING such a HUGE amount of money at my disposal would more that ANYTHING at the time actually count AGAINST me psychologically. In other words: even although I attempted to adhere to SOME FORM of our money management rules at the time (which, to be honest, I’d never actually ‘finalised’ for GCI i.e. the margin requirements and leverage are TOTALLY different from Delta) the losses grew SO QUICKLY (if you look at a chart of any of these indices around August and September you’ll note that they were all in very strong and VISCIOUS DOWNTRENDS at the time and, needless to say, I was long on all of them) that I could not ‘bring myself to realise them’ and I simply held on BELIEVING that the trades would ‘come back to me’. They never did. To make matters worse: every single one of the trading systems in ‘the book’ (using Delta as a reference where possible) were SCREAMING to ‘be short’ on these same instruments. Another mistake. At the time I had also started trading CFD’s and, as ‘luck’ would have it, I had a ‘soft spot’ for the financials e.g. Freddie and Fannie, AIG, Lehman, National City, KeyCorp (to name but a few). Again: in SPITE of the trading systems telling me in no uncertain terms that I should be short on these instruments everything and everyone else had the idea that we we were ‘near a bottom’. So: throwing ALL ‘caution to the wind’ I was BUYING into the financials as they were going down THINKING of course that I was getting some ‘good deals’ and that WHEN things ‘turned’ I’d ‘clean up’ and make a small fortune QUICKLY and be able to pay back EARLY not only the capital to investors but also the guarantees made to them as WELL as a nice bonus and my own financial problems would also be solved. I suppose the rest, as they say, ‘is history’. I managed to lose everything and by the end of November 2008 I was down to about $500 IN TOTAL and THAT was what was left over at Delta i.e. GCI had back then had (and still has) $24 left in the account. Needless to say: by this time I had absoutely NO IDEA how I was going to ‘make good’ on my promises to the incestors LET ALONE how I was going to live. At that time: I was even offered a $100 000 account but turned it down because at that stage I was seriously questioning the viabllity of this business as well as my own capabilties. From the end of November 2008 and beginning December 2008 I reverted back to trading these trading systems at Delta and almost immediately (AGAIN) the gains were HUMUNGOUS. I then started to believe that IF I could just find a few more investors I’d AT WORST CASE be able to go to my existing investors and simply have to ask them for some more time. My ‘plan’ was to explain what had happened (as I have done here) and ask for a little more time and was even prepared to offer some more guarantees for their trouble. At this point it is VERY IMPORTANT TO NOTE that at NO TIME was it my intention to obtain money from NEW investors to ‘make good’ on my guarantees to my existing investors. In other words: this was NEVER a ‘ponzi scheme’ ala Bernie Madoff. The intention was to get some more money, trade the trading systems that were now AGAIN showing HUGE gains, and by doing this I’d at least be able to make a comittment to my existing investors that they would be paid out as promised and guaranteed but just not ‘on time’ i.e. a few months late. Needless to say: this is the reason why I kept all these ‘happenings’ ‘quiet’. In other words: there was NO WAY that had this become public knowledge at the time that I’d have been able to raise $1 in investment which NOW, unfortunately, is what is going to be the end result of all of this. For the past few weeks now I’d been trying to think of what I would say to my existing investors should I have been unable to raise some more capital. By yesterday it was quite clear that there was no way that I was going to be able to raise additional capital so I decided to ‘come clean’ about all of this. Now one thing that has NOT been mentioned by me above YET is this: my business plan (and probably the only reason that I got ANY investors AT ALL) involved GUARANTEEING certain fixed amounts to my investors. I had a guarantor (my father) that was prepared to ‘guarantee’ client funds up to an amount of $300 000 BUT (unbeknown to me) this ‘loose agreement’ was made by him BASED ON MY PERFORMANCE AT THAT TIME. The fact that I stopped ‘operating’ the way I had been up until that time has given him the impression (and I SUPPOSE quite rightly so) that he was ‘duped’ by me. In other words: based on the returns that I was making up UNTIL that time there would have been no problem and it was on THOSE returns that his ‘offer of help’ to ‘set me up’ in this business was made. The fact that I 'changed the ‘gameplan’ or ‘moved the goalposts’ in ‘mid play’ he feels is not his problem and mine only. There was no written agreement in place and, I suppose, to be honest, nothing ‘clearly defined’ either because of the ‘father/son’ relationship. So: SHORT of actually SUING my father on some VERY shaky (and I would imagine COSTLY grounds which I obviously cannot afford) there is not much I can do about this situation. I must give him credit at this time though i.e. due to the fact that I am unable to ‘pay my way’ he is at least ‘footing the bills’ here i.e. covering basic living expenses until I am able to SOMEHOW ‘make this all right’. For this I thank him because I’d be ‘out on the street’ by now. At this point it is also very important to note that I NEVER used ONE SINGLE $ of ANY of this money on myself. I have not paid the mortgage on my home since around July 2007 (not sure whether to blame this business or myself or both but be that as it may) and my home is to be auctioned next month on 19 February. I have lost one motor vehicle already and the only reason I still have another is because it is the subject of litigation (basically I should never have been given finance on the vehicle based on my financial situation at the time i.e. the fact that I was TOTALLy overextended but the finance house ‘chose’ to ‘overlook’ this and, after taking delivery of the vehicle and having a sleepless night because of it, I TRIED to return the vehicle to the dealership the next day and have the contract cancelled. Needless to say: I believe that all they were interrested in was making the sale and the commission on the sale so they were not interested. I even approached their legal department at their head office and was pretty much told the same thing i.e. ‘too late’ they said and ‘you should have thought about this before the purchase’. Fortuanately for me we have what is known as the ‘National Credit Act’ and it’s SOLE PURPOSE is to PROTECT PEOPLE LIKE ME FROM THEMSELVES. In other words: it is the responsbility of any money lender to do their ‘due diligence’ and if they did NOT do so then it becomes THEIR problem and NOT the consumers. Simply put: I’ve told the finance house for this particular vehicle to return what I’ve paid on the vehicle to me and I’ll then happily return the vehicle). I digress although the point is this: $80 000 odd would have MORE than solved MY OWN financial problems i.e. at least had I used the money for MYSELF then at least I WOULD BE OK!!! The point is that I did not and never had any intention of doing so and by my calculations, based on my performance up until the beginning of this ‘debacle’ that by this time (oddly enough by the end of February i.e. next month) I would have repaid the capital and ‘guarantees’ to my investors; I would have been able to service the arrear amounts on my house and motor vehicle, and STILL have a very ‘tidy sum’ left over to trade with and from there I’d ‘have my life back’. Needless to say: none of this is going to happen FOR NOW ANYWAY.

