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The DIBS Method... No Free Lunch continues

  • #7,301
  • Mar 27, 2009 10:58am Mar 27, 2009 10:58am
Quoting julian
looking at all the majors since 1200 uk, there have been 8 trades 7 winners to a minimum of 40 pips,Is it like this everyday
No it isnt, however the benefit of the above is that there are multiple opportunitys for you to get your money in.

Some days there are some great opportunities, others not so great. Until to I had 5 losses for the week. now my trade from last week is up 200 pips. But i wasnt going to trade today so I missed some great places to grab trades, but that is the beauty of the forex market.

there will always be times to get your money in and with DIBS it really is as simple as 1 2 3
  • #7,302
  • Mar 27, 2009 11:06am Mar 27, 2009 11:06am
well i decide to have a few beers with some mates tonight (im an aussie so it is nighttime here) only to come back and see the markets go BOOM. My eur trade that has spent the past week in a range has finally done what I thought it would do.

Now I got to say this. THIS IS THE LONGEST I HAVE EVER HELD A TRADE.

Why is that significant. Well lets start with the basics. We enter a trade and set a limit to 1:1. If that limit gets hit then we are in a free trade.

So for about 4 + days i have had a free trade. Now all my homework early told me that there was more bias down than up but the simpliest reason for holding it this long was IT WAS A FREE TRADE and i am looking for MAXIMUM bang for my bucks. Now the next level of support I see is about 3100. The next trendline support comes in there, plus there was some resistance (not much but some) it is a whole numbers which the eur loves to bounce around and it is a 50% retrace of this last move upwards. I will hold till then and see what happens, however I will hold till then. I have my Moving average coming down nicely so that may be my take profit area if we consolidate early next week.

Have a great weekend all
  • #7,303
  • Mar 27, 2009 11:09am Mar 27, 2009 11:09am
Quoting artov
When looking at inside bars, I often see a false breakout by a few pips. How do you try to avoid that?

If you are looking at historical data then it may pay to check the M15 chart as it may show that the breakout occurred before the trade. No doubt you have already thought this through.

To answer julian's question - no it isn't always this good - far from it. I think I quote Peter Crowns correctly when he said "This is one of the most frustrating and potentially rewarding...."

So we are very likely to get a string of losers and break evens before we get a "runner".
Gone to a better place
  • #7,304
  • Mar 27, 2009 11:14am Mar 27, 2009 11:14am
Thnaks smikester is there any indication of what % are losing trades ?
  • #7,305
  • Mar 27, 2009 11:23am Mar 27, 2009 11:23am
anyone take gbp/usa im short 14304
  • #7,306
  • Mar 27, 2009 11:44am Mar 27, 2009 11:44am
I'm a confessed 'lurker'............reading in soooooo many threads without posting is 'my' way of soaking up as much information about Forex trading as I can. Occasionally I feel qualified to give something in return; but I am a true newbie in this thread.

So redpine I have a question: It is my understanding this method is designed to be used on the H1 time frame. How is it that you 'tested' The DIBS Method "on the daily bar"? I am always searching for successful ways to trade 'The Daily' that I can add to 'my toolbox'; your answer will be greatly appreciated!

Quoting redpine
This inner bar approach in back testing, is very profitable on the daily bar (I need to go back and test other times). As is, testing on 20 different pairs returns significant positive results from 17 pairs over a two year period. No additional indicators or optimization is needed.

I am absolutely amazed how the simplest strategy I've tested is hands down the best. I look forward to reading all of this thread to further learn what others have discovered.

Thanks in advance.

Dan
  • #7,307
  • Mar 27, 2009 12:14pm Mar 27, 2009 12:14pm
Profitable price action today...

http://i39.tinypic.com/4gqclz.gif
TRO
  • #7,308
  • Mar 27, 2009 3:44pm Mar 27, 2009 3:44pm
And the other way...

http://i42.tinypic.com/6e0yva.gif
TRO
  • #7,309
  • Mar 27, 2009 6:09pm Mar 27, 2009 6:09pm
Quoting BeachBum
I'm a confessed 'lurker'............reading in soooooo many threads without posting is 'my' way of soaking up as much information about Forex trading as I can. Occasionally I feel qualified to give something in return; but I am a true newbie in this thread.

So redpine I have a question: It is my understanding this method is designed to be used on the H1 time frame. How is it that you 'tested' The DIBS Method "on the daily bar"? I am always searching for successful ways to trade 'The Daily' that I can add to 'my toolbox'; your answer will be...
With the higher time frames I look at Inside Bars as a potential reverse in the market. If your conservative enough you can wait till the next day is over and see what candle formation appears.

