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The DIBS Method... No Free Lunch continues

  • #4,681
  • Aug 11, 2008 5:47am Aug 11, 2008 5:47am
hi jarroo,

are you taking either break outs off the IB's, I used to follow this thread, but I have a lot of catching up to do



thanks,
Vip
Quoting jarroo
Added-on possibility. Usd/Jpy.
  • #4,682
  • Aug 11, 2008 5:50am Aug 11, 2008 5:50am
This Swissy trade from last week also helped me decide that a stop and reverse is rational when the trade risk is small. I took a small -13 pip (-spread) loss when I went short on a DIBS signal. But I did not take the long DIBS signal (reverse). A costly error on my part. This is why we (I) practise and learn.
Attached Image
Indicators show the past. Price Action "Indicates" the future.
  • #4,683
  • Aug 11, 2008 5:55am Aug 11, 2008 5:55am
Quoting guess121
hi jarroo,

are you taking either break outs off the IB's, I used to follow this thread, but I have a lot of catching up to do



thanks,
Vip
I'll take the IB break if it's with current trade (i.e. an add-on). But won't stop and reverse again on the Eur/Jpy. This tells me that a trend is not forming yet and move on.
Indicators show the past. Price Action "Indicates" the future.
  • #4,684
  • Aug 11, 2008 6:32am Aug 11, 2008 6:32am
Quoting jarroo
Not trailing my brother. Let it ride until (if) it stops out.
If you are not watching your trades, i.e. have to be away (and don't want to miss some interim profit), setting a TP target at the nearest (or a bit below, or a bit above ) S/R could be a good option too.

Trailing stop is a "hit and miss" affair. E.g. you enter a trade with a 30-pip ("fixed" below IB) SL. Then you gain 70 pips and switch to a 30-pip TRAILING stop loss. The price drops by 30 pips and your position is closed with 40 pips in profit. But then the price goes up by 50 pips and keeps going. So, with this example you could be at least 90 pips in profit instead of 40(2.5 times difference!!).

That's what happened with my AUD-USD DIBS today: 1/2 closed at pre-defined level (Pivot), the other half was trailing at 30 pips and surely enough it was closed soon with a small profit. If I let it run, it would still be "on".

But keeping the position open indefinitely is not always the best option, in my view. Taking the above example: you close 1/2 of your position at say 70 or 90 pips profit, and let the other 1/2 position run "forever" (i.e. until stopped out at break even). Say it goes to 120 pips profit, but you let it run. The price then drops to you SL. So, you end up with 70 pips profit on 1/2 position, instead of 1/2 at 70 pips and 1/2 at 120 pips. With that AUD-USD trade, the Pivot could act as resistance for long time. Rather then locking my money in and waiting, I am inclined to take the profit at Pivot and move to greener pastures (BTW, AUD-USD could be getting ready for a major (500-600 pips) reversal...

Jaroo, what are your thoughts on the above?
Attached Image (click to enlarge)
Click to Enlarge Name: aud-usd dibs h1 11 aug 08.jpg Size: 204 KB
One Chart is Worth Ten Thousand Words.
  • #4,685
  • Aug 11, 2008 6:37am Aug 11, 2008 6:37am
Quoting jarroo
I'll take the IB break if it's with current trade (i.e. an add-on). But won't stop and reverse again on the Eur/Jpy. This tells me that a trend is not forming yet and move on.
I guess the original question whether Jaroo ALWAYS considers break's out at either side of IB. As far as I understood, him only with those IBs where bar's top and bottom are correspondingly above and below that day's open (6am GMT).

As for the "add-on", Jaroo could you please clarify. If you have an existing long position but the next day's IB should only be traded "short", do you still wait for "long" breakout or you stay out of it on that day (as taking short would mean you are trading against your currently open long position)?
One Chart is Worth Ten Thousand Words.
  • #4,686
  • Aug 11, 2008 6:46am Aug 11, 2008 6:46am
Quoting jarroo
Yes that's true. On the Yens pairs earlier Opens can be used. The 0300 GMT IB was very tradable.

