D.T.S.

D.T.S.

Daily Trend Surfing is a method that I've been developing and researching since October 2005. I'm still refining it, but since it is 90% complete I'm happy to share my trades with the forex factory community. I'll be applying my D.T.S. method to two currency pairs in this journal, the GBPUSD and XAUUSD pairs. I'll be using real money on an Oanda account. I'll be taking trades at predetermined times, usually around 3am EST and 9am EST.

What is D.T.S.?

Daily: There is a potential to take a trade each day of the week. Trades are closed before 5pm EST.

Trend: Successful trades are highly dependent on whether or not a good trend has been established. Choppy market conditions cause my method to fail. Therefore, a decent market volume is essential. More on this in a later section.

Surfing: Why surfing? First, its a major hobby of mine and I can't help but find parallels while setting up smooth rides, in the soup and in the market. Just as in surfing there are the following major components:

1 -Watching for the break-
Trade directions are determined based on pure price action, specifically by examining the direction of the currency pair for a 3-hour interval prior to the trade. The question to answer in surfing is whether the wave is breaking to the left or right. In trading we need to know whether the pair is breaking up or down.

2 -Testing for strength-
Here on the east coast a lot of our waves are just mush. They often don't offer the strength to lift your board. Once I'm in position with the wave behind me and I know whether I'm taking it left or right, I'll angle the board and start pushing down against the tip of the board with my body weight to get a feel for whether or not it can push. The analogy to trading my method is that I set my entry point a certain distance away from the price level, in order to test whether or not their is enough continued movement to propel the trade in the direction I've already predicted. If it can, then I take the trade, akin to standing up on the board.

3 -Outcome-
You either have a good ride or it dinks out beneath you. Always set stop losses as well as take profits. Adjustable take profits are even better.

4 -Staying out of the water-
I've created a list of news-based trading filters. If certain news events are going to be released I won't trade. Also, if there isn't enough news being released, there won't be enough volume, and I won't trade.

I plan to report my trades in this journal beginning next week. I hope this journal will spread worthwhile ideas to my peers, and instill me with trading discipline. Forgive me if I do not answer all questions, or promptly. I will be out of town on business for the next few days.

Hi,

Looks like a great deal of thought has gone into this which I love to see - the journal posting will keep you honest

Will be keeping an eye on this one - best of luck in your endeavour

Kind Regards
Steve

SKW,

We are watching and reading especially for two reasons:
1. System is 90% complete
2. Started since 2005

Suggest you are very honest with trades and be dedicated to the terms of the system rigidly.

May i also ask that you post the details of the system featuring:
1. Precise entry & exit points
2. Philosophy (don't be scared - reason for) of the entry and exit
3. Things watched for
4. Rules and exemptions

Hoping to see your posts

Dollar-Manhttp://www.forexfactory.com/images/icons/dollar.gif

Sounds very interesting, when will you post the specifics of your system?

This has been a slow week to start posting my system's trades, simply because my filters are telling me to "stay out of the water" (to borrow the language from my first post).

It simply did not seem that there would be enough volume to support nice trending. Thats why I decided to go to my day-job's technical conference for the past 4 days. Can't say I've missed much by not trading my system on Monday or Tuesday. Monday we had one medium impact piece of news out of the US, and it was the type of news I rarely see a lot of volume occur during: Yellen spoke about the economic outlook of Reno. Tuesday we had one low impact piece of news out of the UK, and two low impact pieces of news out of the US. (Remember, in this journal I am only interested in presenting my strategies related to the XAUUSD and GBPUSD pairs.)

As you readers are starting to see, due to all the filters, there may only be 1 or 2 actual trades per week. Its just one of the quirks I've implemented to optimize my system for getting the highest ratio of winning number of trades:total trades taken. I like this goal better than an optimization for just a raw total number of wins. As I see it, it cuts down on my labor. Here's why. I could have traded my system Monday. It looks like most of my strategies would have ended the day with between zero and 10 pips profit. Today, Tuesday is another story. There was much more movement than Monday, but half my strategies were losses while the other half are wins. I think you'll agree, a waste of time.