To page 2 of this post (there is a limit as to how many words you post in a single post and I fear I’m near that limit already and DO NOT feel like having to retype the above again)!!!

1810

Continued!!!

Now it needs to be said:

I PUBLICLY APOLOGIZE to those that I have let down and particularly those that had the faith in me at the time and gave me the CHANCE to be successful. I also apologize to those on this very thread who have been following my ‘antics’ and have trusted my every word. I had NO idea that things were going to turn out this way. I DO, however, believe that I have done everything in MY power to try to make this ‘right’. I know that this is of little consolation to those who have lost money.

That being said: I WILL CONTINUE to do WHATEVER I CAN to ‘make good’ on EVERY SINGLE ONE of my agreements. To me: this is NOT simply a ‘business deal gone wrong’. For the most part: the people that have lost money I consider to be ‘friends’ although we’ve never actually ‘met’ and I may be a WHOLE BUNCH of BAD THINGS but I AM a ‘good friend’ to have!!! I WILL NOT let you down.

All of THAT being said: you may as well know that as of RIGHT NOW I have the princely sum of exactly $1971.86 to trade with at Deltastock and $2 000 of this (there are some small losses on open positions hence the ‘difference’) belongs to a NEW client i.e. the agreement was concluded two weeks ago. Now as much as this MAY upset existing investors: I CANNOT and WILL not use any part of the $2 000 that belongs to the NEW client (or ANY part of ANY NEW investments that I by SOME MIRACLE receive) to service old agreements. That IS a ‘ponzi scheme’ and that is DISHONEST. While some of you MAY PERCEIVE me as being dishonest at this time because I did NOT make this ‘public’ sooner and still tried to get additional investments while all of this was going on: please try to understand my reasoning for attempting this i.e. being ‘late’ would have been a FAR CRY from the current situation. Aside from that: I have been TOTALLY honest about all of this. I made a VERY BAD MISTAKE that I’m probably going to end up paying for VERY dearly in the years to come but be that as it may: I have not DEFRAUDED ANYONE but simply ‘got ahead of myself’ and this, of course, is the end result.

