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Profitunity (Chaos) Trading System by Bill Williams

  • #381
  • Jul 19, 2007 1:55am Jul 19, 2007 1:55am
Fintrans and could you tell percentage of loss trades and profit trades... and ratio... System is interesting
  • #382
  • Jul 19, 2007 2:11am Jul 19, 2007 2:11am
Gladly - except that I will only start doing it from the end of next week.

The reason being is that starting this week (Monday) I have drawn up a spreadsheet to make weekly targets for myself (the main reason being is that over the past couple of months I have messed up badly simply because I have held on to profitable positions that have invariably turned into losses simply because of greed and not knowing when to stop). My target basically from now on is 20% per week of my capital. If I hit that in an hour on Monday morning - I'm gone for the week. If I don't - as long as by Friday I have made my target - things are good. This idea FORCES me to take profit when a position reaches 20% of its cost (or to at least place a stop loss at that point assuming I am further into a profit situation).

Money management (in my opinion) is the 'make or break' of any system. Taking profit on trades (BEFORE they eventually turned into losses) and subtracting bad trades (those that never turned to a profit) for the past six months - I could be a wealthy man right now!!! I'm not - and this is the main reason. Food for thought!

You would be surprised at how compounding your profits builds up - just try it. Don't aim for that 'sparkling' trade - plod along - you'll do well.

Anyway - good trading!

Edit:

Oh - and by the way - using AO and AC as desribed above - make sure that AC is also 'high' or 'low' before opening a position. The reason I say this is because when it is hanging around the middle or zero line - there is no 'conviction' in the market - and you will find that this is where the brokers are just hanging around trying to catch stops (it just happened to me while I was typing this message - because - I was not concentrating)!!!

Second edit:

There is one other 'magic bullet' that I forgot to put in my first message. I have Stochastics (14/3/3) open on my chart as well. Although this is not pure Bill Williams it gives me a sense of 'comfort' i.e. I will only sell when Stochs are above 80, AO is green, and AC is red and only buy when stochs are below 20, AO is red, and AC is green. I am experimenting with the idea of 'hedging' positions when I get valid AO and AC signals but Stochs are around the 50 line and flat.

Regards,

Dale.
  • #383
  • Jul 19, 2007 2:12am Jul 19, 2007 2:12am
Okey here todays chart of EESR

Till this moment i got 2 signals only
Bearish Dbar triggered and 3AO. But now i doubt what to do!

We have 5 green bars... and i could close at 35.5.... or maybe i could wait little more.... and after short correction price will go higher....
My thoughts that price will go higher... becos there is no divergence in AO...

So my opinion i will put stop on 34.8 and wait.... of course i can get losses but Dbars are saying that down trend was broken. I'd better wait for bearish Dbar....

So how do you guys see my situation
Attached Image (click to enlarge)
Click to Enlarge Name: EESR.jpg Size: 93 KB
  • #384
  • Jul 19, 2007 2:39am Jul 19, 2007 2:39am
Hi Protei,


What about balance line signal . I hope that would be valid !
Should we buy as per balance line signal, if price crosses the top.
or since bearish dbar is stopped out, we should wait for fractal before getting a fresh entry.


I presume bullish dbar is invalid, bcoz it is above the alligator.
But logically , I feel it is giving a signal in the direction of the main trend.
So it is slightly confusing, bcoz we are taking dbar signal against the trend and avoiding the signal in the direction of the trend.

pls give your view on the above points.

regards
tej



Quoting Protei
Tej

i would prefer 3 variant.... becos Bullish DBar is invalid.
  • #385
  • Jul 19, 2007 3:06am Jul 19, 2007 3:06am
Key my point of view.

AO and AC are green for a long moment.... more than 8 ticks....
A think that trend will change soon... of course bulls are powerful... but the cannot hold the price... in any case put you stop sell lower than Bearish Dbar... and put stop buy higher...

Concerning Balance signal.... after we closed our position... should we reopen our position with the same amout of lots or... only with 1?....
  • #386
  • Jul 19, 2007 9:39am Jul 19, 2007 9:39am
Quoting tej
i) Close short position, if mkt trades above the Bullish Divergent bar

ii) Close short position and reverse the trade , if market trades above Bullish d bar

iii) Nothing has changed, maintain the old stop loss. i.e. on other side of Bearish Divergent bar.

iv) If price crosses the top of bearish divergent bar, then close and reverse the position , bcoz that will also be a balance line signal.
Hi tej

neither of all.

