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Profitunity (Chaos) Trading System by Bill Williams

  • #401
  • Jul 20, 2007 12:27pm Jul 20, 2007 12:27pm
Quoting fintrans
What's going to happen?
I wish very much to be able to answer this question
If I knew I would screw down the market in few weeks


Well, back to the question:
Quoting fintrans
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?
AO = Momentum
AC = Acceleration

So when we have red AC and green AO this means that general tendency is price to go up while the speed of the move is slowing (the moving power has less steam to continue).

Red AC also means that slowing down acceleration is facing some strong resistance and if thie resistance is stronger than general move (AO) it could reverse the move and Acceleration will speed up in the opposite direction (down) trailing behing the Momentum
  • #402
  • Jul 20, 2007 1:47pm Jul 20, 2007 1:47pm
Hey isto - thanks for the input - I'll respond later.

For now - check out the chart for AUD/USD (and I hope it does not turn out like my last trade on USD/CAD - I eventually closed it out today for a $5.00 profit after a week! I made more in an hour on EUR/USD using AO and AC on their own than I did on that trade)!

Regards,

Dale.
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  • #403
  • Jul 22, 2007 12:40am Jul 22, 2007 12:40am
Okey lets see how situation turns on EESR, and how i made a big mistake.

Becos of a good news prices opened with a little GAP (about 0.7%) higher than on the day before. I looked a little on prices, found that price is going higher and happily went out for some business. But when i came back i was ashmed... becos i found a Bearish DBar on the top, and of course it was triggered. So i immidiately opened shorts... but i think it was too late.... When another Bullish DB was organised i closed Short positions with profit about 0.4% not big but its better than loss....

Anyway i missed this signal.... .

When will go price now i dont know.... becos we have a high support on 35.... and as it can be seen from the chart we tested it but didnt hit it.
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  • #404
  • Jul 22, 2007 12:44am Jul 22, 2007 12:44am
And another chart of SNGS... here also interesting situation

Here we dont have a DB on the top, but price began to lower..... but after 9 ticks... AC changed to green, and was Bullish DB was formed and the triggered... so i have 1 long position now. But i have so doubts what to do... becos last bar look like a bearish DB... so this mean market dont know wich way to choose... so i tightened my stops... hope we wont go down!
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  • #405
  • Edited 11:40pm Jul 22, 2007 11:39pm | Edited 11:40pm
From post #404
Quoting Protei
And another chart of SNGS... here also interesting situation

Here we dont have a DB on the top, but price began to lower..... but after 9 ticks... AC changed to green, and was Bullish DB was formed and the triggered... so i have 1 long position now. But i have so doubts what to do... becos last bar look like a bearish DB... so this mean market dont know wich way to choose... so i tightened my stops... hope we wont go down!
From my observations meny times price re-test Balance line. There are two points I see - Balance line as a resistance and trend line you've drawed as a support...

After one of them is taken well be clear (probablly) which will be the direction...
  • #406
  • Jul 23, 2007 6:25am Jul 23, 2007 6:25am
Hi isto,

Thnx for giving detailed explanation about dbars.
I feel it will help many traders.

Quote
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.

Above lines will help traders to formulate a strategy to deal with dbar failures, depending upon their beliefs.


regards

tej





Quoting isto
Hello tej


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

  • #407
  • Jul 23, 2007 6:40am Jul 23, 2007 6:40am
Hi isto,

I would like to know , as to how you deal with situations given below :

For eg :

You are long multiple contracts as per the system.

You find a valid bearish dbar.

Markets breaks the low of the bearish dbar.

What would you do ?

a) Close your long position and go short one contract

b) Close your long position and wait for next signal before shorting

c) Close your long position (Partially) and wait for red line signal for final exit.


regards

tej
  • #408
  • Jul 23, 2007 6:58am Jul 23, 2007 6:58am
Hey Isto.. here is another chart of SNGS.... as you can see today we had a gap down about 1%.... but after we draw a Bullish Dbar.. that was triggered and price slightly began to growth.... but on the last hour price made a top and then immidiately went down... and closed on 30.300... ACtually i dont know what to do... becos i have some lots of SNGS and i think this is Bearish Dbar... but not valid... so your suggestions... where should i put stops?
Attached Image (click to enlarge)
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  • #409
  • Jul 23, 2007 7:02am Jul 23, 2007 7:02am
Tej

I also have this question.... becos if i add multiple, then middle price of all lots go higher and higher... and usually it is closer to Dbar than i want it to be

I think after Dbar triggered we should close position... but also we should check AC and AO.. how are they... if they are both green, then i will wait... if they are green for a long time... i suggest close all positions... and open short on next signal.... if they are different colors... then open short.... i think thats it
  • #410
  • Jul 23, 2007 7:08am Jul 23, 2007 7:08am
Quoting tej
Hi isto,

I would like to know , as to how you deal with situations given below :

For eg :

You are long multiple contracts as per the system.

You find a valid bearish dbar.

Markets breaks the low of the bearish dbar.

What would you do ?

a) Close your long position and go short one contract

b) Close your long position and wait for next signal before shorting

c) Close your long position (Partially) and wait for red line signal for final exit.


regards

tej
Hi tej

It is almost impossible to answer such a hypothetical question.

It depends on lots of signals, pair, market, etc...
  • #411
  • Jul 23, 2007 7:12am Jul 23, 2007 7:12am
Quoting Protei
Hey Isto.. here is another chart of SNGS.... as you can see today we had a gap down about 1%.... but after we draw a Bullish Dbar.. that was triggered and price slightly began to growth.... but on the last hour price made a top and then immidiately went down... and closed on 30.300... ACtually i dont know what to do... becos i have some lots of SNGS and i think this is Bearish Dbar... but not valid... so your suggestions... where should i put stops?
It seems a sideway move, especially the right side of the chart...
I would stay away...
Attached Image
  • #412
  • Jul 23, 2007 7:15am Jul 23, 2007 7:15am
EURJPY formed two Bullish Divergent Bars during European session.