I do tend to enter late on DIBS signals, because of those "blips". I like to see Price moving hard and fast when breaking the signal.
Waiting for the price to move could be a good thing.

E.g. with today's EUR-USD IB I jumped in too quickly (with long) and was stopped out with 20 pips loss. I then set up a STOP order (i.e. which kicks in only when the price reaches certain level) a few pips above the strong PPZ (orange zone). Breaking that level meant (to me) that the price was finally moving. It did (my immediate target is the Pivot).
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One Chart is Worth Ten Thousand Words.
  • #4,687
  • Aug 11, 2008 7:00am Aug 11, 2008 7:00am
Quoting Forex007
If you are not watching your trades, i.e. have to be away (and don't want to miss some interim profit), setting a TP target at the nearest (or a bit below, or a bit above ) S/R could be a good option too.

Trailing stop is a "hit and miss" affair. E.g. you enter a trade with a 30-pip ("fixed" below IB) SL. Then you gain 70 pips and switch to a 30-pip TRAILING stop loss. The price drops by 30 pips and your position is closed with 40 pips in profit. But then the price goes up by 50 pips and keeps going. So, with this example you could be at least 90 pips in profit instead of 40(2.5 times difference!!).

That's what happened with my AUD-USD DIBS today: 1/2 closed at pre-defined level (Pivot), the other half was trailing at 30 pips and surely enough it was closed soon with a small profit. If I let it run, it would still be "on".

But keeping the position open indefinitely is not always the best option, in my view. Taking the above example: you close 1/2 of your position at say 70 or 90 pips profit, and let the other 1/2 position run "forever" (i.e. until stopped out at break even). Say it goes to 120 pips profit, but you let it run. The price then drops to you SL. So, you end up with 70 pips profit on 1/2 position, instead of 1/2 at 70 pips and 1/2 at 120 pips. With that AUD-USD trade, the Pivot could act as resistance for long time. Rather then locking my money in and waiting, I am inclined to take the profit at Pivot and move to greener pastures (BTW, AUD-USD could be getting ready for a major (500-600 pips) reversal...

Jaroo, what are your thoughts on the above?
It's really up to the individual style of the trader. Locking in profits is never a bad decision. Using S/R levels to "hide in the bushes" to place your stops and/or trail them is a excellent way to go as well.

But you always want to give your trade a chance to run . . that old saying is very true. But difficult to do. Watching a profit of a 120 pips then stopped out for zero pips is tough on the mind, but easy on the wallet.

We all look at a given chart on the Daily or Weekly and say, "Man if entered here I would be like a zillionaire". (See chart at blue line)

Are you prepared to handle those types of pip swings?

Maybe I getting off point, but my goals with the DIBS method may be different then others, and that's OK. I want to be in a trade like that on the Euro blue line and say, "Yeah I'm still long, I only risked 19 pips."
Attached Image
Indicators show the past. Price Action "Indicates" the future.
  • #4,688
  • Aug 11, 2008 7:10am Aug 11, 2008 7:10am
Great DIBS trade on the Ozzie by the way Forex007.
Good stuff.
Indicators show the past. Price Action "Indicates" the future.
  • #4,689
  • Aug 11, 2008 7:12am Aug 11, 2008 7:12am
Quoting jarroo
Maybe I getting off point, but my goals with the DIBS method may be different then others, and that's OK. I want to be in a trade like that on the Euro blue line and say, "Yeah I'm still long, I only risked 19 pips."
Thank you for the feedback, Jaroo!

