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The DIBS Method... No Free Lunch continues

  • #541
  • May 23, 2008 1:25am May 23, 2008 1:25am
Just noticed next Monday is a Public Holiday in both the UK and US.
Good Trading
  • #542
  • May 23, 2008 1:40am May 23, 2008 1:40am
Quoting pipfirst
Hi Jarro,

I see your chart below. Notice there is IB bar in GMT 02:00. Why you not take that ?

Pls advise

Thanks,
MS
It was before the 0500 GMT Open.
Indicators show the past. Price Action "Indicates" the future.
  • #543
  • May 23, 2008 1:56am May 23, 2008 1:56am
Quoting jarroo
Unless Peter tells me otherwise about this situation(since he has more experience trading this method), the IB is only good for the initial breakout. After that, a new IB needs to form again.

Thanks ed.
Peter doesnīt need to tell you. What Peter wanted to tell us with his hints or golden nuggets as some of you call it (for a good reason by the way) is, that we should a) keep is simple stupid and b) understand what we are doing. Understand why momentum is build.

Momentum comes in, when many participants place their orders around the same level and once price breaks through all these orders are hit and move the price pretty fast and due to that hit other orders in place, so price keeps moving until first people start to realize gains and slow down the movement.

Once our entry was broken, also other orders were hit too and the momentum build was not enough. Why should it be enough next time, when we arenīt even on one page in this thread whether to re-enter or not. Lets assume, half of the guys here do place an order, some mentioned smaller lot sizes to have less risk. So just 50% of us place orders to re-enter with potentially lower volume. How is that supposed to create higher momentum than the first time - think about it.

Otherwise if our entry is not hit, but price breaks to other side of the IB first means, our order is still in place, so are orders of other participants, which means onces it breaks through it could build a lot of momentum, which means even if the price breaks the other end of the IB first, the entry would still be valid.

Try to think, were other people would place their orders, either entry or exit orders. These are the price levels where momentum comes in.

I hope this was of any help

And good thread, so thanks to you all. I will leave my 2 cents here every now and again, if you want me to.

Cheers
DaBuschi
  • #544
  • May 23, 2008 1:56am May 23, 2008 1:56am
Quoting edwinnk
I will have to disagree with the earlier responses to this post. I feel that once an IB is broken and stopped out, that you are done with it. Just take the loss and move on. I feel that re-entering with the hope that you will make up your loss is just wishful thinking.

IB's indicate consolidation and we trade the breakout resulting from it. If the breakout fails and gets stopped out, then it means it is a false alarm and the consolidation period is over. Just take your loss and move on.

So if we are trading a breakout, please explain to me this. So price moves through your limit order and triggers a trade but then you get stopped out before it makes it to 1:1, when price returns and breaks through the IB again, how is the second time a breakout? It is not. The price level has no more significance. That price level now becomes a grain of sand on a beach. It is just coincidence that the second time around the trade succeeded. You can just as easily be stopped out again.

Also, since the price did not make it to 1:1 the first time, what does that mean? It means that the breakout was weak and "not really a breakout." Why would you trade that again?

But wait! It could be a false breakout!
Yes, it might have been a false breakout if the break of the IB is only 1-5 pips. But if it broke it by more, it is not a false breakout, and in my opinion invalidates the IB consolidation and breakout trade.

I don’t feel that re-entering a stopped out IB trade is a high probability trade, and that’s what we are looking for, right? I personally would not re-enter.

Edwin

I do see what you mean, and any real disagreement was probably due to a lack of clarity on my part. I'm all about taking re-entries until something tells me the situation has changed. False breakouts only mean that there is still an excess of unsatisfied supply/demand at that level. If the price goes back into the consolidation area after a brief excursion, then I'm going to reason that neither the longs nor the shorts have the advantage. I'm talking here about stop-outs that occur after a breakout of only a few pips relative to the size of the consolidation I'm looking at, not getting stopped out many bars after the entry or after a large candle gets reversed. In either of those cases, a break the other way is likely, and if not, then a new IB will probably form.
  • #545
  • May 23, 2008 2:18am May 23, 2008 2:18am
I see there is confusion around time zones here.
GMT was replaced by UTC in 1972.
Check out this site:
http://en.wikipedia.org/wiki/UTC
  • #546
  • May 23, 2008 2:25am May 23, 2008 2:25am
Quoting mihali
I see there is confusion around time zones here.
GMT was replaced by UTC in 1972.
Check out this site:
http://en.wikipedia.org/wiki/UTC
UTC is only another description for GMT - the time zone itself has not changed.

