DislikedTrend is determined by open of the 6GMT candle right?
But what about the "normal" daily close at 0:00??
According to Peter both of them needs to be in Line for a buy/sell trade.Ignored
The DIBS Method... No Free Lunch continues
thank you very much for helping me out- #3,987
- Edited 8:57am Jul 17, 2008 8:31am | Edited 8:57am
I just got stopped out for some nice profits on todays trades for both EC and UJ. I'm out for the rest of the day. See ya'll tomorrow!
Nice going....
e/c...is that eur/chf?
One more thing...given to the fact that at this moment, the g/u has gone up about the same amount of pips that it has gone down (using our open price @ 6gmt)...would you consider that we have a neutral(ranging) situation and that we could consider going either way? I am aware of the established direction but we do have discretion in our toolbox right? I would appreciate your take on this (other people opinion are also welcomed).
Thanks
Unus pro omnibus, omnes pro uno
Hi Moneda,
I believe that if price is above the daily open (as it is now), we should go long. I just took a dibs trade long on GU, but it did not have a whole lot of strength, so I exited with +10 after it fell back from +14. It may eventually continue to move up and hit my original TP, but I'd rather take what it gives me when it's willing to give it to me.
The fact that it is trading above and below the open is probably an indication that, until we see more definite movement, we should exercise some additional caution.
You always have discretion, of course, since the only player in your game is -- you! My personal discretion involves using the actual daily open at 0000Z as well as the suggested open of 0600Z, and I will trade a nice IB based on how I feel about the overall chart, taking both levels into consideration, among other things...
I believe that if price is above the daily open (as it is now), we should go long. I just took a dibs trade long on GU, but it did not have a whole lot of strength, so I exited with +10 after it fell back from +14. It may eventually continue to move up and hit my original TP, but I'd rather take what it gives me when it's willing to give it to me.
The fact that it is trading above and below the open is probably an indication that, until we see more definite movement, we should exercise some additional caution.You always have discretion, of course, since the only player in your game is -- you! My personal discretion involves using the actual daily open at 0000Z as well as the suggested open of 0600Z, and I will trade a nice IB based on how I feel about the overall chart, taking both levels into consideration, among other things...
NAL,
Nice going....
e/c...is that eur/chf?
One more thing...given to the fact that at this moment, the g/u has gone up about the same amount of pips that it has gone down (using our open price @ 6gmt)...would you consider that we have a neutral(ranging) situation and that we could consider going either way? I am aware of the established direction but we do have discretion in our toolbox right? I would appreciate your take on this (other people opinion are also welcomed).
Thanks
Jeff Singer, K2KV
- #3,990
- Jul 17, 2008 4:52pm Jul 17, 2008 4:52pm
- Joined Nov 2007 | Status: Trader | 3,060 Posts
here is an observation on dibs for what its worth
i like to see a false breakout then a break the other way.... from support wicks area this seems to work well... measure the bars and how far she went too very interresting
i like to see a false breakout then a break the other way.... from support wicks area this seems to work well... measure the bars and how far she went too very interresting
- #3,991
- Edited 11:07pm Jul 17, 2008 4:57pm | Edited 11:07pm
- Joined Sep 2006 | Status: ... | 8,112 Posts
In my previous three posts (#3910, #3945, #3952) I attempted to shed light on how Peter Crowns and TRT might have used DIBS to achieve their (alleged) success.
Let’s recap, and then I’ll add some more material.
The key to the IB (note: Peter says that he trades pennant based entries also) is that its narrow range provides low risk entries, since the SL is placed at the opposite side of the IB. Since every candle’s high/low represents some kind of S/R on a lower timeframe, an IB also identifies an area of market contraction, from which an explosive breakout is potentially possible. There are many days when the market moves primarily in one direction, several times the height of the IB. The smaller the IB, the greater the RR (and the lower the win rate needed to break even in the long term).
Peter talks about how some breakouts are 2-5 times more likely to be profitable than others. TRT has partly revealed his approach to MM, and that involves increasing position size on higher probability setups (as a fellow ex-Blackjack pro, he understands very well how this can skyrocket profits). He has a "sure breakout method" in which he places 3x his normal pos size (alas, I don’t know the rules for this setup). Returning to DIBS, the key is to know which IBs are potentially more profitable than others. Peter/TRT have performed back-tests over decades worth of data. In post #3945 of this thread I suggested some possibilities that somebody might like to back-test. Of course I’m only guessing; Peter’s "secret(s)" might involve something completely different.