Last two bars are showing that the market is balaned (drifting) at the moment and there must come some new info to push it in one or another direction.
  • #387
  • Jul 19, 2007 9:41am Jul 19, 2007 9:41am
Quoting Protei
Ihave some questions about your last chart. On your chart you had some more Bearish dabrs earlier.... but you didnt react on them.... why? becos they are invalid?
If you read reules again you'll see that one of them is:
"there must be acute angle between price and MAs" (I quote it by hart but you'll get the point)...
  • #388
  • Jul 19, 2007 10:15am Jul 19, 2007 10:15am
A strong Bullish Divergent Bar Setup is forming during last two H4 sessions in GBPAUD.

More comments are available here
Attached Image
  • #389
  • Jul 19, 2007 10:28am Jul 19, 2007 10:28am
Well guys i have a hard question... here on chart is an example, when it its really to follow trend... becos there are many Dbars.... and i dont know really how to solve it... this example from history... but it is actually for this moment..... becos if we take a Dbar then we start to go against trend at this moment... And also maybe we could make some rules when to close position... becos sometimes there is no Dbars but trend changes...

So first chart is an example from the past and second is from this moment... i think they are quite the same... becos i closed the position... and dont know what to do now... So guys your suggestions... how go with trend and not to take a wrong side
Attached Image(s) (click to enlarge)
Click to Enlarge Name: SNGS.jpg Size: 94 KB
Click to Enlarge Name: EESR.jpg Size: 85 KB
  • #390
  • Jul 19, 2007 11:16am Jul 19, 2007 11:16am
Each setup is just an opportunity. There is no way (or I don't know any) you can decide whether a signal is valid or not. This is what are the rules for...
  • #391
  • Jul 19, 2007 11:29am Jul 19, 2007 11:29am
Isto but if so then it is really hard to follow trend line when it is slightly going up or down... like on my examples....

Also another that i have checked is if you start your trade with Dbar you can always close it with Balance signal... of course if alligator on your side... if not then you should just wait.... maybe alligator will close or maybe 5 zone bars.... Well as i can see on my chart #2 there were 7 zone bars (AO and AC both up) and AO is green for 10 sessions allready... i think that is too much...
Anyway tomorow will be new information... and we might open again with Gap up higher than Up fractal now...

So i put stop buy higher than fractal up and actually i cannot put stop sell... becos down fractal far away... Okey lets see what will be tomorow
  • #392
  • Jul 19, 2007 2:30pm Jul 19, 2007 2:30pm
Hi Protei,

Even I have noticed the following two problems,
(i) dbars may take us out of the main trend and we may lose a big move.
(ii) I have actually encountered the problem of market changing trend without forming a dbar.

I wish other members will also share their experience on this problem & probably what action they have taken to remedy this problem.

I am sure isto can throw some light on this.

regards

tej




Quoting Protei
Well guys i have a hard question... here on chart is an example, when it its really to follow trend... becos there are many Dbars.... and i dont know really how to solve it... this example from history... but it is actually for this moment..... becos if we take a Dbar then we start to go against trend at this moment... And also maybe we could make some rules when to close position... becos sometimes there is no Dbars but trend changes...

So first chart is an example from the past and second is from this moment... i think they are quite the same... becos i closed the position... and dont know what to do now... So guys your suggestions... how go with trend and not to take a wrong side
  • #393
  • Jul 19, 2007 3:07pm Jul 19, 2007 3:07pm
hi ,

I was just re-reading New Trading Dimensions :

In the chapter : Techniques for taking profits .

I came across these lines


" THE BEST OVERALL STOP WHEN YOU KNOW YOU
ARE WITH THE TREND AND THE TREND IS NOT OVER

When you have evidence that you are still in a trending market, your best overall stop is the Red line. "

I feel dbar method was introduced to deal with sideways market

Therefore using dbar method leads to early exit, when market is in strong Trend.

Can someone help me in identifying , when to use red line or dbar method ?

isto, what is your experience on this matter. I am sure you would have faced such situations & you might have found some answer also.

regards

tej





  • #394
  • Jul 19, 2007 3:58pm Jul 19, 2007 3:58pm
Hi isto,

Kindly tell me what should have been the right trades as per the chaos system in this chart.

