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  • #81
  • Apr 19, 2008 12:53am Apr 19, 2008 12:53am
Quoting Bemac
Thanks Billflet {Bill}, That's the post I was looking for. Still in the same Frame of Mind.
Yes, Bemac (Bill) I found this useful. When Peter mentioned the need for a stop method on the remaining piece of the trade, your method lept to mind.

This week's hourly E/J was a good example of a stacking opportunity and your stop strategy would have kept us in all week.
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  • #82
  • Edited 10:26am Apr 23, 2008 10:23am | Edited 10:26am
I might be getting trader's insomnia, you know, fear of missing out on a good trade setup while sleeping. Those of you on the east coast know I'm talking about. Woke up extra early this morning, and was rewarded with catching the downtown express on cable (IB at 9 GMT). Risk was only 37 pips, for a very nice gain so far (+3x risk). This is a very nice tool to add to anyone's trading toolbox, as long as you're awake & alert when the setup takes place.

Thank goodness we get all the free coffee we can drink!

Have a good trading day!

p.s. on a side note, just found out that whenever you see people drinking coffee in a sitcom on TV, they're actually drinking diet coke (similar dark color). that's why you'll never see any steam coming out of their cups.
Being the best loser that I can be.
  • #83
  • Apr 24, 2008 12:26pm Apr 24, 2008 12:26pm
Quoting Freestyler
I might be getting trader's insomnia, you know, fear of missing out on a good trade setup while sleeping. Those of you on the east coast know I'm talking about. Woke up extra early this morning, and was rewarded with catching the downtown express on cable (IB at 9 GMT). Risk was only 37 pips, for a very nice gain so far (+3x risk). This is a very nice tool to add to anyone's trading toolbox, as long as you're awake & alert when the setup takes place.
It was a great trade! I'm glad you caught it too.

A large percentage of the best trades do happen while most of America sleeps. What is good about the DIBS method is that after you get entered you can usually go to sleep. Either the trade will go 1:1 (or whatever your target figure is for 1/2 of your position) or it won't and you will get stopped out.

The trade is simple and perverse at the same time. It also gives some of the best risk/reward trades possible and always ensures that you are with the daily trend. If you are also in tune with the weekly and monthly trends is when it gets exciting!

This one is a good example. The weekly trend on the GBP/USD is still officially down. This trade has potential "legs".

I attached a snap of the GBP/USD and the EUR/USD DIBS trades I personally took. The blue and red breakout lines are trades I took. Obviously some of the trades had their potential "trails" killed.

So what.

All of the trades went 1:1 on before stopping out. I personally would and will do this forever. Until they shut me down and lock up my mouse.

Have a good day.

-PeterCrowns-
Attached Image(s) (click to enlarge)
Click to Enlarge Name: Snap Inside Hourly Breakouts V British Pound.jpg Size: 397 KB
Click to Enlarge Name: Snap Inside Hourly Breakouts VI Euro.jpg Size: 395 KB
  • #84
  • Apr 24, 2008 2:01pm Apr 24, 2008 2:01pm
Quoting PeterCrowns
I was compelled to include this chart of today's action in the Eur/Usd.

For the record, I personally took every one of the indicated breakout trades-- sells and the buy today, obtaining at the bare minimum a 1:1 reward/risk ratio per trade, and on most of them, a 2:1 or 3:1 reward to risk ratio-- because of the speed and distance the market moved after the breakouts.

What I like about these simple trades is the tendency to be able to cover your risk quickly by exiting half of your position at 1:1, allowing you to hold the remaining position with the initial stop (the other side of the inside bar) as a virtual "free trade".

In a larger term time frame you can stack on quite a position over a period of a few weeks with these "free trades". If the market quickly goes against you, you have the stops already in place. Then it is back to work building these structures up again until a huge move which is your payoff move of thousands of pips on large size.

Thanks for all the kind comments and messages sent to me about this. You have all been very generous in allowing the posts about this style.

Have a great rest of the week.