It failed twice to break down. Momentum and Acceleration are up. There are acute angle with Alligator's line.

So we have respectful signals for up move... Let's see
Attached Image
  • #413
  • Jul 23, 2007 8:33am Jul 23, 2007 8:33am
Looks really dangerous Isto... so big candals....

Also Isto i have a question. How many lots do you buy on a 1 signal? 1?

Becos my exp. is saying that usually from 1 brake of DB and till 3AO we will have approximately 1-2% of move... i think its too much... so maybe better to buy 2-3 lots on 1 break and then buy not 5 but 3-4?
  • #414
  • Jul 23, 2007 9:02am Jul 23, 2007 9:02am
Quoting Protei
How many lots do you buy on a 1 signal? 1?
One - more that one is too dangerous expecially in DBars. Reverse might easily fail ...
  • #415
  • Jul 23, 2007 9:32am Jul 23, 2007 9:32am
so another question is... if price is going up but still lower than red line... should we take other signals like balance line 3AC or others like AO crossing through zero or maybe zone signal? or only 3AO?
  • #416
  • Edited 1:47pm Jul 23, 2007 12:40pm | Edited 1:47pm
Hi Protei,

I would buy one lot on Dbar Signal
bcoz like isto says :

Quote
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.


So it is not really a reversal signal.... but a probability
& on my charts I have seen many dbars signals being stopped out...

regards
tej


Quoting Protei
Looks really dangerous Isto... so big candals....

Also Isto i have a question. How many lots do you buy on a 1 signal? 1?

Becos my exp. is saying that usually from 1 brake of DB and till 3AO we will have approximately 1-2% of move... i think its too much... so maybe better to buy 2-3 lots on 1 break and then buy not 5 but 3-4?
  • #417
  • Jul 23, 2007 12:47pm Jul 23, 2007 12:47pm
Hi isto,
Did u buy on the breakout of 1st bullish dbar.... ?
bcoz if you bought then you would have been stopped out...

Somehow i feel you might have skipped that signal..., probably bcoz mkt opened gap up and then came down.

what was the right action to be taken ?

Buy on 1st dbar.... stopped out & now try on 2nd dbar again
Or
Skip 1st dbar...bcoz of gap, & try for 2nd dbar

what is your suggestion
regards
tej



Quoting isto
EURJPY formed two Bullish Divergent Bars during European session.

It failed twice to break down. Momentum and Acceleration are up. There are acute angle with Alligator's line.

So we have respectful signals for up move... Let's see
  • #418
  • Jul 23, 2007 1:43pm Jul 23, 2007 1:43pm
Quoting isto
Hi tej

It is almost impossible to answer such a hypothetical question.

It depends on lots of signals, pair, market, etc...

Hi isto,

I have faced such situation many times
Pls Look at the chart, I have marked Fractal buy followed by other signals :
z -- Zone, bl -- Balance Line, AC & AO

Even if one buys one lot on each signal , there will be 12 lots
before 1st dbar appears.
So what should one do at this juncture.
a) Exit partial Long position
b) Exit full Long position
c) Exit full Long position & go short

If one had gone short he would have been stopped out.
[ This is another question where to place the stop loss trigger.
a) Above the bullish bar or b) Above the 1st dbar ]

What should we do , after we take a dbar signal and are stopped out ?
a) Should we just exit our position
b) reverse the trade in main direction, bcoz if dbar trade was stopped out, it means that original trend is still on (as in this case)

Now we are getting one more bearish dbar...
So as per system we should go short again ?

Pls answer it in detail.... it will help to clear the confusion in my mind.

regards

tej
Attached Image (click to enlarge)
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  • #419
  • Jul 23, 2007 2:24pm Jul 23, 2007 2:24pm
Hi protei,

I have read two main axioms of the market
i) Trend is Your Friend
ii) When in Doubt, Stay out.

Like Isto says there is no trend, we should probably stay out.

But I have seen that, big Trending moves, usually start from a sideways market.


Since you are already long, You could hold the position with the same stop loss. Bcoz, you are getting 3 AO signal also,
& moreover when you went long , u were prepared for stop loss of dbar.

And despite all this if market wants to go down , You will get your exit and 1st entry signal on break of down fractal.
By this time It would have broken the up trend line also. Thus a double confirmation to go short.

This is just my view, it may be wrong completely...

Pls remember I am trying to learn .....

regards
tej



Quoting Protei
Hey Isto.. here is another chart of SNGS.... as you can see today we had a gap down about 1%.... but after we draw a Bullish Dbar.. that was triggered and price slightly began to growth.... but on the last hour price made a top and then immidiately went down... and closed on 30.300... ACtually i dont know what to do... becos i have some lots of SNGS and i think this is Bearish Dbar... but not valid... so your suggestions... where should i put stops?
  • #420
  • Jul 23, 2007 9:19pm Jul 23, 2007 9:19pm
Thanks Tej for your awnser....

And on your chart i see that you should tighten your stops, becos last Bearish Dbar have acute angel... and also AC and AO for a long time were green.... and now AC turned to red... so be careful!


Concerning DBars... i think if Dbar is triggered you should put stop there.... becos market can reverse also on a 1 Dbar... But here could be 1 exception... if AO and AC are green... then you might wait a little with stop for Dbar.. and look for next bar.
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