One edge Peter does discuss is the importance of trading with the confluence of the daily move (to date). He also briefly alludes to the importance of higher timeframes: "If you are also in tune with the weekly and monthly trends is when it gets exciting!". As I stated back in post #3952, TRT trades a system based solely on an opening range breakout in the week, which is profitable in its own right.
OK, thus far we have a low risk entry, with potentially high RR, an (unknown) means of calculating its potential, and its pos size weighted accordingly.
Peter states that DIBS exits are discretionary. However, in the method that he outlined, my understanding is that the SL remains fixed, but half the position is taken off at 1:1 RR. Thus if the trade stops out, the net result will be breakeven. Hence at this point Peter has acquired himself a "free trade".
Let's move onto TRT’s discussion on RR. In post #504 in "No Free Lunch", he talks about the secret being "long tails", RR of anything up to 450:1. In his weekly ORB system, the SL remains fixed for the week, and I suspect that with DIBS it is fixed indefinitely. Eventually, one will catch a major trend that lasts weeks, or months, without being stopped out. In other words, if played this way, DIBS is potentially offering returns of long-term magnitude (e.g. several hundred pips), with only an intraday timeframe level of risk (e.g. 10-20 pips). If the trade also happens to coincide with positive carry, then over several weeks/months, this will also become very significant. TRT discusses this possibility excitedly as forex’s "Unique Edge #1" elsewhere.
Furthermore, each day, the DIBS setup potentially allows additional trades to be added to an existing one, which, if likewise allowed to run by the market, will pyramid the overall effect.
Here is TRT on "how to make $1,000,000 from trading" (copied from http://www.forexfactory.com/showthread.php?p=205799, emphasis mine):
"Here's an example of 10 thousand trades. Of these trades, you might lose on 6000 of them for small losses, win on 3800 of them for moderate profits, and win fairly big on 200 of them. You make your million from this series of trades by losing only $9 million on your total of losing trades while making $10 million dollars on your total of profitable trades. This means averaging $50 a trade per lot or contract (in the case of futures), which is really good after expenses. Very doable with robust methods. And, you have to stay on your game or you won't do this well.
But this is nothing like you've been promised by the "gurus" and promoters of the "money per day" foolishness."
The section I’ve bolded mirrors the DIBS philosophy. With DIBS, there are going to be hundreds of small losses, due to noise triggering the tight SL. However, a good many of the trades will reach the "free trade" status. The exit is discretionary, but if the SL remains fixed, the remaining half of the trade will, over time, either return to the SL, resulting in breakeven, or run away from the SL to become a "home run" trade.
As with any system, the key is net expectancy. Since we need not consider the breakeven trades, the question is whether enough home runs occur to compensate for the many small losses. (In other words, even an RR of 300:1 will fail if the system wins less than once in every 300 trades). Both Peter and TRT stress how important it is to shrug off losses. This is essentially a re-hash of the Turtle trading concept introduced many years ago by Richard Dennis and William Eckhardt. The assumption is that a prolonged trend must eventually occur, compensating the trader for his patience. I would point out that, the lower a system’s win rate, the larger the trade sample size must be, in order to attain a statistically valid back-test (to explain simply with an extreme example, if a system has a win rate of 1%, then testing it over a 500 trade sample would be meaningless, since just one winning trade above or below the five needed to break even makes a huge difference to expectancy, and that one could be "fortuitous"). Having said that, Peter and TRT claim to have been trading for more than 45 years between them.
Well, that’s my take on DIBS, for whatever it’s worth.
Peter slammed anybody who dared to suggest that the method should be tweaked (by adding indicators, optimizing SL levels, etc) on the basis of a handful of recent losses (see post #438 in "No Free Lunch"). DIBS has been tested over decades and its effectiveness is dependent on the robustness of its overall concept, rather than any to-the-pip precision in the numbers. Anybody who is conducting a post-mortem analysis as to how each individual trade could have been improved, as opposed to simply putting losses behind them and trusting in the long term potential of the system, is completely missing the point.
[EDIT] Here is TRT on the "long term outlook" needed to succeed (sourced from the same post as above):
"Almost like the chicken and the egg. To know something has an edge you have to know what an edge is.
