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The DIBS Method... No Free Lunch continues

  • #4,101
  • Jul 27, 2008 10:46am Jul 27, 2008 10:46am
Quoting highneb
If it was possible to make money from DIBS. The hedge funds would be pumping money into it in the billions. This technique is as old as the hills, and very easy to program into a computer. My opinion is this way of making money is too easy and my back testing 'backs' this up. An inside bar is simply a pause in the market, a concept as old as stocks and currencies themselves.

I know there are some great DIBS trades out there, but if the gains are cancelled out by lots of small losses, we may as well toss a coin.
My view is that the people who make money from Dibs have developed a method to filter their trades. I myself am still developing my filter and I am only trading very small size when my day job allows. However I am slightly in profit.

What I have found is that by filtering you avoid those scenarios when the market is mid range or perhaps whipsawing. A few weeks back I probably only took 3 trades in 2 weeks and I think all were losers. The markets werern't doing much.

As I say I am still trying to tune my approach and it does mean I miss some DIBS trades that move quite a lot, but hopefully it will work for me.

I think this is the only way any method based trading approach can work consistently.

Verno
  • #4,102
  • Jul 27, 2008 11:32am Jul 27, 2008 11:32am
Quoting verno
My view is that the people who make money from Dibs have developed a method to filter their trades. I myself am still developing my filter and I am only trading very small size when my day job allows. However I am slightly in profit.

What I have found is that by filtering you avoid those scenarios when the market is mid range or perhaps whipsawing. A few weeks back I probably only took 3 trades in 2 weeks and I think all were losers. The markets werern't doing much.

As I say I am still trying to tune my approach and it does mean I miss some DIBS trades that move quite a lot, but hopefully it will work for me.

I think this is the only way any method based trading approach can work consistently.

Verno
Excellent post.
DIBS does not work when applied mechanically, thats my point. It can only work as a within a discretionary stratagy... and so the question arises, how do we filter or choose our signals?
  • #4,103
  • Edited 12:02pm Jul 27, 2008 11:38am | Edited 12:02pm
To answer this comment from Johnny: "and ib is not the market resting it is a BREAKOUT pattern duh!!!"

An IB is a pause, or if you like, a lessening of the volatility. What follows after is the breakout...

In response to the 'car' comparison. If the long term 'expectation of DIBS is 51%, then it doesn't matter who is trading it.. expert or novice, the chances of winning on a trade are still 51%.

As to the comments regarding the futility of backtesting: It would take a brave man/woman to apply a strategy that hasn't worked in the past.

I don't belive an IB on the hour chart is significant enough to give the trader a big enough edge to beat the spread. I have spent at least 2 weekends backtesting DIBS and this is what I found.
  • #4,104
  • Jul 27, 2008 11:51am Jul 27, 2008 11:51am
..and whats more (you guys won't like this), I predict this thread will slowly fade as more and more traders find they are breaking even at best... we will see.
  • #4,105
  • Jul 27, 2008 12:29pm Jul 27, 2008 12:29pm
Quoting highneb
..and whats more (you guys won't like this), I predict this thread will slowly fade as more and more traders find they are breaking even at best... we will see.
Is he having an argument with any1? I will advice you find another thread if you can't find solace here.
  • #4,106
  • Jul 27, 2008 12:48pm Jul 27, 2008 12:48pm
Quoting dito
dibs = car
traders = women

women cant drive. is not the cars fault
traders cant manage to profit from dibs. its not dibs fault.

anyway a single trade has like 4 element, entry, exit, risk exposure, and rrr with proper s/r identification. dibs is entry element.

imagine you driving a car only know how to push gas pedal, without knowing when to turn or when to brake. *splat*

Sorry but this is just way too sexist a comment to ignore
Never say never.
  • #4,107
  • Jul 27, 2008 1:21pm Jul 27, 2008 1:21pm
I apologize, it is meant to be a common joke. If it is really unacceptable, please delete this. (I dont know how to delete a post).
  • #4,108
  • Jul 27, 2008 1:23pm Jul 27, 2008 1:23pm
Quoting highneb
..and whats more (you guys won't like this), I predict this thread will slowly fade as more and more traders find they are breaking even at best... we will see.
The fading has already started if you didn't notice, and the reason is because many don't understand the strategy. Of course it's not a mechanical system, and if you had read the thread like you said then you wouldn't write that in your posts, it's been said over and over again that this is not a mechanical approach. PC's approach is not mechanical, and that's not mine either.

