No Free Lunch but all the Free Coffee you can drink

Thank You, Mr. Peter Crowns!
You opened my eyes...

Bluefish

thanks for the post,g8t 1,but if any1 doesn't blive d strategy it is their problem wat we care at d end of d day is how much ur equity has swollen.thanks 2 PC the DIB's king.i hav backtested this strategy to d level dat the devil cant tell me it doesnt work,

note:always look at price action,if u see a GAP in the direction of an inside bar most of the time its a continuation and if its against the DIB then its a reversal

Peter, your posts here are the most informative I've read on this entire forum.

Thank you ever so kindly for opening the curtains.

If you're ever in Australia, let me know so I can buy you a beer or three

Brilliant sign-off post, Peter. I'm sorry you consider your venture into ForexFactory an overall failure, but rest assured you did at least reach some who "get it".

In Peter's lastish post he mentioned "Your First Loss Is Your Best Loss." For those looking for some reading, I'd suggest this:
http://www.smartmoney.com/tradecraft...story=20010315

Yes it is in the context of stocks, but the information applies to all markets.

First of all, i want to say a HUGE thank you! to Peter Crown, personaly i have found this thread most edjucative, and most valuable thread that i have been read.

(to be honest, reason i registered on FF was to throw my appreciaton to Peter and other seasoned traders who have been shared valuable information. ((seasoned at my point of view atleast as i have 0 real trades on my shoulders at this point ))

That said, now on those toughts that i have.

i have been thinking and trying to find my edge over others and so i have come up whit some considerations.

First of them would be about carry trades. so if we for example would get to point where we could stack up 10% of our account to Long in GBP/JYP(according to petes tact to stack trades on same direction on breakouts), and we would be so lucky that longer trend would be up, wouldnt it be wise to try to hold those positions as long as they just do not get stopped as we would get "free" money from interest rate and we still had that chance to hit that big fish when it might occur? to compare if we would be going short and trend would be down we would just hold as long as it doesnt seem to go flat/chance direction as we would have to pay interest rate every day.

Second would be about that edge pete mentioned that some trades have 3-5 times chance over similar looking breakouts. this one i have been thinking alot. So on my consideration could it be so that as when we get breakout at some major support/resistance and it chances to from support to resistance and visa versa, and we are on "Good" side on trade when that happens, wouldnt it provide us some cover from being stopped? i think it would.

3rd is about trend. So, if we come to point where we would have drawn a trend "tunnel" and it would be long term bullish, price would be on very bottom on that tunnel. now we get a buy singal. from my view this would be a great trade as price tends to act so that it pinballs from bottom to roof of that tunnel, and according to that, we would have even bigger chance that price will go on direction we like(ofcourse if trend is bending that wouldnt be case, but luckily we have tight stoploss )

So, those were my toughts, feel free to comment and give eny feedback you consider would be good to give.

And to mention again i do not have eny experience from trading yet other that Demoing, and i have only studiet a whole market less than an year so do not judge me if i am all wrong or these point were allready pointed out at somewhere and i missed it.

Oh, and sorry about my london language as it is not my native language.

I wonder whether people really understand the implications of the results kindly posted by zinc6.

Let me start with this observation:

Once in a trade, you can exit it only once. You can close it at 1:1 profit target, at 2:1, 10:1 or trail it with a trailing stop. But you can’t close it at 1:1 and 10:1 at the same time. I have noticed that many DIBS followers love the idea of exiting half of their position at 1:1 to get the so-called "free ride" on the other half. Please note that if you do that consistently, then what you basically do is trade two different systems: System A with a 1:1 profit target (AND) System B with a "let the profits run" type of exit. You just allocate half of your funds to the System A and the other half of your funds to the System B. That said, please also note that with a 1:1 profit target in the System A, you need a %win rate of more than 50% for it to be profitable. In other words, if you use a 1:1 profit target, more than half of your trades MUST be wins or the system will cost you money. So if you still love the idea of a free ride on the other half of your position, just make sure that you achieve a 50%+ win rate on the first half exited at 1:1. I know that a free ride feels good -- just make sure you don't have to pay for it.