Quickly, name all your friends who have that going for them. A couple of great trades, or a month of great trades, or a year of great trades is nowhere near enough. To make 50 thousand-plus trades and be ahead, to be able to survive years of changing markets, politicians, governments, wives, ex-wives, good health, bad health--- while trading profitably is what you need from an edge."
I will end with a question. To produce a free trade, it makes no difference whether half profit is taken off at 1:1 RR, or the SL is moved to breakeven. Peter apparently recommends the former. The trade-off (as I see it) being that this gives price more subsequent room to move initially, but the halved pos size is going to cut profits from all winning trades by 50%. If the DIBS philosophy is to let profits run (note Peter’s comment: "the best trades for us are the ones that don't give you ANY retracement after the breakout"), then I would have thought that the object would be to let as much of the position run as possible. Comments, anybody?
David
Let’s recap, and then I’ll add some more material.
The key to the IB (note: Peter says that he trades pennant based entries also) is that its narrow range provides low risk entries, since the SL is placed at the opposite side of the IB. Since every candle’s high/low represents some kind of S/R on a lower timeframe, an IB also identifies an area of market contraction, from which an explosive breakout is potentially possible. There are many days when the market moves primarily in one direction, several times the height of the IB. The smaller the IB, the greater the RR (and the lower the win rate needed to break even in the long term).
Peter talks about how some breakouts are 2-5 times more likely to be profitable than others. TRT has partly revealed his approach to MM, and that involves increasing position size on higher probability setups (as a fellow ex-Blackjack pro, he understands very well how this can skyrocket profits). He has a "sure breakout method" in which he places 3x his normal pos size (alas, I don’t know the rules for this setup). Returning to DIBS, the key is to know which IBs are potentially more profitable than others. Peter/TRT have performed back-tests over decades worth of data. In post #3945 of this thread I suggested some possibilities that somebody might like to back-test. Of course I’m only guessing; Peter’s "secret(s)" might involve something completely different.
One edge Peter does discuss is the importance of trading with the confluence of the daily move (to date). He also briefly alludes to the importance of higher timeframes: "If you are also in tune with the weekly and monthly trends is when it gets exciting!". As I stated back in post #3952, TRT trades a system based solely on an opening range breakout in the week, which is profitable in its own right.
OK, thus far we have a low risk entry, with potentially high RR, an (unknown) means of calculating its potential, and its pos size weighted accordingly.
Peter states that DIBS exits are discretionary. However, in the method that he outlined, my understanding is that the SL remains fixed, but half the position is taken off at 1:1 RR. Thus if the trade stops out, the net result will be breakeven. Hence at this point Peter has acquired himself a "free trade".
Let's move onto TRT’s discussion on RR. In post #504 in "No Free Lunch", he talks about the secret being "long tails", RR of anything up to 450:1. In his weekly ORB system, the SL remains fixed for the week, and I suspect that with DIBS it is fixed indefinitely. Eventually, one will catch a major trend that lasts weeks, or months, without being stopped out. In other words, if played this way, DIBS is potentially offering returns of long-term magnitude (e.g. several hundred pips), with only an intraday timeframe level of risk (e.g. 10-20 pips). If the trade also happens to coincide with positive carry, then over several weeks/months, this will also become very significant. TRT discusses this possibility excitedly as forex’s "Unique Edge #1" elsewhere.
Furthermore, each day, the DIBS setup potentially allows additional trades to be added to an existing one, which, if likewise allowed to run by the market, will pyramid the overall effect.
Here is TRT on "how to make $1,000,000 from trading" (copied from http://www.forexfactory.com/showthread.php?p=205799, emphasis mine):
"Here's an example of 10 thousand trades. Of these trades, you might lose on 6000 of them for small losses, win on 3800 of them for moderate profits, and win fairly big on 200 of them. You make your million from this series of trades by losing only $9 million on your total of losing trades while making $10 million dollars on your total of profitable trades. This means averaging $50 a trade per lot or contract (in the case of futures), which is really good after expenses. Very doable with robust methods. And, you have to stay on your game or you won't do this well.
But this is nothing like you've been promised by the "gurus" and promoters of the "money per day" foolishness."