Generally after a strong Up or Down, if you get an IB you would prefer either of the following candles to occur. Doji or spinning top as some call it shows that momentum has shifted and the market is unsure. This can be the turning point. Or a Pin bar which can either be a hammer or shooting star (2/3rds wick, 1/3rd candle at top of bottom). This is the best indicator.

DIBs is primarly based on the 1 hour chart however Peter has mentioned that it can be traded on all time frames but lower than an hour is not recommended as there is too much noise and the chances of seeing false breakouts occur most below the hour.

With the higher Timeframes there is slightly more pip risk so that will steer some way but there is also less chance of false breakouts, so if you get in then you can be in for a while if the markets are turning around.

Hope this helps clear some things up
  • #7,310
  • Mar 27, 2009 6:42pm Mar 27, 2009 6:42pm
Quoting BeachBum
I'm a confessed 'lurker'............reading in soooooo many threads without posting is 'my' way of soaking up as much information about Forex trading as I can. Occasionally I feel qualified to give something in return; but I am a true newbie in this thread.

So redpine I have a question: It is my understanding this method is designed to be used on the H1 time frame. How is it that you 'tested' The DIBS Method "on the daily bar"? I am always searching for successful ways to trade 'The Daily' that I can add to 'my toolbox'; your answer will be...
With a 1,000+ posts you can still be considered a lurker?

Trading is just a part time hobby, so my goal has always been to create an automated system. In three years of part time effort, I still have to find a successful system at the lower timeframes. I initially tested this on the one hour time frame and found it to be profitable in backtesting, but figured that most of the pips in an automated system would be lost to spread, slippage and fees, so I just started trying different ideas, exploring the solution space. Daily bars started showing really good results, I kept experimenting and found a couple of conceptual things wrong with my algorithm. I need to go back and retest at the one hour time frame.

Below is my code for a long entry:

if(barIndex > 3 &&
HIGH_[barIndex - 2] > HIGH_[barIndex -1 ] &&
LOW_[barIndex - 2] < LOW_[barIndex - 1] &&
HIGH_[barIndex] > HIGH_[barIndex - 1] &&
(CLOSE_[barIndex-1] < OPEN_[barIndex-1] || HIGH_[barIndex] > HIGH_[barIndex-2]) &&
!TimeZone::instance()->isFriday(stick->date()))

Open price is set to the close of bar -1 or close bar -2 depending on whether the trade goes against the inner bars direction or with it.

For an exit, a stop loss would be set first at the lower of the close or open for the previous bar. Then at the open of the next bar the stop is move 25 pips below the close of the previous bar. This continues until it's stopped out.

The results were dramatic, but I will note my algorithm still could have problems. I need to do a bit more validation.

I'm looking forward to reading this thread for ideas on how to further improve this system.

Dan
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  • #7,311
  • Edited Mar 28, 2009 12:06am Mar 27, 2009 11:00pm | Edited Mar 28, 2009 12:06am
Quoting Bemac
I hope, that due to the lack of response to this post, you do not feel that you wasted your time in compiling it.

I think that the true students of this approach have already bookmarked but still unwilling to respond to your post.

The belief being...
A Secret Society can aquire more by remaining Secret.

Do I contribute to this fallacy?
Of course not. That's why i opened it.

If Jarroo hadn't picked up the baton, we wouldn't even be discussing this {Thanks Jim. I wish I could give you an additional 10 Vouches but se la vie.}
Just try to imagine...
Thanks brother.

And thank you for the gentle push in the direction that brought me to this point. I get so so much back it's not definable. I think there's saying or proverb in there somewhere.

But in the truest sense it really comes down to one thing for me. . . . . . . . . . . . . . it's a whole lot of fun.

Jim
Indicators show the past. Price Action "Indicates" the future.
  • #7,312
  • Mar 28, 2009 11:07am Mar 28, 2009 11:07am
Quoting Bemac
I hope, that due to the lack of response to this post, you do not feel that you wasted your time in compiling it.

I think that the true students of this approach have already bookmarked but still unwilling to respond to your post.

The belief being...
A Secret Society can aquire more by remaining Secret.

Do I contribute to this fallacy?
Of course not. That's why i opened it.

If Jarroo hadn't picked up the baton, we wouldn't even be discussing this {Thanks Jim. I wish I could give you an additional 10 Vouches but se la vie.}
Just try to imagine...
That's right, Bemac... I can't do this vouch stuff (I'm just a bored doctor crawling and trying to make some things enter my thick brain... I guess I ned a drill sometimes) .... but I can say for sure that this whole story... (your initial thread, superb.... Peter Crowns showing up, and this piece of art that Jim has given to us) makes me trade evryday better and better, which means that I'm still breathing over the water line... ....

Sincerely, I thank you, Bemac, Peter and Jim...

Cheers!