PC says himself that he knows which DIBS trades that has a higher probabilty, and that's his discression. Do you think that you can say the same? If not, how can you say that it's at best a BE system?

If you could go back one year and trade with DIBS and post it here, I would happily give you some contructive criticism. But to give you that you have to give me a reason to why you are entering every trade (besides that it's an IB), and that means you have to give me the overall picture s/r points, trendlines, and some fundamental analysis and whatever else you use (no indicators though as I don't use them). And you also have to tell me if you're trading a hot pair (and why it is a hot pair). And also I want to know how you are trailing your stops, and what you think that the rrr (risk:reward ratio) is, your entries, BE point, and stoplosses. Only then will your backtesting have some meaning. This should (if done in a meaningfull way) take some time. Could you do this? If not, I would suggest that you stop posting on this thread so we don't have to deal with this day in and day out - thank you!
  • #4,109
  • Jul 27, 2008 1:40pm Jul 27, 2008 1:40pm
Quoting highneb
..and whats more (you guys won't like this), I predict this thread will slowly fade as more and more traders find they are breaking even at best... we will see.
I like this, it's funny

I trade this system as my main daily strategy. I use trendlines, fibs, sup/res, no indicators, trail my stop and I love the signals and filters that the DIBS gives.
Sometime I decide not to trade: major news, not convincing technicals or fundamentals, against the main trend, Monday morning GMT, Friday afternoon GMT, holiday weeks and my gut feeling.
Been constantly profitable since the implement of DIBS.
  • #4,110
  • Jul 27, 2008 1:42pm Jul 27, 2008 1:42pm
Quoting dito
I apologize, it is meant to be a common joke. If it is really unacceptable, please delete this. (I dont know how to delete a post).
No harm done, I am sure it was just a joke...still I had to say something
Never say never.
  • #4,111
  • Jul 27, 2008 1:44pm Jul 27, 2008 1:44pm
Quoting highneb
..and whats more (you guys won't like this), I predict this thread will slowly fade as more and more traders find they are breaking even at best... we will see.
Do you also predict eur/usd to go to 1.4?
  • #4,112
  • Jul 27, 2008 1:58pm Jul 27, 2008 1:58pm
Thanks for a very interesting reply.

Even though there are calls for me to 'leave this thread'. Very important points are coming out, which will be of benefit to those wishing to try this method.

how does Peter 'know' that it is a high probability trade?

The last post states that we should use trendlines, fundamental analysis, support and resistance, and whether or not the pair is 'hot' before making a DIBS trade. This is very different to the more-or-less mechanical approach that peter laid out.

The original DIBS strategy outlined by Peter gives approximately a break even result when back tested over a decent length of time.

With that as a foundation it will be exceptionally difficult to make your millions.
  • #4,113
  • Edited 2:27pm Jul 27, 2008 2:05pm | Edited 2:27pm
Just my opinion

I believe that in general women can become some of the best traders due to the way they are wired.

Recently I played put put golf with my niece, all the guys wanted to get a hole in one, she was only going for a hole in two. She won everyone else but me, and gave me a run for the money, we bet two dollars. I was also happy with getting a hole in two. I could not help my self but to wonder how the "hole in one" mindset hinders men in trading.

Best regards

Dale
  • #4,114
  • Jul 27, 2008 2:14pm Jul 27, 2008 2:14pm
Quoting highneb
Excellent post.
DIBS does not work when applied mechanically, thats my point. It can only work as a within a discretionary stratagy... and so the question arises, how do we filter or choose our signals?
My filters are based on trying to identify a trend and then taking DIBS inline with trends.

The 10 million dollar question is how you identify the trend. I don't have that answer

  • #4,115
  • Jul 27, 2008 2:16pm Jul 27, 2008 2:16pm
Quoting highneb
Thanks for a very interesting reply.

