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The DIBS Method... No Free Lunch continues

  • #7,401
  • Apr 1, 2009 4:06am Apr 1, 2009 4:06am
Given the strong movements on GBPUSD and EURGBP, I'm not sure how strong a hand EURUSD will be.

EURCHF could break either way (straddles opening), trend is slightly down but MAs are converging. USDCHF might push up if it can break through....

EURJPY look fairly flat and a 65pip range, so thats a no.

will ride this one out, see which turned out to be the correct call and what I can learn from it, if anything.
  • #7,402
  • Apr 1, 2009 4:40am Apr 1, 2009 4:40am
I'm very tempted to TP on EUR/GBP right now. Looking at the 1HR history, price has reached this low level on 3 previous occasions and did a complete "U Turn".

However, in the spirit of DIBS, I'll let it ride. Still in demo, and still quite new to all of this.




...
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  • #7,403
  • Apr 1, 2009 4:53am Apr 1, 2009 4:53am
Quoting SlideDog
Given the strong movements on GBPUSD and EURGBP, I'm not sure how strong a hand EURUSD will be.

EURCHF could break either way (straddles opening), trend is slightly down but MAs are converging. USDCHF might push up if it can break through....

EURJPY look fairly flat and a 65pip range, so thats a no.

will ride this one out, see which turned out to be the correct call and what I can learn from it, if anything.
I took the Eur/USD long. 24 pip risk seem quite well in my book. Not too sure what will happen but im committed.

Still looking for others out there
  • #7,404
  • Apr 1, 2009 5:01am Apr 1, 2009 5:01am
Quoting SlideDog
Perhaps you've hit the nail on the head. Could it be that IB candles with long wicks and tails and a small body (particularly if over 50 pips overall range) are the 'bad' IBs, but the lowest range candles, particularly if wicks/tails are not much longer than the body, are the best IBs? Even more so if with trend?
Not too sure on that. Those are pin bars/ or dojis and depending on the TF they can be a great indicator of direction and change.

The benefit of a Pin bar with a LONG tail and that has good pip length is.

1) It can give you information that the market has been there, tried that and failed.
2) if it happens to support the daily direction it can be a great indicator to buy/sell
3) the fact the there is a long tail and the head at the end means that if you are in the market has to travel all the way back up that tail to knock you out.

Pin bars as IB I believe are a great call, provided they fit the criteria of the open candle.
  • #7,405
  • Apr 1, 2009 5:02am Apr 1, 2009 5:02am
Quoting takingthepip
I'm very tempted to TP on EUR/GBP right now. Looking at the 1HR history, price has reached this low level on 3 previous occasions and did a complete "U Turn".

However, in the spirit of DIBS, I'll let it ride. Still in demo, and still quite new to all of this.




...
Do you use a MA-based TP signal? Razor_Trader does, I think he closes half a lot on one MA trigger and the rest on another. Strictly speaking you shouldn't be in that trade at all though according to DIBS rules - would you advocate a slightly wider SL earlier in the session or when the IB is very close to/straddling the opening price, particularly with a short candle such as this one?

Nothing forming, guess I need to watch AUD/USD as well as that looks like one I should have taken when it broke through.

Does everyone monitor all major pairs? I watch USD, EUR, GBP, CHF, JPY against each other as much as possible, along with USD-CAD and USD-AUD.
  • #7,406
  • Apr 1, 2009 5:06am Apr 1, 2009 5:06am
Quoting Razor_trader
I took the Eur/USD long. 24 pip risk seem quite well in my book. Not too sure what will happen but im committed.

Still looking for others out there
Free trade
  • #7,407
  • Apr 1, 2009 5:09am Apr 1, 2009 5:09am
Quoting Razor_trader
Not too sure on that. Those are pin bars/ or dojis and depending on the TF they can be a great indicator of direction and change.

The benefit of a Pin bar with a LONG tail and that has good pip length is.

1) It can give you information that the market has been there, tried that and failed.
2) if it happens to support the daily direction it can be a great indicator to buy/sell
3) the fact the there is a long tail and the head at the end means that if you are in the market has to travel all the way back up that tail to knock you out.

Pin bars...
Certainly seemed to work for your EUR-USD long...
  • #7,408
  • Apr 1, 2009 5:24am Apr 1, 2009 5:24am
Quoting Razor_trader
Not too sure on that. Those are pin bars/ or dojis and depending on the TF they can be a great indicator of direction and change.

The benefit of a Pin bar with a LONG tail and that has good pip length is.

1) It can give you information that the market has been there, tried that and failed.
2) if it happens to support the daily direction it can be a great indicator to buy/sell
3) the fact the there is a long tail and the head at the end means that if you are in the market has to travel all the way back up that tail to knock you out.