-Peter-
Peter,

Great job thus far... I have just looked at this thread for the first time and I have to say I have enjoyed what I have read thus far. I havent got through the entire thread but I have a question about this post and was hoping you could clear this up for me. On April 2, it looks like the second bar would have been an inside bar that would have created a sell signal using your strategy. Am I missing something here? If so, what am I missing and if I am not missing something why didnt you draw a red line or why didnt you enter a trade at that point? Thanks and all the best!
  • #85
  • Edited 4:15am Apr 25, 2008 3:32am | Edited 4:15am
Quoting fxtrader42
Peter,

Great job thus far... I have just looked at this thread for the first time and I have to say I have enjoyed what I have read thus far. I havent got through the entire thread but I have a question about this post and was hoping you could clear this up for me. On April 2, it looks like the second bar would have been an inside bar that would have created a sell signal using your strategy. Am I missing something here? If so, what am I missing and if I am not missing something why didnt you draw a red line or why didnt you enter a trade at that point? Thanks and all the best!
-fxtrader42-

As there was no chart for April 2 in the post above, I'm not sure what you mean. Perhaps you meant April 22? If so, then which chart are you refering to? The GBP/USD or EUR/USD?

(Edit: I looked back to my April 3rd post and think I've found the chart you were describing. The second bar was indeed an inside bar, but since the market didn't fall below the inside bar there was no selling event. There was no buying event above the second bar because the high of the inside bar was BELOW the open of the day signified by the dotted line. The 10th bar of the day was an inside bar and I actually bought the upside breakout of that bar for a profit. Hope this helps.)

Also, these are all the breakout trades I actually took. It is possible for me to miss one or two others from time to time.

BTW-- The Eur/Usd short is still cranking away profits. It looks like this is going to be a very nice week.

-PeterCrowns-
  • #86
  • Apr 28, 2008 7:27am Apr 28, 2008 7:27am
Peter, many thanks for share your ideas here. Id like to ask some questions. English is not my native language so sorry if there are some errors.


1- lets say we have a valid setup to sell but price go up and broke the inside bar: if price came back and broke down the inside bar this still a valid setup? if yes, how many bars or how many time you will aceppt to say that this setup still valid? EURUSD today had a inside with a long setup is it possible to take a sell too (i undurstend that it need to be in the 9-10 first hours)?

2-today's GBPJPY open bar (bar that openned 1:00 EST) was an inside bar itself. when price broke it down was a valid sell? when it came back and broke up it was a valid buy?

3-what about gaps? how do you trade it?

4-i am confuse about the importance of the daily trend. In the examples you gave you took trades in the same day in both directions. Do you increase lots when the trade is in the direction of the daily trend?


many thanks again.
  • #87
  • Apr 28, 2008 9:50pm Apr 28, 2008 9:50pm
Quoting giraia_br
Peter, many thanks for share your ideas here. Id like to ask some questions. English is not my native language so sorry if there are some errors.


1- lets say we have a valid setup to sell but price go up and broke the inside bar: if price came back and broke down the inside bar this still a valid setup? if yes, how many bars or how many time you will aceppt to say that this setup still valid? EURUSD today had a inside with a long setup is it possible to take a sell too (i undurstend that it need to be in the 9-10 first hours)?

2-today's GBPJPY open bar (bar that openned 1:00 EST) was an inside bar itself. when price broke it down was a valid sell? when it came back and broke up it was a valid buy?

3-what about gaps? how do you trade it?

4-i am confuse about the importance of the daily trend. In the examples you gave you took trades in the same day in both directions. Do you increase lots when the trade is in the direction of the daily trend?


many thanks again.

Hi giraia,

If I may, I would like to attempt to answer some of your questions, and have Peter correct me if I am wrong. I am still working on my list of questions for him, in response to his reply to my last post.