Even though there are calls for me to 'leave this thread'. Very important points are coming out, which will be of benefit to those wishing to try this method.

how does Peter 'know' that it is a high probability trade?

The last post states that we should use trendlines, fundamental analysis, support and resistance, and whether or not the pair is 'hot' before making a DIBS trade. This is very different to the more-or-less mechanical approach that peter laid out.

The original DIBS strategy outlined by Peter gives approximately a break even result when back tested over a decent length of time.

With that as a foundation it will be exceptionally difficult to make your millions.
Hi, I didn't state that "We should use..." but that I use it.
I don't think Peter is teaching a strategy but just gave information about one that he uses, then the objective of this thread was to test it and see how it goes. If you believe that 95% of traders loose, you should also accept that for each system traded 95% loose, but we should have this 5% who makes profit, why is that? I tried various "profitable" system, but I couldn't profit, even from those that are very mechanical and easy to follow.

I personally look at DIBS, as a trend continuation signal. If I get a DIBS trade in front of a strong level of sup/res, I might not take it, as an IB could also indicate a reverse, and we know that.
I don't believe in mechanical trading, EA's, trading software and blind trust of my system, even if I know that some experienced profitable traders might say I'm wrong. I also never backtest anything, there are too many fact to consider to know if I would have taken or not that trade in the past.
  • #4,116
  • Jul 27, 2008 2:19pm Jul 27, 2008 2:19pm
Quoting verno
My filters are based on trying to identify a trend and then taking DIBS inline with trends.

The 10 million dollar question is how you identify the trend. I don't have that answer


I'll give you to the 10million $ answer.

Jacko's advice, show the chart to a 5 year old and ask him if the lines are going up or down
Multiple higher TF would help IMO
  • #4,117
  • Edited 5:41pm Jul 27, 2008 2:25pm | Edited 5:41pm
I will make one huge point at this juncture.

The fact that a promising simple system is difficult to back test should be a flashing light to you.

A good thing.

Anything easy to implement and test is also easy to destroy. DIBS will be more difficult to destroy because no two of you will trade the concept the same way.

-Peter Crowns-

PS: I am impressed with the effort so many of you have expended. -zinc6- Within your breakdown of potential profits you have given away the greatest potential of the method. PC

(I did get an email from a reader of this thread (Matt) who also used to be on the floor. He wasn't exactly happy that I was telling these details of floor trading. Well, my answer was: "These are very big markets and anything I might reveal is unlikely to matter much since very few will believe that profitable trading can be simple. Most are looking for some special complex answer. It isn't there!")


I've been accused by my friend -TheRealThing- that I am one of the most reluctant traders he's known.
Even more reluctant than him.

I don't think that is bad. I only like to take trades that have low risk and are in the direction of least resistance, the main trend.

Thanks again -soso- for the question.

Now I have to watch the Kentucky Derby the sport of kings, and recliner bound traders after a long spring----

-Peter Crowns-
If you were trading purely mechanically, taking all breakouts that fit the DIBS concept--, you would have definitely taken that short (and been stopped out, not a major catastrophe) prior to the long trade created by the upside breakout of the inside bar. If you had absolutely no other idea about the market than DIBS indications you could and probably should.


Peter say so much with so few words.
  • #4,118
  • Jul 27, 2008 2:44pm Jul 27, 2008 2:44pm
and I quote PC.....

A)'Obviously, it would logically follow that the currencies which are up more are better buys and the ones down more are the better shorts. So basically, if you get a buy setup forming on two strong currencies, take the trade on the one up most on the day.'

B)'Once you know which markets to trade, and in which directions--- it is a pretty simple job.'

C)'You will notice that almost all of the breakouts were significant enough for you to make a very good shorter term trade, some you could have trailed most of them with a form of trailing stop (moving average) and still be in hundreds of pips after entry with a small stop at the other side of the inside bar. I am not willing to remain in a trade 1 minute longer than absolutely necessary if it is going against me, but I'm willing to hold for months if a trade is going my way in a larger trend. Swings and all. You do get used to them after you start collecting some gargantuan profits.'