Pin bars...
Just stepped back through a couple of days' IB formations on various pairs and this is a seriously useful post IMHO. I think you've shown me how to read what the candles tell me rather than just OHLC and direction, which is all I could really see in there before.
  • #7,409
  • Apr 1, 2009 5:29am Apr 1, 2009 5:29am
Quoting SlideDog
Do you use a MA-based TP signal? Razor_Trader does, I think he closes half a lot on one MA trigger and the rest on another. Strictly speaking you shouldn't be in that trade at all though according to DIBS rules - would you advocate a slightly wider SL earlier in the session or when the IB is very close to/straddling the opening price, particularly with a short candle such as this one?

Nothing forming, guess I need to watch AUD/USD as well as that looks like one I should have taken when it broke through.

Does everyone monitor all major pairs?...
I have used a 20MA before when price went over 100 pips in my favour and it worked out quite well. It's too soon to have any hard and fast rules about what to do under 100 pips. Move SL to break even would be my first thought, and maybe take 20% if it gets close to the 100 pip mark. I may experiment with using a different smaller value MA under 100 pips. Thanks for the suggestion.

I don't advocate widening stop loss when IB is close to open and small, no.

I got in a bit late on the EUR/GBP IB having got in earlier and was stopped out, I was hesitant about going in again, short. When I saw price action break through 1HR and 4HR trendlines I took the short. Not strictly DIBS, I suppose, in that the SL was much wider, and not at the boundary of the IB.

Just a discretionary trade.

I monitor all the 4 majors plus EUR/GBP and GBP/JPY.
  • #7,410
  • Apr 1, 2009 5:39am Apr 1, 2009 5:39am
Just dropping by
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  • #7,411
  • Apr 1, 2009 5:50am Apr 1, 2009 5:50am
Quoting SlideDog
Do you use a MA-based TP signal? Razor_Trader does, I think he closes half a lot on one MA trigger and the rest on another. Strictly speaking you shouldn't be in that trade at all though according to DIBS rules - would you advocate a slightly wider SL earlier in the session or when the IB is very close to/straddling the opening price, particularly with a short candle such as this one?

Nothing forming, guess I need to watch AUD/USD as well as that looks like one I should have taken when it broke through.

Does everyone monitor all major pairs?...
Just to clarify this.

I trade at the moment with 2 mini lots a trade. Whilst my account allows a little more, I am a bit more conservative and it allows me to take another trade should a situation arise on another pair, or the same pair at another hour of the day.

I have a Limit set for 1:1 + spread, so in regards to the Eur trade I just posted, the risk from High to Low was 24 pips. entry and exit is 1 pips either side so the total risk is 26 pips, so therefore my limit is 26 pips from my open + the spread which happened to be 3 pips at the time. So my limit is 29 pips.

My second take profit is a 25 SMA. Im not really interest in the total pips I get but if the market comes back and touches it I will exit, or if I away I move my SL to just below it AT THE TIME.

NOW to confuse you a little. MY guidelines for the SMA are a minimum 4 hours after the market has
A) moved through it. At the moment the SMA is above the price action, due to the move up yesterday, so if we break and close above it then after 4 hours my SMA comes into play, otherwise my initial SL is my exit (free trade)
B) if the market is infront of the SMA at execution then I only pay attention after 4 hours of market action.

I do this for various reasons but the main one is patience. I can get an entry and walk away for 4 hours if needed so im not at my PC biting nails, exiting early.

This is what im comfortable with. There will be times where the SMA will get me out at profit but I subsequently miss a big move. In time when my account allows me I will trial something a little different, in which I exit half at 1:1, another at SMA and the other will run for as long as I feel comfortable.

Hope I havent confused you. It may not be DIBS exit plan but it is mine and I feel comfortable with it.
  • #7,412
  • Apr 1, 2009 5:50am Apr 1, 2009 5:50am
Quoting Dale
Just dropping by
Hi there dale,

How are things
  • #7,413
  • Apr 1, 2009 5:57am Apr 1, 2009 5:57am
Quoting takingthepip
I have used a 20MA before when price went over 100 pips in my favour and it worked out quite well. It's too soon to have any hard and fast rules about what to do under 100 pips. Move SL to break even would be my first thought, and maybe take 20% if it gets close to the 100 pip mark. I may experiment with using a different smaller value MA under 100 pips. Thanks for the suggestion.

I don't advocate widening stop loss when IB is close to open and small, no.

I got in a bit late on the EUR/GBP IB having got in earlier and was stopped out, I was...
The benefit of trading is simple. If your not comfortable about a trade then you dont have to take it. There are no rules that you HAVE to follow other than your own at the end of the day.