Lets start with answering your last question first, as it would lead to answering the other questions. According to Peter, the close price for the previous day and the opening price for the current day would determine the direction of the trend, ie current price is below today's open (lets exclude gaps for the moment), then trend is down, and we are looking for well oppurtunities, and vice versa, if current price is above today's open, then we are looking for buy opps. Now, once we have our inside bar, we know we are only going in one direction in our trade. eg if price is above today's open, then we are looking for longs, so we place our limit long above the high of the inside bar. It should not matter to us at all if the price goes down and down after we have placed our limit buy. The only time that buy should be canclled is if during the course of the day the price ends up below today's open, then our bias has shifted short, hence longs are no longer in play. I have found that leaving a pending order and forgetting about it is quite injurious to health http://www.forexfactory.com/images/icons/icon12.gif.

To summarise, trend is determined by current price being above or below today's open. Trend will determine whether we are going long or short, not both.

Over to you Peter...

Regards,
K.
  • #88
  • Edited 10:23pm Apr 28, 2008 10:10pm | Edited 10:23pm
Hello Peter,

I have been trying to get to your reply with more questions and observations that need commenting, but everytime I sit down to type it out after having thought about it, some distraction pops up. Finally managed to get down to doing this today.

Many thanks for your reply to my post, it was indeed quite insightful. Your subsequent posts to others have also been quite interesting, esp the charts you posted. It is amazing how once the trades are active and running, or been closed out, they appear so "obvious". I am in the process of running this method thru vhands simulator with a crude inside bar indicator that seems to pick up some other things apart from inside bars, but atleast it gets me to notice the screen.

Now, as always with great replies, follow more questions.

There somethings in your reply that had me a bit confused, the main one being your comment:

Without mirth, what you need to accomplish as a trader is get aboard a move before everyone else does, and not get bucked off by some swings after you get on. That may translate to "momentum" to you, but not to someone else.

How does one get onto a move before everyone else does? My reading has led me to summise that most trading methods are one of three, trend folliwing long term, breakouts, and waiting for a pull back once a move has started. The only thing that I can see as getting into a move before a move starts is the break out, but I have seen more breakouts being false breaks than real breakouts. Hence, wouldn't it be more prudent to actually wait for a move to start, wait for a pullback and then get in on it?

It basically comes down to you having an edge that you are aware of that others aren't. You take your trades, the market facilitates you, and you profit because the majority of market participants really don't have much of a clue, even if they have been operating for a long time.

Now,first I thought you were talking about the majority being the retail traders who are just doing this for a hobby and trying to make a small amt here and there. But the last part of the line made me think again. For me the majority in the market are the big boys, and since they have been operating for a while, surely they would have a clue. If they don't have a clue, there isn't much hope for me http://www.forexfactory.com/images/icons/icon10.gif.

You gave me a list of the big boys, putting them in 3 categories. I couldn't think of who fits in the first category, but the second one is obviously the banks, and who as you said provide the liquidity, so they make their money regardless. It is the third category that I am interested in, ie funds. If they trade on price and time, and any derivative of these two, why is it they do not have the "luxury" of us smaller traders of have the option to wait till conditions suit us? Wouldn't they have strict criteria for entering, hence probably having to wait more than the retail trader who can probably exercise a bit of "faulty" discretion?

Lastly, about what you stated as being the open of the session. Was that 6am London time or GMT time, as their is a 1 hr difference b/w them now due to day light savings? Also, will you take trades before the session opeing bar, and after your arbitary 9-10 hours have passed from the day before? ie say, at about 4am there is a valid entry signal, will you take that or wait till after 6am to take ur trades?

As always, looking forward to your reply.
  • #89
  • Apr 29, 2008 6:07pm Apr 29, 2008 6:07pm
Quoting kermut
Hello Peter,

.... Now, as always with great replies, follow more questions.

There's something in your reply that had me a bit confused, the main one being your comment:

Without mirth, what you need to accomplish as a trader is get aboard a move before everyone else does, and not get bucked off by some swings after you get on. That may translate to "momentum" to you, but not to someone else.