The section I’ve bolded mirrors the DIBS philosophy. With DIBS, there are going to be hundreds of small losses, due to noise triggering the tight SL. However, a good many of the trades will reach the "free trade" status. The exit is discretionary, but if the SL remains fixed, the remaining half of the trade will, over time, either return to the SL, resulting in breakeven, or run away from the SL to become a "home run" trade.
As with any system, the key is net expectancy. Since we need not consider the breakeven trades, the question is whether enough home runs occur to compensate for the many small losses. (In other words, even an RR of 300:1 will fail if the system wins less than once in every 300 trades). Both Peter and TRT stress how important it is to shrug off losses. This is essentially a re-hash of the Turtle trading concept introduced many years ago by Richard Dennis and William Eckhardt. The assumption is that a prolonged trend must eventually occur, compensating the trader for his patience. I would point out that, the lower a system’s win rate, the larger the trade sample size must be, in order to attain a statistically valid back-test (to explain simply with an extreme example, if a system has a win rate of 1%, then testing it over a 500 trade sample would be meaningless, since just one winning trade above or below the five needed to break even makes a huge difference to expectancy, and that one could be "fortuitous"). Having said that, Peter and TRT claim to have been trading for more than 45 years between them.
Well, that’s my take on DIBS, for whatever it’s worth.
Peter slammed anybody who dared to suggest that the method should be tweaked (by adding indicators, optimizing SL levels, etc) on the basis of a handful of recent losses (see post #438 in "No Free Lunch"). DIBS has been tested over decades and its effectiveness is dependent on the robustness of its overall concept, rather than any to-the-pip precision in the numbers. Anybody who is conducting a post-mortem analysis as to how each individual trade could have been improved, as opposed to simply putting losses behind them and trusting in the long term potential of the system, is completely missing the point.
[EDIT] Here is TRT on the "long term outlook" needed to succeed (sourced from the same post as above):
"Almost like the chicken and the egg. To know something has an edge you have to know what an edge is.
Quickly, name all your friends who have that going for them. A couple of great trades, or a month of great trades, or a year of great trades is nowhere near enough. To make 50 thousand-plus trades and be ahead, to be able to survive years of changing markets, politicians, governments, wives, ex-wives, good health, bad health--- while trading profitably is what you need from an edge."
I will end with a question. To produce a free trade, it makes no difference whether half profit is taken off at 1:1 RR, or the SL is moved to breakeven. Peter apparently recommends the former. The trade-off (as I see it) being that this gives price more subsequent room to move initially, but the halved pos size is going to cut profits from all winning trades by 50%. If the DIBS philosophy is to let profits run (note Peter’s comment: "the best trades for us are the ones that don't give you ANY retracement after the breakout"), then I would have thought that the object would be to let as much of the position run as possible. Comments, anybody?
David
- #3,996
- Jul 18, 2008 3:28am Jul 18, 2008 3:28am
- | Joined Sep 2007 | Status: Breakout Baby | 692 Posts
NAL,
Nice going....
e/c...is that eur/chf?
One more thing...given to the fact that at this moment, the g/u has gone up about the same amount of pips that it has gone down (using our open price @ 6gmt)...would you consider that we have a neutral(ranging) situation and that we could consider going either way? I am aware of the established direction but we do have discretion in our toolbox right? I would appreciate your take on this (other people opinion are also welcomed).
Thanks
Although I feel I'm doing pretty good with my entries, that's not what I should be working on - it's psychology. I didn't follow the golden rule of letting the profits run. If I had I would at this moment be up twice as much as I got yesterday, and who knows how far this can go? It might have been one of those runners PC talks about. A lesson learned I guess...
On to your question. I would see that as one day on indecision. Since we are seeing a USD bull at the moment after a USD bear and the GU (or EU for that matter) isn't moving I wouldn't consider trading this pair at the moment until we see some direction, preferebly in the USD direction. Now the move can come in two ways: either we get a contraction in price (like a triangle) and then a breakout or just a rangebound breakout (where price tries to break out of a level of s/r). So this doesn't mean that we can't trade this pair, it means that we have to be patient for good setups.
The way I see it at the moment is that on the majors we are either buying or selling the USD. Which currency to buy/sell against the USD depends on the setups we get.
- #4,000
- Jul 18, 2008 4:03am Jul 18, 2008 4:03am
- Joined Jun 2007 | Status: Be yourself, everyone else is taken | 2,734 Posts