D) 'There are "secrets" of trading that are known to a few of us. These secrets buy our multi-million-dollar homes and lives of relative security.'

Some of them are very simple- but not known or able to be exploited by many. You actually only need one good one to gain entry to a world that no one ever really sees, until you're there yourself.

And, contrary to some common beliefs, not all breakouts are the same. I know which breakouts have 2 - 5 times the edge of similar-looking breakouts others take, get frustrated with, and likely lose money trading if they don't have perfect skills.



So.......

I believe that if DIBS trading is not profitable for some or is BE or barely profitable we must go back to what we know, or what has been made known to us. For those that say it is not working,

1) are you trading the hot hand no matter what and taking the trade up or down the most on the day?

2) Are you allowing your trades to run as long as possible? PC said that a trade or two part of a larger trend can represent half of the years profits...that is a big deal guys and I would say vital to the reality of DIBS and it's profitability....if you are jumping out to soon and getting scared off by swings and so on then you are essentially not trading DIBS.....it least not the way PC does.....and after all HE is the one with the multi-million dollar home right?

3) PC said not all breakouts are the same.....this deserves more attention then it has gotten, it deserves 3 times the attention that time frames and GMt has gotten....and while there are things that PC knows that we do not we must venture into this territory whether we have his kind of access or not. He said "there are secrets"....he also said that if we are willing to pull out all the stops we will get to where we are trying to get to....this I say is a race worth running, so let's get into any kind of details we can about breakouts with the "better edge".

5) PC says

"Some of them are very simple- but not known or able to be exploited by many. You actually only need one good one to gain entry to a world that no one ever really sees, until you're there yourself."

I believe he has given us enough info through DIBS to say that we have a decent shot in gaining entry into a world that noone really sees...he said though it would require pulling out all the stops so it will not be easy forsure.

I would like to hear from Jarroo ans others that contributed heavily and lead the way throughout most of this thread....how is DIBS going, how are the returns?
The way is narrow
  • #4,119
  • Jul 27, 2008 3:15pm Jul 27, 2008 3:15pm
Quoting highneb
The original DIBS strategy outlined by Peter gives approximately a break even result when back tested over a decent length of time.
Highneb,

Thanks for reporting your backtest results. PC was very specific about the entry rules but not so much about exits. May I ask what exit rules have you backtested?

Leonardo Follower
  • #4,120
  • Jul 27, 2008 5:42pm Jul 27, 2008 5:42pm
Quoting highneb
If it was possible to make money from DIBS. The hedge funds would be pumping money into it in the billions. This technique is as old as the hills, and very easy to program into a computer. My opinion is this way of making money is too easy and my back testing 'backs' this up. An inside bar is simply a pause in the market, a concept as old as stocks and currencies themselves.

I know there are some great DIBS trades out there, but if the gains are cancelled out by lots of small losses, we may as well toss a coin.

What nobody has addressed on this long thread is: IS THERE A POSSITIVE EXPECTATION when trades are agrigated? If there is (like a loaded dice) then what is it? Also if there is a positive expectation, why havn't the 'big boys' traded out the advantage long ago?

What we need on this thread is proper evidence of a positive expectation of the DIBS strategy over a decent length of time. Cherry picking winning trades from the past is meaningless.

I'm not an enemy of DIBS. I would like to make money using this simple methos as much as the next man. I just havn't found the results worthwhile enough to deploy my hard earned capital.
There are hedge funds that work with price action (momentum), but they work with weekly or monthly charts.

DIBS is not "an easy way of making money", it's a system that helps you identify trade opportunities with low risk compared to potential reward. If you didn't get that (or if you want a "complex" solution), there are hundreds of other systems out there...

As for the "worthwhile results", have you traded DIBS for at least 6-12 months, following al the rules (as well as using common sense) to say that DIBS doesn't work?..

I am not your enemy, I am simply here to help On a serious note, if you don't understand what DIBS is all about, move on to smth else, don't waste your time (or money).
One Chart is Worth Ten Thousand Words.
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