How does one get onto a move before everyone else does? My reading has led me to surmise that most trading methods are one of three, trend following long-term, breakouts, and waiting for a pull back once a move has started. The only thing that I can see as getting into a move before a move starts is the break out, but I have seen more breakouts being false breaks than real breakouts. Hence, wouldn't it be more prudent to actually wait for a move to start, wait for a pullback and then get in on it?

It basically comes down to you having an edge that you are aware of that others aren't. You take your trades, the market facilitates you, and you profit because the majority of market participants really don't have much of a clue, even if they have been operating for a long time.

Now,first I thought you were talking about the majority being the retail traders who are just doing this for a hobby and trying to make a small amt here and there. But the last part of the line made me think again. For me the majority in the market are the big boys, and since they have been operating for a while, surely they would have a clue. If they don't have a clue, there isn't much hope for me http://www.forexfactory.com/images/icons/icon10.gif.

You gave me a list of the big boys, putting them in 3 categories. I couldn't think of who fits in the first category, but the second one is obviously the banks, and who as you said provide the liquidity, so they make their money regardless. It is the third category that I am interested in, ie funds. If they trade on price and time, and any derivative of these two, why is it they do not have the "luxury" of us smaller traders of have the option to wait till conditions suit us? Wouldn't they have strict criteria for entering, hence probably having to wait more than the retail trader who can probably exercise a bit of "faulty" discretion?

Lastly, about what you stated as being the open of the session. Was that 6am London time or GMT time, as there is a 1 hr difference b/w them now due to day light savings? Also, will you take trades before the session opening bar, and after your arbitary 9-10 hours have passed from the day before? ie say, at about 4am there is a valid entry signal, will you take that or wait till after 6am to take ur trades?

As always, looking forward to your reply.
-kermut-
First thanks for the reply to the other questioner above. You definitely have the spirit of the DIBS method.

Thanks for the questions. I'll try to make the answers as clear as possible.

First--
Quote
How does one get onto a move before everyone else does? My reading has led me to summise that most trading methods are one of three, trend folliwing long term, breakouts, and waiting for a pull back once a move has started. The only thing that I can see as getting into a move before a move starts is the break out, but I have seen more breakouts being false breaks than real breakouts. Hence, wouldn't it be more prudent to actually wait for a move to start, wait for a pullback and then get in on it?

It is a matter of time frame of those holding and entering trades. The least informed, worse capitalized traders enter last. If you are to be successful trading, you have to find a way to "beat" the majority of money into the preferred trading direction (the market dictates this) so that it can continue the trend after you are in. Whether you accomplish this by entering on pullbacks or direct breakouts like I do it, is a matter for you to decide. To be the most successful overall you probably should chose the method the fewest other traders would prefer--- the toughest to accomplish psychologically or physically. ie: staying up at odd hours to accomplish your business.

That which pays me gets my business.

Second--
Quote
But the last part of the line made me think again. For me the majority in the market are the big boys, and since they have been operating for a while, surely they would have a clue. If they don't have a clue, there isn't much hope for me

Just because an entity is big doesn't make it smart. Thank goodness. Otherwise we would all be toast in the trading business. If you become good at trading it will ultimately be because you have learned to pick Bank's pockets.

The banking system has loads of money available to it, but the surest money available to them is to profit from commissions and carrying charges otherwise known as the "carry trade". The people who work for banks are not the Einsteins many feel they must be. They don't have to do anything creative. Governments need them so much they guarantee them profits, inside information and freedom from failure. Jobs for life.

Third--
Quote
It is the third category that I am interested in, ie funds. If they trade on price and time, and any derivative of these two, why is it they do not have the "luxury" of us smaller traders of have the option to wait till conditions suit us? Wouldn't they have strict criteria for entering, hence probably having to wait more than the retail trader who can probably exercise a bit of "faulty" discretion?

They have too much money to place on trades to get "cute" with order placement. You might not have thought much about this yet, but when you finally get to be successful at this, you are going to have many trading opportunities closed to you that NOW you can just trade blithely with a small account.