So, wether you say 6am GMT or 6am UTC makes no difference - only that more people are familiar with the term "GMT".

regards
daytrading
Enter Signature
  • #547
  • May 23, 2008 2:34am May 23, 2008 2:34am
  •  MPP
  • Joined Jun 2007 | Status: Be yourself, everyone else is taken | 2,734 Posts
Quoting bogus
Hi guys. Now Im confused. I see GMT as GMT no matter where you are in the world. NZ where I am is GMT +12. What I deduce from Peter's quote is 6 GMT which is 6 London time, is the standard. London is on DST, but GMT is not. I take it that 5 gmt is now the time to start the day for trades.
What do you think?
Peter sticks to 0600GMT no allowance for BST (british summer time).

heres a couple of links for desktop clocks, that may help some with TZ issues, also you can set the FF clock to any TZ you wish if you simply want to check a time somewhere.

http://www.qlock.com/
http://www.stemhaus.com/firefox/foxclocks/

a simple way to sort clocks is to adjust you FF to London no BST ofset and then set your windows clock to the same TZ, this will keep all your clocks in one zone so you know when the news is breaking etc, and then use a normal clock for your local time.

for a reference on times use

http://www.timeanddate.com/worldclock/
  • #548
  • May 23, 2008 2:51am May 23, 2008 2:51am
Quoting MPP
Peter sticks to 0600GMT no allowance for BST (british summer time).

heres a couple of links for desktop clocks, that may help some with TZ issues, also you can set the FF clock to any TZ you wish if you simply want to check a time somewhere.

http://www.qlock.com/
http://www.stemhaus.com/firefox/foxclocks/

a simple way to sort clocks is to adjust you FF to London no BST ofset and then set your windows clock to the same TZ, this will keep all your clocks in one zone so you know when the news is breaking etc, and then use a normal clock for your local time.

for a reference on times use

http://www.timeanddate.com/worldclock/


Thank you MPP, for the links - especially the comedy club. Looks great for deat times like now.

Shefa.
  • #549
  • May 23, 2008 2:56am May 23, 2008 2:56am
Quoting DaBuschi
~~
And good thread, so thanks to you all. I will leave my 2 cents here every now and again, if you want me to.
Cheers
DaBuschi
Welcome to the thread DaBuschi, and please do.
Good Trading
  • #550
  • May 23, 2008 3:28am May 23, 2008 3:28am
Dear Robincys

Great idea !

I've sent you a message on Trading Rooms asking for permission to join the room.

Look forward to seeing you there.

Best wishes, Paul
  • #551
  • May 23, 2008 3:35am May 23, 2008 3:35am
Quoting loudoniii
Dear Robincys

Great idea !

I've sent you a message on Trading Rooms asking for permission to join the room.

Look forward to seeing you there.

Best wishes, Paul

u r welcome. the access is open to all the DIBS user!
  • #552
  • May 23, 2008 3:41am May 23, 2008 3:41am
Quoting robincys
u r welcome. the access is open to all the DIBS user!
Hi Robincys,

I did not succeed to enter the tradingroom. Is it possible for you to send me the link again ?
Hope you do,
Shefa.
  • #553
  • May 23, 2008 3:47am May 23, 2008 3:47am
Quoting aud
Welcome to the thread DaBuschi, and please do.
Thanks AUD.

@ All

I think, almost everybody here is aware of how to enter a position, but there is one point, that Peter did not explain and Iīm sure he did for good reasons. Itīs his exit strategy.

That is the key to success. The entry doesnīt really matter as you could be profitable with a strategy thats entries are based on a coin flip. What Iīm really thankful for is, that Peter showed us an option to get into the market with bigger positions due to the initial stop being based on narrow bars. That helps us in two ways. First is, we can use bigger lot sizes as already said and second, due to the narrow range we have a pretty close take profit for the first half of our positions, which lets us get into risk free trades pretty quickly.

But still we havenīt made any money yet, if we donīt move our stop. Some move it to break even after closing the first half of our position with 1R. So they make at least 0.5R on the whole position once price retraces and hits our SL. This is one way to handle it. I wouldnīt recommend it though as Peter closed the first half of his positions for the reason to have a free trade so no risk for the equity. By moving the SL to BE you take away some breathing space for the price. Could stop you out of some big moves but otherwise if we have a good breakout with a lot of momentum, price probably wouldnīt come back to our entry point anymore. So, I think there is no right or wrong in this case.

The biggest question is, how do we close the second half if the just explained case occurs, that the price heads up and away and we still have our SL at our initial SL or even BE. How do we bank some pips here, without taking the breathing space away from the price?