Assuming that I do not get arrested for any of this and am still able to trade: you have my word that I will do EVERYTHING IN MY POWER to make good on my commitments to you all. Needless to say: with the amount of money at my disposal at present this IS going to take a good while. That being said: I will continue to try to raise capital in an effort to ‘fast track’ what I need to accomplish.

To the above end: I will post weekly details of EXACTLY what is ‘going on’ on this thread (also of course assuming that after this I do not get banned from this website. If I do I will then have to post such details on my company website).

Now IN SPITE of ALL of this: some VERY important lessons have been learned here (one could of course argue that you’ve heard ALL of this before)!!! For one thing (and thanks to J. and HIS hard work): I have come to the realisation that EITHER you trade these systems EXACTLY as Wilder designed them or NOT AT ALL. I’ve worked LITERALLY ‘night and day’ for the past two weeks sitting with a pen, paper, and calculator and back tested not only the ‘standard’ systems but every other conceivable idea that I could some up with to make these systems ‘perform’ under the conditions that prevailed in 2005, 2006, and the beginning of 2007 (as we know they would have had NO problems generating HUMUNGOUS profits for the latter part of 2007 and all of 2008). The ONLY ‘versions’ of these trading systems that ENSURED that you did NOT ‘lose your shirt’ were the ‘stock standard’ ones. While they may gave generated LESS profit during 2007 and 2008 they lost almost NOTHING during 2005 and 2006 and therein lies ‘the key’!!! OK: I ‘stand by’ my SIS/FSS and a small change to the TBPS but other than that: YOU EITHER TRADE THESE SYSTEMS EXACTLY AS THEY ARE DETAILED IN ‘THE BOOK’ OR NOT AT ALL!!!

From this point onward I will continue to post as ‘normal’ on this thread (assuming of course that after ALL of this my posts are still welcome here. If not: I ASSURE you that I WILL understand and there will be no ‘hard feelings’). I will also continue to service my ‘self trade clients’ as I have been doing. For better or for worse: I STILL BELIEVE that NOT ONLY CAN I ‘MAKE IT’ in this business but SO CAN YOU and HOPEFULLY (although it’s of no consolation to those that have lost money here) you will be able to learn from my HUGE mistake!!! I know that had I NOT ‘strayed’ from these systems (EVEN ALTHOUGH back then I was not following them 100% as they were designed) I’d not be typing this post today. This I have now proved to myself beyond ANY doubt ESPECIALLY in the past two weeks.

I would ALSO like to point out to you: the % gains that I have posted from time to time on this thread HAVE INDEED been 100% ‘genuine’ and correct. The ONLY difference being that with a small amount of capital: OBVIOUSLY in MONETARY terms and ESPECIALLY given the sheer MAGNITUDE of my ‘trading mess’ they do not equate to much.

In ‘closing’: I apologize once again and, as I said, I will continue to do whatever it takes to ‘make up’ for all of this and ‘make good’ on my commitments to others and, while it MAY take some time, I WILL reach this goal. To those of you who have INDEED been able to ‘part with a kind word’ IN SPITE of your current loss: I am deeply touched and I really do appreciate your input.

Regards,

Dale. (forexbrokersSTILLonline.net).

1811

Right. Back to ‘business’. (As I said: I’ll continue here as long as I am able to do so).

Fabio:

It is only NOW that I have been able to ‘digest’ your post. I TOO have spent MANY hours lately checking to see whether or not the TBPS on its OWN would suffice and be profitable. What I HAVE found is this: it IS INDEED HIGHLY PROFITABLE IN ALL MARKETS IF you use ADX as a filter. In other words: YOU ONLY take trades as signalled by the TBPS in the direction being indicated by ADX AND ADX is rising (as indicated by my ADXAC). ALSO: I have noticed that the TBPS has a ‘long bias’ as it were. In other words: in order to go long the MF today must be greater than EITHER the MF yesterday or the MF the day before yesterday BUT to go short the MF today must be less than BOTH the MF yesterday and the MF the day before yesterday i.e. it’s ‘biased’ to the ‘long side’. Now while I firmly DO believe that one SHOULD be ‘biased to the long side’ on equtities and commodities: I do NOT believe that this applies to forex pairs. So: by simply changing the ‘rules’ for the long trades i.e. the MF today must ALSO be greater than the MF yesterday AND the MF the day before yesterday you are removing this ‘long bias’. One other thing I’ve noted: SOMETIMES (without the implementation of this change) the MF will be indicating a long trade (for example) BUT the price has ALREADY CLOSED CONTRARY to the TBP. The implementation of this change appeasr to resolve this issue once and for all.