The question then becomes - when Do you exit?..
One Chart is Worth Ten Thousand Words.
  • #4,690
  • Aug 11, 2008 7:26am Aug 11, 2008 7:26am
Quoting jarroo
Great DIBS trade on the Ozzie by the way Forex007.
Good stuff.
Yes textbook DIBS
  • #4,691
  • Aug 11, 2008 8:33am Aug 11, 2008 8:33am
Originally Posted by jarroo http://www.forexfactory.com/images/buttons/viewpost.gif
Great DIBS trade on the Ozzie by the way Forex007.
Good stuff.
Quoting Now and Later
Yes textbook DIBS

Thank you, guys! I am learning from you A LOT!
One Chart is Worth Ten Thousand Words.
  • #4,692
  • Edited 9:43am Aug 11, 2008 9:21am | Edited 9:43am
Quoting jarroo
We all look at a given chart on the Daily or Weekly and say, "Man if entered here I would be like a zillionaire". (See chart at blue line)

Maybe I getting off point, but my goals with the DIBS method may be different then others, and that's OK. I want to be in a trade like that on the Euro blue line and say, "Yeah I'm still long, I only risked 19 pips."
Jaroo, such a trade looks good on a chart. It ran for almost 30 months and yielded approx. 3300 pips.

BUT!! 30 months x 20 working days = 600 days. 3300/600= ... 5.5 pips per day (or under 30 pips per week).

If you are a big hedge fund, showing such a strong profit/growth helps a lot as every year (or even quarter) you'll have more and more investors coming on board with (hundreds of) millions.

If you are a day trader, even with 100 full lots ($100K in cash is needed to open such a position!), 5.5 pips per day gives you... $55.00 - enough for lunch, but without coffee...

Making even 10-15% per year trading with $100-200 million is a good result. Making 10-15% trading with $100K is not worth the hassle (in my opinion).

I see DIBS as a stand-alone daily exercise which, if done correctly could give me 50-100 pips a day. In that case, trading with $100K could allow one "to make a living".
One Chart is Worth Ten Thousand Words.
  • #4,693
  • Aug 11, 2008 9:26am Aug 11, 2008 9:26am
Quoting Forex007
Thank you for the feedback, Jaroo!

The question then becomes - when Do you exit?..
When to exit...A freind once told me Pigs get fattened, Hogs get slaughtered....i think yes let it run but take a trail with it.....a daily dibs in my mind would take a trail of the last three candles high or low...given that you are out with half the amt risked...but that's just me.....
  • #4,694
  • Aug 11, 2008 11:01am Aug 11, 2008 11:01am
Quoting Forex007
Thank you for the feedback, Jaroo!

The question then becomes - when Do you exit?..
Here's what I've been doing the past weeks and it's really suiting my style of trading:
1) First of all I look for a free trade, preferebly for 1/2 of the position but sometimes only 1/3 of the position will remain after BE point
2) The remaining part is left to ride until the price comes to a s/r area and stalls for a longer time or starts reversing. When I see the reversal (I look at lower timerframes for this) I exit more than half of the remaning position and the last part is left at initial sl. This way I've realised a win on this trade even if the rest gets stopped out.
3) The remaning postion's sl is moved only after I see that there's an s/r area between the entry price and current price, and the sl will be placed on the opposite side of the s/r area in comparison as to where price is now.
4) What happens is when you get into a trend like we did the last 3 weeks, you'll have locked in a few pips along the way and at the same time you would have some profits accumulating.
5) At some point I would maybe close every accumulated position, and that can be due to a major change in the fundamentals.

Trailing the stoploss with a fixed amount of pips isn't really going to let you catch a longer trend unless it's at least equal to 1.5*ADR. This will allow that price retraces for a day or so, and even standing up to a news spike, before continuing in you way. I think it's better to use s/r areas and make sure to be away at least 1.5*ADR from current price. And don't move the sl until you are certain that price has been through a s/r area, tested it and then moved away. 1.5*ADR on EU for example is something like 180-200 pips.