Now back to zinc6's results…

For the sake of discussion, let R be our measure of losses and profits, i.e. if a trade is stopped out, we have a 1R loss. If it is closed at 1:1, we have a 1R profit. If it is closed at 2:1, we have a 2R profit. If it is closed at 10:1, we have a 10R profit. Etc.

Then, average profit per trade in Rs = ( profit target in Rs * number of wins – 1R * number of losses ) / number of trades

For example, let's say we trade EUR/USD with a 2:1 profit target. Based on the results from the table, we would have:
average profit per trade in Rs = ( 2R * 41 – 1R * 96) / 137 = -0.102R
In other words, if you had traded EUR/USD only using DIBS in the Oct 2007 - Apr 2008 period with a 2:1 profit target, then based on zinc6's results, you would have achieved a -0.102R loss per trade.


I have made similar calculations for the other data in the table. Here are my results:

DIBS Trading Results for the Period Between Oct 2007 - Apr 2008 based on zinc6's Backtest:

EUR/USD with a 1:1 profit target: -0.036R loss per trade
EUR/USD with a 2:1 profit target: -0.102R loss per trade
EUR/USD with a 3:1 profit target: -0.153R loss per trade
EUR/USD with a 4:1 profit target: -0.088R loss per trade
EUR/USD with a 5:1 profit target: 0.007R profit per trade
EUR/USD with a 10:1 profit target: 0.365R profit per trade

GBP/USD with a 1:1 profit target: 0.152R profit per trade
GBP/USD with a 2:1 profit target: 0.248R profit per trade
GBP/USD with a 3:1 profit target: 0.376R profit per trade
GBP/USD with a 4:1 profit target: 0.280R profit per trade
GBP/USD with a 5:1 profit target: 0.248R profit per trade
GBP/USD with a 10:1 profit target: 0.056R profit per trade

USD/JPY with a 1:1 profit target: -0.122R loss per trade
USD/JPY with a 2:1 profit target: -0.201R loss per trade
USD/JPY with a 3:1 profit target: -0.223R loss per trade
USD/JPY with a 4:1 profit target: -0.173R loss per trade
USD/JPY with a 5:1 profit target: -0.180R loss per trade
USD/JPY with a 10:1 profit target: -0.446R loss per trade

USD/CHF with a 1:1 profit target: -0.174R loss per trade
USD/CHF with a 2:1 profit target: -0.239R loss per trade
USD/CHF with a 3:1 profit target: -0.217R loss per trade
USD/CHF with a 4:1 profit target: -0.167R loss per trade
USD/CHF with a 5:1 profit target: -0.087R loss per trade
USD/CHF with a 10:1 profit target: 0.116R profit per trade

All four pairs with a 1:1 profit target: -0.045R loss per trade on average
All four pairs with a 2:1 profit target: -0.074R loss per trade on average
All four pairs with a 3:1 profit target: -0.054R loss per trade on average
All four pairs with a 4:1 profit target: -0.037R loss per trade on average
All four pairs with a 5:1 profit target: -0.003R loss per trade on average
All four pairs with a 10:1 profit target: 0.023R profit per trade on average


FINAL NOTE: By no means do I want to imply that DIBS does not work. It may be a perfect and hugely profitable system. The testing period was far too short to draw any valid conclusions. In order to properly evaluate the system, you would need to extend it to at least 5 years, IMHO. Based on zinc6's results, I can only say that it is possible that the greatest potential of the DIBS methodology is in being ready to ride well beyond the 10R target in EVERY TRADE. It is also possible that exiting part of your position at a 1:1 target might cost you money, i.e. you have to pay for your "free" ride on the remaining portion. In any case, you can't make a mistake by doing your own detailed research before allocating your money to trading any system or technique.

To all those who say that they don't care about backtest results of mechanical systems because they rely on discretion to be profitable when trading a technique, let me offer my sincere congratulations. What you say in essence is this: "My discretionary skills are so great that I can even turn a losing mechanical system into a profitable one." Again, hats off to you!

Leonardo Follower

I guess it means something.....

Leo Follower,

I'm finding that one of the most productive tweaks is not being too quick to exit half. If the breakout is strong, holding both halves until a stall or retrace seems to improve results. On the other hand, if the breakout barely moves you into the trade, and then price languishes, I'll implement the take half at 1:1 rule (if it is indeed reached). This thought is similar to using a time stop.