The DIBS method is not a method that funds are likely to trade. Not that they wouldn't like to. It just takes too many people with too much individual control to accomplish that. They need to trade large quantities on methods that have reasonable edges by traders that have little control that earn enough for them to maintain a hold on the money they manage.

A fund that has $500 Million in assets throws off 2% management fees a year ($10 Million) and the fund receives about 20% of profits made in addition. But the guaranteed $10 Million is what the fund wants to be sure to keep. They can use ANY strategy that can make an average of 10 - 20% annually, and doesn't require much trading in and out. They're happy if they luck into a big yearly trend. Otherwise, just holding their own and the capital under management is their main goal.

Long-term moving average systems fill that bill quite nicely, have worked for a long time and keep bringing home the sure money. Why would they want to fool around waiting for trades in the middle of the night when a principal of the fund can make 3 - 5 million by hiring a 70K forex trader who executes a dead-simple system (10 trades a year) that the principal can tell immediately if he is doing his job right by checking a platform 1 minute a day?

Not all funds are alike of course. There are "niche" funds who do have 40 -50 guys trading for them. They do make a lot of money sometimes, but they tend to be smaller (< $100M) and as they get bigger, they expand to slower methods.

Fourth--
Quote
Was that 6am London time or GMT time, as there is a 1 hr difference b/w them now due to day light savings? Also, will you take trades before the session opening bar, and after your arbitrary 9-10 hours have passed from the day before? ie say, at about 4am there is a valid entry signal, will you take that or wait till after 6am to take ur trades?

Ask yourself, when does the market open? I use 00:00 CST or 06:00 GMT as my open. Believe me, if you are off 1 hour due to Daylight Savings time it is not going to be a problem.

No, I don't take trades before the session opening bar. I will take trades within the opening session bar, if the previous hourly bar is an inside bar.

Think I'm being arbitrary about being willing to trade just the first 9-10 hours? Check out the last 20 years of intraday market action. The first 10 are the hours when 90% of the trends that actually develop WILL develop.

Think about that for a few minutes. Perhaps you might figure out other strategies that might be profitable to you.

I hope some of this has been helpful to some of you.

Thanks again -kermut- for the great questions.

-PeterCrowns-
  • #90
  • Apr 30, 2008 1:32am Apr 30, 2008 1:32am
Peter

It's not easy to ditch what I've spent years learning. But...

I started filtering my normal trades by applying your Up Or Down On The Day Rule. I'm sure you can guess my results--fewer trades, higher (significanty higher) win to loss. That rule alone made a measurable difference in my trading.
Now I'm taking more and more DIBS setups, again with very pleasing results. Not to mention the simplicity eliminates a lot of stress. I'm finding the DIBS setups get me into the trade a lot quicker than my everyday method. My normal way signals a lot of the same trades, but many pips behind, depending on the length of the breakout bar.

To anyone else following this thread: Do yourself a favor and trade the most active hours no matter how tough that seems. It makes a world of difference. There's nothing more discouraging than watching a seemingly good trade wither on the vine during the late NY afternoon.

Thanks again Peter--this is good stuff.
  • #91
  • Apr 30, 2008 2:16am Apr 30, 2008 2:16am
Quoting billflet
Peter

It's not easy to ditch what I've spent years learning. But...

I started filtering my normal trades by applying your Up Or Down On The Day Rule. I'm sure you can guess my results--fewer trades, higher (significanty higher) win to loss. That rule alone made a measurable difference in my trading.
Now I'm taking more and more DIBS setups, again with very pleasing results. Not to mention the simplicity eliminates a lot of stress. I'm finding the DIBS setups get me into the trade a lot quicker than my everyday method. My normal way signals a lot of the same trades, but many pips behind, depending on the length of the breakout bar.

To anyone else following this thread: Do yourself a favor and trade the most active hours no matter how tough that seems. It makes a world of difference. There's nothing more discouraging than watching a seemingly good trade wither on the vine during the late NY afternoon.