Now some math:
Let's say that the risk on each trade is 1%, so the lotsize is depending on the stoploss size. Say you had an entry at 1.5895 and the sl is 11pips (including the spread). After price reached 11 pips we closed half of our position, and leave the rest to run. Uptil now you have closed 5/10 (which is equal to 1/2 lol) of your position. At 1.5840 price hits a s/r level and is stalling and reversing somewhat. So you close 3/10 of the remaining position (which is 1/2 of the original position) for 55pips, and that leaves 2/10 of the original position. If the remaining position is then stopped out you will get an account increase of: (5/10*11 + 3/10*55 - 2/10*11) / 11 = 1.8% (if you risked 2% the win would be 2*1.8%=3.6% and so on). So you have locked in 1.8% account increase. If you close everything here you will instead get (5/10*11 + 5/10*55) / 11 = 3% account increase, and this would be nice too. But let's say that you manage to trail the sl on the last remaning position until 1.5005 then you would instead have seen an account increase of (5/10*11 + 3/10*55 + 2/10*890) / 11 =18.2%. And that is just from one trade. What if you've managed to have a few more trades along the way and traded 2-4 pairs?

In Jarroos example I would definetly not still be in the trade if I was in were he shows on his chart. The reason is that it's a bit too hard to say the least, and I'm not really looking to get into a trend on the longest timeframes, a trend on the daily timeframe will be just fine. If you look at EU this year where the price was ranging between 1.5300-1.6000 you could see that there were a few trends to get into if you would have gotten in at the top or bottom of that range. And with the right trailing stop you would have managed some nice accumulated trades. This is NOT EASY, but this is what I thrive to achieve. And I actullay did on the latest move down getting my first trade in at 1.5898 with a 11 pips sl. The hard part is watching the profits go up and down, but the trend was clearly down that I just left if (it hurt my eyes some days I have to admit). And I exited at 1.5015 because my emotions got the best of me because no one knows where this baby could end as the trend is still down. I should have stuck to my sl-system...

I hope that this has given you somethings to think about when it comes to letting the trades run. If you feel that there's too much pips up and down to handle, go ahead and close some of the opened positions, but do practise to leave some of it. Or you could just leave an even smaller part of the original position after a run to lock in some more pips. Because to say the truth price might move in your way 200-300 pips before you get a new position that doesn't get stopped out or closed for just BE.
As I said it's easier said than done as I've already closed my positions - but at least I gave it a good shot.
  • #4,695
  • Aug 11, 2008 11:24am Aug 11, 2008 11:24am
Quoting Forex007
Jaroo, such a trade looks good on a chart. It ran for almost 30 months and yielded approx. 3300 pips.

BUT!! 30 months x 20 working days = 600 days. 3300/600= ... 5.5 pips per day (or under 30 pips per week).

If you are a big hedge fund, showing such a strong profit/growth helps a lot as every year (or even quarter) you'll have more and more investors coming on board with (hundreds of) millions.

If you are a day trader, even with 100 full lots ($100K in cash is needed to open such a position!), 5.5 pips per day gives you... $55.00 - enough for lunch, but without coffee...

Making even 10-15% per year trading with $100-200 million is a good result. Making 10-15% trading with $100K is not worth the hassle (in my opinion).

I see DIBS as a stand-alone daily exercise which, if done correctly could give me 50-100 pips a day. In that case, trading with $100K could allow one "to make a living".
Over 30 months, if you were a long tail trader, you would be adding to this trade along the way.

5.5 pips per day with 100 full lots gives $55.00 per day? More like $5500 per day. But you wouldn't be trading 100 standard lots with a 100k account.

But, still, I understand your point. However, if you read TheRealThing's most recent post, he'll give you a real-life example of how powerful long tail trading with limited risk can be, if allowed to shape up over time.
  • #4,696
  • Aug 11, 2008 12:52pm Aug 11, 2008 12:52pm
Quoting billflet
Over 30 months, if you were a long tail trader, you would be adding to this trade along the way.

5.5 pips per day with 100 full lots gives $55.00 per day? More like $5500 per day. But you wouldn't be trading 100 standard lots with a 100k account.