Free Ride is simply a term we use when we take half and reduce risk. You make a good point--nothing is for free. The risk reduction only can happen if the we get to 1:1. It is important to note that when dividing the system as you did, if the first part (System A) of the system were a consistent winner, it would make sense to trade that alone. Of course the first half of the system involves risk.

You've obviously done some real work here. Are you saying results might be better by not even entering the first half (System A) of the trade? I think part of the key is letting A run a little longer if it is willing.

All the best
Bill

Taking profits at 1:1 is the one aspect of DIBS that I have had some trouble adjusting too and had to let it go. The reason is the following.
Trading 2 full lots.

10 trades letting profit run.
3 BE = 0
5 Losses = 2(300 X 5) = 3000
2 Wins@ 180 PIPS = 2x(180 X 20) = 7200
Profit = 7200 - 3000 = 3200

Same 10 Trades w/ taking 1 lot profit at 30 PIPS.
3 BE = 0
5 Losses = 3000
2 Wins@ 180 PIPS = 1st Lot = 300 + 300 =600
Two lots 2(180X10) = 3600
Profit = 1200

With letting your profit run you could take 6 losses and still break even.

By the very nature of taking a 1:1 profit you go against the 'Let your profits run" maxim.

By paying astute attention to which market is the 'hot hand' - as Billflet so succinctly describes, one can increase their profits by not taking the 1:1 win.
Added Note: I am a trend following trader. I am used to chipping out small losses trying to catch the trend so not taking the 1:1 comes naturally for me. This may not be the situation with your style of trade. I also have modified the DIBS - I do not do hourly.

That graph that was done by zinc6 is very helpfull and puts things into somewhat a perspective when it comes to the long term expectations.
But that is assuming you take very single trade that comes.

However what you guys are failing to take into account is that a lot of good dibs trades occur at heavy support and resistance lines especially on swing highs and lows or after heavy runs in one direction. So having said that a somewhat experience trader can filter out a lot of the obvious risky dibs trades and stick only to the high probability ones.

And the outcome of that kind of trading will be quite different then taking every single dibs trade that comes along.

The fact is a purely mechanical system never works in the forex market because conditions are always changing and each trade is unique.

So we go back to the golden rule and that is the trader that makes the system work not the other way around.

Remember peter crown in one of his posts identified that he knows when a breakout is 5-7 times more likely to break strong and that is when the probabilities are in his favor.

That is what ultimately will either make or break you in the long term.

Quote:
"In essesence 50% of trades reach at least 1:1 R prior to being stopped out."

So basically half the work is already done for you by the system for the most part.

The trader's job is to identify which trades have the most potential and filter out the traders that don't have as much potential so you can tip the odds in your favour. Add to that letting some of those high probability trades run for longer periods where you can catch larger r:r and you have it made.

Patience here will play a large role so that is another psychological challenge.

Peter crowns gave is the basics it is up to each trader individually to select
the trades and to manage them.

This is a perfect example of a risky DIBS trade that is up against heavy resistance. Price tried to punch through 2 times before that and this IB
was right up against it. Why would u risk it and take a buy in this situation?

This was a very preventable loss for anyone who took this. When u learn to eliminate these it will make a big difference in your account.

"Its not having losers that sink accounts, its keeping them." And I would also say "adding to them."

Good stuff. Thanks.

Jim

Good job you hav a Minimal Loss Stop in place. These are the setups I wouldn't want to miss beacause you know what the say about Triple Tops... They Don't Last.

"enter before others"? I think that is the premise of the method.

i am not advocating this, only saying that it is a double-edged sword


EDIT: sorry but i can't help ask it: Why would you hide your account number? Are you afraid to lose your demo pips?

thought it was my real one thats why i blocked it out

hehehe, mas será q vc pensou o mesmo q eu?

The chart posted , in my opinion, is almost screaming to me..... "I'm going to decide!". As you said, maybe price couldn't resist breaking the triple top, maybe it would dive... (as it did).... but I think it wouldn't be around there too much, as we saw (very strong resistance... it's a "break it or leave it" situation).... giving DIBS a try, who knows we don't get a hit-and-run? I would also put a sell order at the lower limits to catch a dive.... just thoughts...

Cheers!

could we know these details? Or if you prefer could you sent me a pm?

thanks in advance.