Thanks again Peter--this is good stuff.
-billflet-

The DIBS method is one of the surest "unknown" methods available for making money in Forex. I wish I had invented it.

I got it from a generous trader years ago when I needed to be successful in the pits eons ago (it seems like forever sometimes). He posts in FF once in a while, aptly enough under the moniker, TheRealThing.

Having traded the concept personally for more than 15 years, I know how good and also how irritating it can be. As you mentioned, trading during the active hours is key to the best trades. It is hard to beat the combination of low risk and high probability.

It is much more powerful than any of the methods I've seen promoted in FF. And easier to implement. Yet it stays in obscurity, which is the way of all good methods.

-PeterCrowns-
  • #92
  • May 1, 2008 3:00pm May 1, 2008 3:00pm
And it is only the 1st of the month.

“Give me a place to stand, and I will move the Earth.” - Archimedes (Grecian Mathematician , 280-211 BC)

This was the best DIBS trading day I've had in a month. (See Usd/Chf hourly chart below) Regardless of what it may appear, this post is not to gloat, but to show the virtually perfect DIBS trade and why you have to trade the earliest breakouts possible for the greatest possible gains.

Thank goodness I was awake and trading this morning!

While the Eur/Usd and Gbp/Usd both had good DIBS trades this morning, and I took them too-- my most effortless and hugely profitable trade was buying the Usd/Chf at 1.0354. Just 30 minutes into the day, the market took out the high of the previous hour's inside bar, putting me long. Because the bar was so narrow, my protective sell stop was ONLY 6 pips below my entry. Since the risk was so low I was able to multiply my size accordingly, and had 4 times the position I typically have on these trades.

It took off so quickly I didn't even drop off half of my position until 1.0499. Yes, 145 pips later and at the round number: 1.0500. (What a great problem to have!!!)

As I'm writing this the profit from the trade exceeds 25 times the risk taken. The day is not over. And the month has JUST begun.

If you look on a daily chart (also inserted below) you can see that there is a clear breakout to the upside on the Usd/Chf. Having gotten in before the breakout gives us a comfort zone, something that is rare and usually significant this early in a month.

What if this market goes up to 1.0750 or 1.1100 (66:1/125:1 return on risk) or even higher? What if this is the beginning of a serious turn in the dollar for a while?

And remember, this is just 1 trade. If this should be the beginning of a longer trend, profits on this one trade could be enormous. Other add on trades could make a huge pile by the time the trend ends.

If the trade fails, ie: gets stopped out – no problem. There will be others that will work.

If the market doesn't reverse and take out the initial trade stop, I will use the 20 period moving average (displayed) as a trailing stop. I have seen just one trade like this one provide half the year's profits for a good trader, by just following it up with a trailing stop.

Obviously, finding the low risk “place to stand” is crucial. For me, DIBS has proven to be one. It is definitely not a method to "fade".

This trade is an actual working example of how you can, with a simple but durable methodology, expect to make profits from long tails.

There are consequences for trading correctly. Exponential profits!

-PeterCrown-
Attached Image(s) (click to enlarge)
Click to Enlarge Name: DIBS Perfect Hourly.jpg Size: 424 KB
Click to Enlarge Name: DIBS Perfect daily.jpg Size: 450 KB
  • #93
  • May 1, 2008 3:34pm May 1, 2008 3:34pm
Excellent trade Peter, and thank you for sharing it with us, it is a great example.
Same Whore .... Different Dress
  • #94
  • Edited 10:02am May 2, 2008 9:58am | Edited 10:02am
Hello Peter, great thread and strategy, I didn't thought someone posting a trading strategy can catch my attention anymore. I was wrong!

I have a question, using 06:00 GMT as the start of the trading day, do "european" pairs (cable, euro) work better than say usdjpy or audusd?