But, still, I understand your point. However, if you read TheRealThing's most recent post, he'll give you a real-life example of how powerful long tail trading with limited risk can be, if allowed to shape up over time.
ok so i know it wasn't the usual trading t ime for an entry but i took and nice DIBs on the aud...first with 30 pips then i trailed with 30...nice...Today has been a good day for me....about 200 pips in total..i didn't take the gbpusd i thought it was a bit much for the stop loss but it did pay off....
  • #4,697
  • Aug 11, 2008 12:59pm Aug 11, 2008 12:59pm
Quoting NowAndLater
Now some math:
If the remaining position is then stopped out you will get an account increase of: (5/10*11 + 3/10*55 - 2/10*11) / 11 = 1.8%
But let's say that you manage to trail the sl on the last remaning position until 1.5005 then you would instead have seen an account increase of (5/10*11 + 3/10*55 + 2/10*890) / 11 =18.2%.

If you look at EU this year where the price was ranging between 1.5300-1.6000 you could see that there were a few trends to get into if you would have gotten in at the top or bottom of that range. The hard part is watching the profits go up and down, but the trend was clearly down that I just left if (it hurt my eyes some days I have to admit).
NAL, thanks A LOT for the detailed explanation, it was very useful indeed.

I still don't get this: if you stay in the trade based on, say, D1 TF, but see 200-300 pips retracements in the process, why not exit, catch a retracement, and then enter again (or simply exit, wait for the retracement to stop and then re-enter). If you keep the main trend in mind, it's not hard to find good re-entry points.

Another way, I guess, would be to use two diff. a/c: keep one e.g. "long", and use the other to catch all the (valid) daily "short" setups. Double-yummie?..

When people refer to long-term gains, they mention 800-1000 pips (over 3-4 months). But a daily range of a good pair is 120-150 (lately, at least). So, if you have a valid set up on a daily basis to catch even 25% of that (i.e. 30 pips per day), you get the same profit in half the time. Good DIBS days produce up to 100 pips, so you can (in theory ) get 800 pips in less than two weeks, being in control every day of where your trades are.

I do, nevertheless, see your point about letting at least 20-25% of the original position run in a "free" trade. Will give it a go...
One Chart is Worth Ten Thousand Words.
  • #4,698
  • Edited 4:23pm Aug 11, 2008 1:05pm | Edited 4:23pm
Quoting billflet
Over 30 months, if you were a long tail trader, you would be adding to this trade along the way.

5.5 pips per day with 100 full lots gives $55.00 per day? More like $5500 per day. But you wouldn't be trading 100 standard lots with a 100k account.

But, still, I understand your point. However, if you read TheRealThing's most recent post, he'll give you a real-life example of how powerful long tail trading with limited risk can be, if allowed to shape up over time.
Thanks for the tip about TRT's post, will have a look.

Sorry for the typo - I calculated the microlots, but wrote "full". My point was: if you have $100K a/c, allocate 1% to that trade and earn 0.055% per day, that doesn't strike me as a viable business.
One Chart is Worth Ten Thousand Words.
  • #4,699
  • Aug 11, 2008 3:16pm Aug 11, 2008 3:16pm
Quoting Forex007
...: if you stay in the trade based on, say, D1 TF, but see 200-300 pips retracements in the process, why not exit, catch a retracement, and then enter again (or simply exit, wait for the retracement to stop and then re-enter). If you keep the main trend in mind, it's not hard to find good re-entry points.
...
Ahhh.. A Scalper in the making. Or, are you volounteering a Scalp?
The method you mention above is, not only for the Very Strongly MM Disciplined, but also for those of Deep Pockets & Tenacity.

There are Two (2) Main Points of Information in this Thread {at least Originally}
1) When to "Get In"
2) When to "Get Out"

I'm almost positive that I have never seen a system of "Micro Management" that actually Increases Production. Usually, it only increases disagreement & dissention.{I'm sure that's gonna cause some mail but I consider it Noise until proven otherwise.}

If you have someone {or something} that can do the job; for Your sake, let them do it without constant interference & interuption.
{I'm Not saying 'Don't keep tabs on them.'}

Quoting Forex007
If you keep the main trend in mind, it's not hard to find good re-entry points.
I think my verbage of that statement might read...
If you keep the main trend in mind, it's not hard to find good "Add Contracts" points.