HT
Many share my views with me. But I don't share them with them...
  • #7,313
  • Mar 28, 2009 2:32pm Mar 28, 2009 2:32pm
Thanks for sharing your thoughts.................

Quoting Razor_trader

Hope this helps clear some things up
  • #7,314
  • Mar 28, 2009 2:39pm Mar 28, 2009 2:39pm
redpine........thanks for answering, but some of what you wrote confuses me.

Quoting redpine
With a 1,000+ posts you can still be considered a lurker? I am in this thread..........

Below is my code for a long entry:

if(barIndex > 3 &&
HIGH_[barIndex - 2] > HIGH_[barIndex -1 ] &&
LOW_[barIndex - 2] < LOW_[barIndex - 1] &&
HIGH_[barIndex] > HIGH_[barIndex - 1] &&
(CLOSE_[barIndex-1] < OPEN_[barIndex-1] || HIGH_[barIndex] > HIGH_[barIndex-2]) &&
!TimeZone::instance()->isFriday(stick->date()))

Because I know nothing about code, the above is lost on me.

Open price is set to the close of bar -1 or close bar -2 depending on whether the trade goes against the inner bars direction or with it.

This statement confuses me: Can you explain further?

Dan
  • #7,315
  • Edited 7:33pm Mar 28, 2009 7:07pm | Edited 7:33pm
Quoting BeachBum
redpine........thanks for answering, but some of what you wrote confuses me.
1. if(barIndex > 3 &&
2. HIGH_[barIndex - 2] > HIGH_[barIndex -1 ] &&
3. LOW_[barIndex - 2] < LOW_[barIndex - 1] &&
4. HIGH_[barIndex] > HIGH_[barIndex - 1] &&
5. (CLOSE_[barIndex-1] < OPEN_[barIndex-1] || HIGH_[barIndex] > HIGH_[barIndex-2]) &&
6. !TimeZone::instance()->isFriday(stick->date()))

Line 1. just checks that there are greater than 3 bars to consider.
Line 2. & 3 checks for an inner bar.
Line 4. just checks that the current bar has passed the high of the inner bar.
Line 5. checks for the two possible directions that the current bar can go. It can go in the same direction of the inner bar or it can go in the opposite direction of the inner bar. My testing today suggests, better results are achieved in a long trade if the inner bar is down and the current bar is up. In other words the current bar is a reverse in direction of the inner bar.
Line 6. Makes sure I don't hold positions over the weekend. The greatest variability in this system I found was by holding a position over the weekend. I think trading on Fridays is ok as long as you close the position on Friday. See GBP/JPY. I actually took this trade on Friday and closed for 140 pips profit.

"Open price is set to the close of bar -1 or close bar -2 depending on whether the trade goes against the inner bars direction or with it."

Ignore this. Since I changed rule 5 for only reverses in direction then the open price used in backtesting is the high of the inner bar.

Hope this helps. BTW, GBP/JPY Friday would be a perfect trade.

Dan
Attached Image (click to enlarge)
Click to Enlarge Name: gbpjpy27mar.gif Size: 26 KB
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  • #7,316
  • Mar 29, 2009 6:58am Mar 29, 2009 6:58am
Quoting redpine

Hope this helps. BTW, GBP/JPY Friday would be a perfect trade.

Dan
Yes it would. A great example of a daily IB. I would be keeping an eye on TP though with this trade as there is a nice trendline that comes up from the bottom candle that might come into play, however with the Pound/Yen you are generally looking at a good number of daily pips on most moves.

Cant wait for monday
  • #7,317
  • Mar 29, 2009 12:30pm Mar 29, 2009 12:30pm
I just got a quick question regarding the DIBS method, well 2 actually.

Im not quite sure how to word it...

For it to qualify as a DIBS trade does the next Bar/Candlestick have to be totally engulfed by the previous Bar/Candlestick? Wick and Real Body? Or is the Real Body the only thing that is important?

Also, for some silly reason I am having a hard time figuring out what 6:00GMT is... I am in the MST Time zone. So when would market open be my time?

Thanks in advance.
  • #7,318
  • Mar 29, 2009 12:45pm Mar 29, 2009 12:45pm
The inside bar must ALL be within the previous bar and really for it to be a decent trade you'd like to see the next bar break the lows for a short without going near the highs.
  • #7,319
  • Mar 29, 2009 1:12pm Mar 29, 2009 1:12pm
the gbp/jpy trade would have given nearly 300 pips on friday how many pips a week are you guys averaging,thanks
  • #7,320
  • Mar 29, 2009 1:13pm Mar 29, 2009 1:13pm
Quoting foredog
The inside bar must ALL be within the previous bar and really for it to be a decent trade you'd like to see the next bar break the lows for a short without going near the highs.
Depending if you are trading long or short, of course
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