Thanks!
-soso
Trading = a mirror to your human flaws. Fix them or be fixed.
  • #95
  • May 3, 2008 3:21pm May 3, 2008 3:21pm
Quoting soso
Hello Peter, great thread and strategy, I didn't thought someone posting a trading strategy can catch my attention anymore. I was wrong!

I have a question, using 06:00 GMT as the start of the trading day, do "european" pairs (cable, euro) work better than say usdjpy or audusd?

Thanks!
-soso
Good question, -soso-

I don't trade the Aud/Usd that much. The Usd/Jpy trades just fine using DIBS. And yes, the European pairs seem to work better than average then. What follows is the likely explanation.

To quote Monk (from the USA Network TV series), "Here's the thing"-- currency pairs that have more money interest behind them move more. And they will move more when the locations that house the money have daylight.

So, when the first major money center opens, Britain and Europe-- that is when the viable currencies get their boosts, up or down. As the sun moves to the Americas the final major thrust of money flows into monetary concepts, either bullish or bearish.

Not that many people in the world care about the New Zealand or Australian currencies except as to how they may interplay with specific businesses. There are charts that deal with how much trading volume goes to specific currencies worldwide. Others who have good access to them can post them, please.

As a simple rule of thumb, look at the spreads to trade a certain pair. If it is wide there isn't as much interest. That doesn't mean that it can't be volatile, but the risk may well overwhelm the potential.

I know that the main currencies are these: Eur/Usd, Gbp/Usd, Usd/Chf, Usd/Jpy. I trade them almost exclusively.

I will occasionally plant long term trades in Gbp/Jpy to take advantage of carry, but have been out of that for months until recently, as you can easily imagine why.

About the long Usd/Chf trade I took the other day, May 1st. Its still going strong. I did add to it on May 2nd to make an additional free trade. (See chart snap below- the first buy of the day was a loser, the second was the big winner converted into a free trade--by the way, notice how much bigger the risk per trade became, so much smaller size was traded---)

I'll see how the Usd/Chf looks in a week. A week can seem almost like forever in the currencies. At least, this is the kind of trade set up you look for to get big profits from small risks.

Jesse Livermore said it a long time ago, and it loses no truth by being an old saying, that profits are made by sitting, not trading. The following quotation comes from Reminiscences of a Stock operator. (If you need a copy- PM me for where you can get a perfect electronic one for free.)

Quote
And right here let me say one thing: After spending many years in Wall Street and after making and losing millions of dollars I want to tell you this: It never was my thinking that made the big money for me. It always was my sitting. Got that? My sitting tight!

It is no trick at all to be right on the market. You always find lots of early bulls in bull markets and early bears in bear markets. I've known many men who were right at exactly the right time, and began buying or selling stocks when prices were at the very level which should show the greatest profit. And their experience invariably matched mine that is, they made no real money out of it.

Men who can both be right and sit tight are uncommon. I found it one of the hardest things to learn. But it is only after a stock operator has firmly grasped this that he can make big money. It is literally true that millions come easier to a trader after he knows how to trade than hundreds did in the days of his ignorance.

I've been accused by my friend -TheRealThing- that I am one of the most reluctant traders he's known. Even more reluctant than him.

I don't think that is bad. I only like to take trades that have low risk and are in the direction of least resistance, the main trend.

Thanks again -soso- for the question.

Now I have to watch the Kentucky Derby the sport of kings, and recliner bound traders after a long spring----

-PeterCrowns-
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  • #96
  • May 3, 2008 3:41pm May 3, 2008 3:41pm
Thank you Peter for your explanation!

Quoting PeterCrowns
I only like to take trades that have low risk and are in the direction of least resistance, the main trend.
Very well put, indeed!
Trading = a mirror to your human flaws. Fix them or be fixed.
  • #97
  • Edited 9:29am May 4, 2008 2:08am | Edited 9:29am
This is a list of the average range of several different pairs throughout the different sessions and more importantly the overlaps. By trading the hours Peter suggests, you will participate in the Asian/European overlap, the entire European session and the European/US overlap. In other words, when almost everything happens.