Question?
How can Trading become Boring?

Answer {After you find what works for you}
Stop running around hunting mice when you have a Moos# in the freezer.
a wee Scots play oan wurds aboot a timerous beastie.

Oh well... jmo
  • #4,700
  • Aug 11, 2008 3:42pm Aug 11, 2008 3:42pm
Quoting Forex007
NAL, thanks A LOT for the detailed explanation, it was very useful indeed.

I still don't get this: if you stay in the trade based on, say, D1 TF, but see 200-300 pips retracements in the process, why not exit, catch a retracement, and then enter again (or simply exit, wait for the retracement to stop and then re-enter). If you keep the main trend in mind, it's not hard to find good re-entry points.
You answer it yourself actually. If I see a 200-300 retracment I will exit only because it's taken out my sl. If my sl is 250 pips away, and price has retraced 200 pips - should I then exit when price has retraced 200 pips when my sl is 50 pips away? No because if the trend resumes then my profits will come back and increase even more. So if I can line up a few of these s/r areas along the way I could profit a lot. And sometimes a new trade gets stopped out (due to different reasons) which makes it a lost chance to stay with the trend, and you really should have been in more profits but you are now just watching from the sideline. It also takes some pressure of always being in the market as well because you won't feel like you've missed a move.
This question isn't so straightforward to answer but I hope you understand what I'm trying to say here...

Quote
Another way, I guess, would be to use two diff. a/c: keep one e.g. "long", and use the other to catch all the (valid) daily "short" setups. Double-yummie?..
This I've thought about hard the past week actually while being in the positions I had. But that would really mean you are trying to pick bottoms in a downtrend where there "should be" retracments. While I do that as well sometimes, I find it's easier to pick points where I could enter with the trend again. Like I did today on EU which you can see posted here (after initially being in a countertrend move): http://www.forexfactory.com/showpost...7&postcount=24. There were two other great oppotunities to go with the trend on EU on 4th and 6th of August, based on fibs, trendlines and support turning into resistance. But we have to keep in mind the strength of the trend. Last week every support was taken out with minmum retracement.

Quote
When people refer to long-term gains, they mention 800-1000 pips (over 3-4 months). But a daily range of a good pair is 120-150 (lately, at least). So, if you have a valid set up on a daily basis to catch even 25% of that (i.e. 30 pips per day), you get the same profit in half the time. Good DIBS days produce up to 100 pips, so you can (in theory ) get 800 pips in less than two weeks, being in control every day of where your trades are.

I do, nevertheless, see your point about letting at least 20-25% of the original position run in a "free" trade. Will give it a go...
Again you are looking to succesfully enter trades on daily basis, this will not always be the case. You might get stopped out before there's a move.
About the 3-4 month: This is why I don't look for trends on a too big picture, because within that there are many minitrends to be caught, and aslo the swings of the profits can be too big for me. H4 (and sometime D1) trends are enough for me since I consider myself to be a daytrader. I take trades on a daily basis and use them to make a swing trade position.
I never look at how many pips I make, I look for % change of the account. This is because 30 pips can mean as much as 100 pips to my account size. It's all about the % risked and the stoploss size. I see a lot of talk about how many pips I made here and how many I made there. If I risk 1% on a 10 pips stoploss and gain 50 pips my account would have increased by 5%. But if the stoploss was 50 pips and I made 150pips the account would "only" grow 3%, almost half as much although the pips made was threefold. If people instead said that they've made 100 pips and every pips was worth 0.10% then that would make much more sense to me.

Isn't money managment a funny subject? It's barely treated when you're learning about trading. Sure they say "risk a small amount in terms of % and look for good risk: reward ratio". But there's so much more in this area. This is one of the most important things I've learned from PC. He has pointed out to me clearly in a PM exchange how important it is to let the profits run. But I have to find my way of trailing my sl so that it suits me and my psychology.
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