Any ideas here?

Donīt get me wrong, I have my own way to do it, which Iīll come up with later. I just want to start a thinking process here.

I hope you guys are with me.

Thanks for reading these lines
DaBuschi
  • #554
  • May 23, 2008 3:52am May 23, 2008 3:52am
Quoting Shefa
Good Morning HT and every body else.

There is a sentence saying: "When the monkey does not know to dance, he says the floor is not good enough" (maybe there is an English expression for that?).
I mentioned it, because yesturday I was checking the charts from about month ago till now. I got the impression that the DIBS by itself can not be accurate enough, at least for me, although I belive there are people who can make profits from DIBS only/mainly. Correct me if I am wrong, but I remember that Peter himself wrote that when the IB is formed, he crosses it with other informations he has, and then decide whethere to take the trade, or not.
We did not get the details of all those "other infirmations", and I am not complaining about it. On the contrary, I thanks him for all the help he gave us. B U T, I think it is our job, now, to find a group of "other informations" that will help us to improve our decisions. As we do not have the connections for "inside information", we can make advantages of "outside" ones, like indicators of any kind.
THis is what I did yesturday, trying to keep it as simple as possible, and I will check it today.
I wish a successful day for all of us,

Shefa.

Good Morning, Shefa and everybody!

Absolutely correct! As I said some posts before, we must ALWAYS "keep an ear on the floor", and use our discretion to filter all the setups this method gives... Indicators can be powerful tools to filter and refining the method, that's for sure! What I meant was that we must avoid entering a trade based only on what an indicator signs, we must take the big picture.

In fact, so far on what I see, we may have a wild day coming... Friday is often a rough sea day, and I noticed now that Monday will be a dead day, Bank's Holiday ...

In Brazil (If I got your proverb right...) we say: "The blindman excuses is always the cane..."

Good Trading to all!

HT
Many share my views with me. But I don't share them with them...
  • #555
  • May 23, 2008 4:17am May 23, 2008 4:17am
  •  MPP
  • Joined Jun 2007 | Status: Be yourself, everyone else is taken | 2,734 Posts
Quoting DaBuschi
Thanks AUD.

@ All

I think, almost everybody here is aware of how to enter a position, but there is one point, that Peter did not explain and Iīm sure he did for good reasons. Itīs his exit strategy.

That is the key to success. The entry doesnīt really matter as you could be profitable with a strategy thats entries are based on a coin flip. What Iīm really thankful for is, that Peter showed us an option to get into the market with bigger positions due to the initial stop being based on narrow bars. That helps us in two ways. First is, we can use bigger lot sizes as already said and second, due to the narrow range we have a pretty close take profit for the first half of our positions, which lets us get into risk free trades pretty quickly.

But still we havenīt made any money yet, if we donīt move our stop. Some move it to break even after closing the first half of our position with 1R. So they make at least 0.5R on the whole position once price retraces and hits our SL. This is one way to handle it. I wouldnīt recommend it though as Peter closed the first half of his positions for the reason to have a free trade so no risk for the equity. By moving the SL to BE you take away some breathing space for the price. Could stop you out of some big moves but otherwise if we have a good breakout with a lot of momentum, price probably wouldnīt come back to our entry point anymore. So, I think there is no right or wrong in this case.

The biggest question is, how do we close the second half if the just explained case occurs, that the price heads up and away and we still have our SL at our initial SL or even BE. How do we bank some pips here, without taking the breathing space away from the price?

Any ideas here?

Donīt get me wrong, I have my own way to do it, which Iīll come up with later. I just want to start a thinking process here.

I hope you guys are with me.

Thanks for reading these lines
DaBuschi
i'm playing with a different view, divide the trade into 3 instead of 2, close 2/3 of the trade, 1/3 is instant profit, 1/3 will offset the free runner.

i find then i can forget about the runner and let the SL gap increase, as time goes on i'll move the SL to match the next trade's and build the position, trading with the longer term trend.

just one variation on the theme.
  • #556
  • May 23, 2008 4:32am May 23, 2008 4:32am
Quoting DaBuschi
The biggest question is, how do we close the second half if the just explained case occurs, that the price heads up and away and we still have our SL at our initial SL or even BE. How do we bank some pips here, without taking the breathing space away from the price?

Any ideas here?

Donīt get me wrong, I have my own way to do it, which Iīll come up with later. I just want to start a thinking process here.
Good post, DaBuschi.

I'll kick the ball with a couple of exit tools i find useful on the hrly TF.