The figures came from an article in Currency Trader a few years ago--credit to Kathy Lien. Even though the numbers aren't exactly current, they illustrate the need to trade the hours Peter suggests.

When measuring the pip movement, don't forget to consider the pip value. After all, we're trading for money--not pips. A 25 pip move in the EUR/GBP is a Hotter Hand than 35 in USD/JPY. Most platforms allow you to compare price movement by percentage, not just number of pips. This is important when determining the Hot Hand.
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  • #98
  • Edited 4:57pm May 4, 2008 10:43am | Edited 4:57pm
Your kindness in sharing your knowledge is most appreciated.

Two questions please.
Do you ever use discretionary trading based on your years of trading experience to attempt to pick relative tops or bottoms for long term (multi-year) trades?

It appears to me that using the DIBS method would by default, place a trader in a long term trade. Do you find this is so with your long term experience trading the DIBS method?

Good luck on that CHF trade

http://tbn0.google.com/images?q=tbn:...chp_rocket.jpg
LR
  • #99
  • May 5, 2008 12:01am May 5, 2008 12:01am
Quoting Mgh
Your kindness in sharing your knowledge is most appreciated.

Two questions please.
Do you ever use discretionary trading based on your years of trading experience to attempt to pick relative tops or bottoms for long term (multi-year) trades?

It appears to me that using the DIBS method would by default, place a trader in a long term trade. Do you find this is so with your long term experience trading the DIBS method?

Good luck on that CHF trade
-Mgh-

Good questions, and a great place for me to make a serious point.

By my understanding, all trading is discretionary.

No one forces anyone to trade any style or quantity or system or timeframe. So anything or any method you chose is by your own discretion.

I trade to be on the winning side, and to make money, period. Not to see the elegance of a trading method. The only elegance I care about is a much larger elegant account after my efforts. I will use ANY true advantage I can get, inside information, perfect mathematical tipping points in the direction of where the market is destined to go (my usual edge), bad traders, and any news from major banking institutions (when they are forced to tell their positions it gives you a HUGE edge).

All winning traders that I know of are systematic in their trading. Either they trade a "system" or they trade a market concept virtually perfectly over and over.

I have bought many exact bottoms in markets that 99% of other traders with their analysis would claim was a bear market, but in my systematic analysis was just a bottom in a v-e-r-y long term bull market.

It is very possible for a strongly bearish trader and a strongly bullish trader to both be right and actually profit from the same trade opposite each other because of operating on different time frames. Of course, as the time frame continues after a trade at the same price, it would become less likely that both would profit.

Even though I entered trades on the floor like the other floor traders, I wasn't a scalper, or someone who constantly was "at the offer" and "at the bid". When I got my signals to trade, I would pay up (give up the spread) to get filled now, just like outside traders who paid the bigger commissions.

My edge was a longer time frame (potentially days instead of minutes) and the speed advantage over the outside screen traders, for whom it might take a full 30 seconds to 90 seconds to be sure of a market order fill when they saw a signal.

You guys don't even realise how good you have it with instant fills that we all enjoy now. But you also don't realise how much disadvantage you suffer from trading against old pros who used to trade off floor with a 90 second disadvantage and still made 100% return on their money every year. They still are out there and cleaning up now that they have the advantage of instantaneous fills.

At the very least, DIBS makes sure you are with the daily trend. Which means that you have a good chance of being in the direction of the main trend because the market should go up a higher percentage of the time when the trend is up and the market should go down a higher percentage of time when the trend is down.

Thanks -Mgh-

-PeterCrowns-
  • #100
  • May 5, 2008 8:06am May 5, 2008 8:06am
Peter,

Again, thank you for your kind answers and clarification of discretionary trading.
I'm now trading the hours you recommend, it's a hard transition from MST.

As with many worthwhile insights, an answer brings another question or two.

You wrote
...perfect mathematical tipping points in the direction of where the market is destined to go (my usual edge),...

Would ya care to elaborate?
LR
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