A bearish Pin bar on an up day has a little more risk by the fact that the head is closer to where your SL is. However all your orders should be a stop orders. SO the market has to first run the length of the wick to get you in and then travel all the way back down to knock you out. The shear fact that the market has come up to get you in is a good sign that perhaps the candle isnt the info it shows and if it doesnt travel the whole length then guess what? Your order hasnt been executed so your not in anyway.
  • #7,414
  • Apr 1, 2009 5:58am Apr 1, 2009 5:58am
hi everyone,

i have some problems with this particular aspect of the system that closes half position at the size of the IB range. hope i did not get this wrong

assuming all trades are taken with 2 lots and 1 lot closed at 1R.
assuming we have 10 winners and all got out at 5R profits.
that will be 50R profit on lot 1 and 10R profit on lot 2.

and assuming the next 20 trades are all losers of 1R.
that will be -20R on first lot and +20R on 2nd lot.

our net pnl will be:
for "free trd" strategy: 50R+10R=60R
for holding the 2 lots till death or glory: 100R-40R=60R

this still looks fine when the conditions holds true, which is fixed loss, fixed rtns, winning rate of 33%.

however~!!!
this is a profitable system(as ppl are trading it and discussing it?) and sometimes "outsize rtns" occurs which might hit 10R, 40R, 600R....
even assuming win rate does not improve. we can easily see that by taking profit on the 2nd lot, we are horendously limiting our profits.

you can try that on any system u are using that is even remotely profitable to see this holds true. basically its 2 systems. one with unlimited rewards and 1R risk. the 2nd is 1R reward 1R risk.

but still... the fact that ppl are still making profits means that this is a really gd system that even covers this bad point.

*** i am not a "pro" trader and i don't trade this system. so i am just taking a mathematical viewpoint. plz correct me if i am wrong***

just trying to help,
spicy
  • #7,415
  • Apr 1, 2009 5:59am Apr 1, 2009 5:59am
Quoting Dale
Just dropping by

Hi Dale. Thanks for that.
  • #7,416
  • Apr 1, 2009 6:06am Apr 1, 2009 6:06am
Quoting Razor_trader
Just to clarify this.

I trade at the moment with 2 mini lots a trade. Whilst my account allows a little more, I am a bit more conservative and it allows me to take another trade should a situation arise on another pair, or the same pair at another hour of the day.

I have a Limit set for 1:1 + spread, so in regards to the Eur trade I just posted, the risk from High to Low was 24 pips. entry and exit is 1 pips either side so the total risk is 26 pips, so therefore my limit is 26 pips from my open + the spread which happened to be 3 pips at the...
Hi Razor, another great post. This makes sense to me. As far as DIBS goes, there is no defined exit. PM mentioned the free ride at 1:1 but after that it's down to the comfort level of the individual trader.

Your system sounds good to me. I didn't mean to sound critical if that's how it came across, I'm just interested in what others find successful so I can get a hang on the different ideas so I can identify something that works for me.
  • #7,417
  • Apr 1, 2009 6:08am Apr 1, 2009 6:08am
Doing good,

It was nice to have PC drop in

There have been some great post lately in my opinion.


Best regards

Dale
  • #7,418
  • Apr 1, 2009 6:08am Apr 1, 2009 6:08am
GBP/USD IB looks good for a long trade.
  • #7,419
  • Apr 1, 2009 6:09am Apr 1, 2009 6:09am
Quoting SlideDog
Just stepped back through a couple of days' IB formations on various pairs and this is a seriously useful post IMHO. I think you've shown me how to read what the candles tell me rather than just OHLC and direction, which is all I could really see in there before.
You must be tired of seeing me

Just further on candle formations. The higher a time frame, the stronger their message.

On an hourly chart you get the infomation for the past 60 mins, 4 hours = 240 mins and so of. What this means is simple. While on a smaller timeframe the information can be obvious it doesnt make it very strong. If you got the same formation on say a daily or weekly then the information has past over a long time making the arguement stronger.

So if you got certain bars on higher time frame generally speaking, whilst the risk my be higher your reward can be substantionally greater. If at the top of a trend you got an IB that was a Pin or Doji there is a clear message that at some stage of the day the majority of traders have either bought greater trades on the otherside, or the majority of traders have taken profit causing also a balance shift. Generally speaking on higher timeframes if this is the case there is more chance for people to pay attention and look for new entrys in the new direction.

All you have to do as traders is simple. TRADE what you SEE. Why? Because if you see something that stands out as plain as day there is a good chance most professional traders are doing, or have already done the same thing.
  • #7,420
  • Apr 1, 2009 6:16am Apr 1, 2009 6:16am
Quoting spicymonkey
hi everyone,

i have some problems with this particular aspect of the system that closes half position at the size of the IB range. hope i did not get this wrong

assuming all trades are taken with 2 lots and 1 lot closed at 1R.
assuming we have 10 winners and all got out at 5R profits.
that will be 50R profit on lot 1 and 10R profit on lot 2.

and assuming the next 20 trades are all losers of 1R.
that will be -20R on first lot and +20R on 2nd lot.

our net pnl will be:
for "free trd" strategy: 50R+10R=60R
for holding the 2 lots till death...
Hi Spicy

Post here backs you up - but with comments about equity levels being less choppy if one uses the Free Trade method.

http://www.forexfactory.com/showthre...67#post2616367
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