1st is the use of fibs pulled in the direction of the trade, the inner fib levels (38.2, 50 and 61.8) used as support/resistance, as per Bobokus' thread. So, if i'm long i'll pull a fib on the swing that's developing and with every new high made during the trade, the fib high is pulled up....an hourly open below this fib's 61.8 support level signals a break of support for this trade and an all-out exit (for me at least).

2nd, on the hrly i find the %k line of a 14,3,3 stoch very useful for exits near the top/bottom of a swing. So, for a long trade, as long as the stoch stays above 80 this gives me confidence to stay with the trade...when there's an open below 80, that's usually a good time to secure a large chunk of profit.

I find a combination of these tools whilst monitoring price patterns for signs of momentum/exhaustion works well.

No doubt there are simpler, more efficient exit methods, which i hope to learn soon!
  • #557
  • May 23, 2008 4:34am May 23, 2008 4:34am
Quoting MPP
i'm playing with a different view, divide the trade into 3 instead of 2, close 2/3 of the trade, 1/3 is instant profit, 1/3 will offset the free runner.

i find then i can forget about the runner and let the SL gap increase, as time goes on i'll move the SL to match the next trade's and build the position, trading with the longer term trend.

just one variation on the theme.
I actually thought about that too, especially the first part. If I got you right, you would move your SL to the initial SL of the next opened position (after opening I assume). Is one idea to handle it, but as we get stopped out often, that would probably close positions prematurely.

Please see screenshot below for the exit strategy I have in mind. The chart shows the daily chart of USD/CHF. I donīt have an open position here, I just took that chart because it shows pretty good, how prices move over time.

As can be seen, price moves in waves and Iīm sure most of you guys are aware of that. We see a downtrend here and I would move my SL to the last high whenever a new low is made. The blue lines show the lows and the green ones the highs made when price retraced. The red line could be the next SL, but right itīs not, as the last low hasnīt been broken yet.

Please note that itīs always easy to do that afterwards and a hard thing to do, when the trend is starting to establish and we see the price moving in our favor and then come back and retrace and we see huge gains evaporate and worst case hit our SL and close the position with 0 gain.

But I think that is the only way to get into trades that make more than 100R and in the end it seems Peter was heading for those trades.

What do you think?
Attached Image
  • #558
  • May 23, 2008 4:34am May 23, 2008 4:34am
Quoting MPP
i'm playing with a different view, divide the trade into 3 instead of 2, close 2/3 of the trade, 1/3 is instant profit, 1/3 will offset the free runner.

i find then i can forget about the runner and let the SL gap increase, as time goes on i'll move the SL to match the next trade's and build the position, trading with the longer term trend.

just one variation on the theme.
Interesting approach

When trading a "hot hand" (trade in the same direction of the week's trend) I usually trail my stops manually using 1 or 2 pips away from a variation of Parabolic SAR (0.06). Why? Cause I really don't like pullbacks. If they happen, I prefer to be stopped out in profit and watch for a new entry point... try to make twice the same pips... .

But if I'm trading a pair against weeks trend, I watch it veeeery carefully and take my money off as soon as possible, rather than letting it run free. Those trades, for me, have a high probability to end 0 x 0 (sorry... soccer stuff), cause Mr. Market didn't make up his mind yet.

Cheers!

PS: This is a chart I posted before with my setup on the CHF trade
Many share my views with me. But I don't share them with them...
  • #559
  • May 23, 2008 4:43am May 23, 2008 4:43am
Quoting ChowClown
No doubt there are simpler, more efficient exit methods, which i hope to learn soon!
Mine is definitely simpler, if more efficient Iīm not able to say. Probably better made for getting a heart attack when seeing your unrealized gains disappear

But that is why I started this discussion, to learn from each other.

Another idea just came up my mind - if we are in a long term trend, there will be days, where we get signals in the other direction of our current position. As I canīt hedge positions at my broker without opening a sub account, I just thought, I could place an order to trade that signal with half the position size of my current position.

Letīs say Iīm long in the EUR/USD with 10 lots, already build up a good amount of pips, but now have a short signal based on the entry rules. I would now place a sell order for 5 lots. If itīs hit, my position is reduced to 5 lots and I bank some pips.

Once I get long signals again I would add up to the current position as usual. I might try that.
  • #560
  • Edited 4:57am May 23, 2008 4:45am | Edited 4:57am
Hello? Is there anybody in there? Just nod if you can hear me...

I guess everybody is watching the DIBS forming on CHF....
Many share my views with me. But I don't share them with them...
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