I'm formulating my plan for the next 3 days, and it is highly possible that I'll only get 1 trade in this week. Again, my goal is not just getting more wins than losses, but also to weed out days that break even. The chart below will show why I think filtering out certain days improves system performance. It shows performance of the two strategies I will test in this journal, as they performed for the final 4 months of 2006.

http://www.forexfactory.com/%5Burl=h...g%5D%5B/url%5Dhttp://www.forexfactory.com/%5Burl=h...g%5D%5B/url%5Dhttp://imageshack.us%5D%5BIMG%5Dhttp...ltered18vk.pnghttp://img241.imageshack.us/img241/387/filtered18vk.png


Thank you Steviet, Dollar-man, and et_phonehome_2 for the interest, the questions, and positive responses. Relating to the question of philosophy:

Its hard to explain without a few terms being defined. So here goes. D.T.S. is a system, and it could be said to have an overarching "philosophy". It assumes that there are more days that certain currency pairs will trend, than there are days that they will be volatile (although daily trends may often be part of a weekly range that appears volatile). D.T.S. tries to predict the direction of the currency pair for one day based on the direction around time of market opening (somewhat similar to BigBen here). I currently have 7 strategies. The strategies include the details of SL and TP and timing and filters for a given currency pair. Filters are reasons not to trade. Timing refers to the hour of the day that trades are to be taken, as well as how long the market needs to be watched before deciding on the direction of the trend. I realize that timing and filters are really just subjective. I have decided to be strict about my timings, using ones that seem to offer relatively consistent profits (testing since October 2005), and will continue to use them until they stop working for two months in a row. This eliminates guesswork. Filters, on the other hand, are still a work in progress, and are the reason I have not claimed to have a complete system.

I look forward to publishing my first trade of this journal soon.

I wish you the best with your system and eagerly looking forward to your posts!

Good Luck and may the Pips be with you!

Trade #1

Pair: XAUUSD
Direction: Long
Price: 644.70
Time: 9:06 am EST
SL: 642.70
TP: 647.70

Trade #1 Results

Trade closed at 647.10 at 17:00 EST.
Reason: TP/SL not hit by end of business day.
Result: Profit

Trade #2

Pair: XAUUSD
Direction: Long
Price: 659.50
Time: 9:24 am EST
SL: 657.50
TP: 663.10

Trade closed at 657.50 at 10:27 EST.
Reason: SL hit
Result: Loss

Trade #3

Pair: XAUUSD
Direction: Short
Price: 653.80
Time: 9:00 am EST
SL: 655.80
TP: 650.30

Trade closed at 657.50 at 9:47 EST.
Reason: TP hit
Result: Profit

Trade #4

Pair: XAUUSD
Direction: Long
Price: 650.40
Time: 9:06 am EST
SL: 648.40
TP: 653.90

Trade closed at 648.40 at 14:37 EST.
Reason: SL hit
Result: Loss

Pair: GBPUSD
Direction: Long
Price: 1.9616
Time: 2:54 am EST
SL: 1.9576
TP: 1.9656

Trade closed at 1.9656 at 05:12 am EST.
Reason: TP hit
Result: Profit

Trade #6

Setup
Pair: GBPUSD
Direction: Short
Price: 1.9499
Time: 3:15 am EST
SL: 1.9539
TP: 1.9459

Results
Trade closed at 1.9459 at 5:01 am EST.
Reason: TP hit
Result: Profit

Trade #7

Setup
Pair: GBPUSD
Direction: Short
Price: 1.9496
Time: 3:25 am EST
SL: 1.9536
TP: 1.9456

Results
Trade closed at 1.9456 at 4:30 am EST.
Reason: TP hit
Result: Profit