As per my limited understanding of the system , I believe

i) we should go long on break of the fractal
ii) Add on AO, AC, zone & Balance line signals
iii) Close all long positions on break of Bearish dbar.
iv) Create a fresh short position (1 lot) on break of Bearish dbar.
v) Close this short position, when price crosses top of the bearish dbar
vi) Open a long position (1 lot) as per balance line signal, when price crosses top of the bearish dbar


regards

tej




Quoting isto
Hi tej

neither of all.

Last two bars are showing that the market is balaned (drifting) at the moment and there must come some new info to push it in one or another direction.
Attached Image (click to enlarge)
Click to Enlarge Name: dbars in Trend.GIF Size: 12 KB
  • #395
  • Jul 19, 2007 11:40pm Jul 19, 2007 11:40pm
Hello tej
Quoting tej
i) we should go long on break of the fractal
ii) Add on AO, AC, zone & Balance line signals
iii) Close all long positions on break of Bearish dbar.
iv) Create a fresh short position (1 lot) on break of Bearish dbar.
v) Close this short position, when price crosses top of the bearish dbar
vi) Open a long position (1 lot) as per balance line signal, when price crosses top of the bearish dbar
Here is I think a classic sample of dbar (beginning is in post #388).

DBar has two major properties to qualify as DBar.

 

  1. it is far away from the red line
  2. there is acute angle between price and red line


There are valid and not valid DBars, visible on the chart below.

1st bunch of DBars (not valid) do not interrupt the trend and down move continue.
2nd DBar (valid) result into a sideway move (down trend is interupted at the moment).

Gerenaly speaking sideway is the place where trend might:

  1. continue previous move
  2. reverse

So here DBar gives us just a signal that a reverse might happen.

There is no rule that DBar will cause trend reverse. It is a signal the trend might reverse in near future.

A Signal appearace does not mean that we must act immediately (place order).
A Signal appearace just says "be careful. an possible event in front."

That's all

And trader acts according the rules he/she follows and according the believes he/she has about the chart landscape.

Hope this will clear a little bit the matter

Attached Image
  • #396
  • Jul 19, 2007 11:45pm Jul 19, 2007 11:45pm
Isto on your chart this invalid Dbars changed the trend for some moment.. and any way price many times closed higher than red line... so we should immidiately close our short positions, or we will begin to feed Alligator.... i think this is the main rule of Chaos trading
  • #397
  • Jul 19, 2007 11:53pm Jul 19, 2007 11:53pm
Quoting Protei
Isto on your chart this invalid Dbars changed the trend for some moment.. and any way price many times closed higher than red line... so we should immidiately close our short positions, or we will begin to feed Alligator.... i think this is the main rule of Chaos trading
Yes, but main down move is stil valid. Thevertheless these spikes above red line should close short positions
  • #398
  • Jul 20, 2007 5:49am Jul 20, 2007 5:49am
Hey isto and friends,

Just a comment - I don't think it's a long way off now when we see a bearish divergent bar formed on the daily AUD/USD chart. It is becoming so obvious that even I can see it. When it is formed there should be good angulation and this would be one of the trades where I would abandon my sole use of AO and AC and go with the system as a whole.

Anybody agree with me? Any comments?

Regards,

Dale.

Just something else: I placed a sell stop order based on a valid down fractal about two weeks ago on USD/CAD. The order was hit and executed and ever since then it has been moving up and down and up and down - not enough to hit my stop loss and not enough to turn a profit. This is one drawback of this system. And to make matters worse I'm paying the swap on the thing every single day. I mean - what are you supposed to do in this case?
  • #399
  • Jul 20, 2007 6:43am Jul 20, 2007 6:43am
Hey isto: you're the expert!

What does it mean when you have divergence between AO and AC?

In other words - when AO is green and heading up and above the zero line and AC is red and heading down and below the zero line?

What's going to happen?

Regards,

Dale.

(Don't skip over my message just prior to this one though).
  • #400
  • Jul 20, 2007 12:06pm Jul 20, 2007 12:06pm
Hi Dale, Thank you for your posting - it is an interesting point of view...

It will be interesting to see (if you don't mind) it in progress. I mean a open of a trade on a chart, progress and exit on other charts...

Don't you face too many whipsaws in this timeframe?

Quoting fintrans
Just a comment - I don't think it's a long way off now when we see a bearish divergent bar formed on the daily AUD/USD chart. It is becoming so obvious that even I can see it. When it is formed there should be good angulation and this would be one of the trades where I would abandon my sole use of AO and AC and go with the system as a whole.

Anybody agree with me? Any comments?
I personally cannot comment any suggestions for a futures move. Most of the time I'm wrong...
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