I will be detailing my EXACT trading ‘plan’ or ‘methodolgy’ during the course of the day and you can take from that what you see ‘fit’. Essentially: I will be trading the ‘PURE’ DMS with ALL the ‘rules’ in place i.e. ADXR must be above 25, ADX must be rising, and the pairs must be the highest on the ADXR scale. To this end I’ve created an ‘ADXRAccelerationDeclerationOscillator’ or ‘ADXRAC’ which I will email shortly to everyone. The idea behind this being that the moment ADXR turns down and you MAY be in a trade then it’s time to start looking to ‘get out’ and move on to another instrument / pair that has a ‘new’ higher rating. I believe that this will solve the ‘age old question’ as to WHEN to ‘call it quits’ based on the ADXR value. I will be using the TBPS and / or RTS ONLY when ADXR is below 25 AND/OR ADX is below BOTH the DI’s. Regarding the RTS: we’ve ALWAYS had ‘issues’ with the ‘BOS’ sequencing. To alleviate this issue once and for all: I will use the RTS to trade ‘pullbacks’ in price that are CONTRARY to the direction indicated by ADX. In other words: if ADX is indicating a long trade (the ADXO is green) I will wait for a ‘pullback’ to B1 and, if this happens, my TP will be S1 (and obviously visa versa for short). My STOP will be LBOP or HBOP (I do NOT believe that these are SAR points ANY MORE). I MAY even incorporate the LRC’s here again as that little ‘system’ worked VERy well for me last year and that was IN SPITE of me not using nor understanding ADX correctly so I can only imagine that NOW this would be a great improvement. More important than ANYTHING though: I need to complete my ‘weighting system’ as I believe that above (just ABOUT) ALL ELSE this is ‘key’ to NOT having nice profits being offset by HUGE losses because you’re trading something else that ‘moves like a swine’ and is giving you the same $ per point / pip movement and you’re ‘wrong’ on the trade. Once complete: I shall post it here.

Regards,

Dale. (forexbrokersonline.net).

1812

Fabio

  1. I am very interested in your results with the TBPS. I had done a backtest also with excel on the TBPS and it came up positive even in trending situations. So I’d be interested in comparing results. I found what I thought to be a couple of mistakes on his spreadsheet. What I’d suggest is that we backtest exactly the same thing and compare results. (I’m not as confident anymore of my results as I only backtested one pair – eur-usd I think)

  2. Would also like to learn how to create an EA in MT - any advice or recommendations would greatly be appreciated - ie any video tutorials out there.

thanks,
jcc

1813

Gentlemen,

as a by-product of the DMS studies I have studied applying ADX in filtering TBPS trades. To complement the discussion here, I attach a couple of worksheets for the interested.

The first file contains a proof of correctness of my calculations. It is Wilder’s high-low-close data for from p. 61-62 as processed through my tool. There are a couple of differences:

31.8.1977: Here it seems that Wilder has used the wrong value for exit.
1.9.1977: Here Wilder seems to have a subtraction error in the result.
16.9.1977: Because Wilder has rounded TP 204.07 to 204.0, it has been hit by high. My calculations do not do this rounding, so there is no TPing, which affects the subsequent trade as well.
23.9.1977: On this day, both TP and SL were hit. My program is conservative here and assumes SL in such cases. Wilder shows TP here.

Wilder also uses rounding of the results in a way that makes minor differences in the last digits.

The rest of the files include equivalent calculations for GBP/JPY and EUR/USD. The summed annual and total results can be found in the files as well. I think they are in line with Fabio’s findings.

The last file is GBP/JPY without SARing, i.e. if neither SL or TP is hit, the next day they are just updated until either gets hit.

My conclusion is that TBPS definitely needs some sort of filtering to be profitable. Please feel free to draw your own conclusions from these figures.

J.

Wilder-TBPS-Plywood77.pdf (6.06 KB)

TBPS-GBPJPY-05-09.pdf (106 KB)

TBPS-EURUSD-05-09.pdf (92.6 KB)

TBPS-GBPJPY-noSARing-05-09.pdf (103 KB)