The DIBS Method... No Free Lunch continues

Another battle of the TLs for the Eur. I am still in it for the long run, just waiting to see whether she breaks above the trendline and makes another 150 pip run to the upper trendline. Chart posted below

Thank you.

@ Julian...yup ... i think i was trying to automate everything ...


Keep DIBing

have u used the 6 GMT for USD JPY ??

Exitted my EUR long. Factored in news later on, open candle bearish and it came back and hit my EMA which by my rules I am to exit (im a stickler).

Dont think I will trade again today. NFP later today and the weekend, + ive had a very healthy week with 670 pips of profit from 3 trades.

Ill catch you all nice and early Monday and see how the market has responded.

Have a good weekend

Well done Razor,have a nice weekend
Yes I use the 6gmt,its not hard for me as I live in London,just wish esignal would allow me to adjust my daily charts
Im still longusd/jpy from yesterday up 60 pips now

now IB GU, EU, EJ, UJ and UCHF

I've taken EU and UCHF

let's see

Given that neither of these is a "hot hand" do you have any direction in mind? Just before NFP?

The problem with trading this close to News is all the candles that appear will generally be IB's for the reason that most are awaiting the news, they are not really a high prob IB. I would be on the sidelines (I am until Monday) because you need to be aware of the following.

Whilst the IBs range might seem appealing, quite often when rates or Non farm news comes out with percieved news the spikes will bypass you SL meaning that your initial trade of X risk is now X risk multiplied as brokers ignore most exits.

If the news is on the other side of your candle you could very easily find your self on the panic side of the fence as you scramble to exit. I have been there a few times and a good 70 pip spike over 2 minutes plus the continue on can leave your stop loss in the dust.

it's too risk take before NFP.

cancel all order.

it is a wise move. If the markets moved in your favour ohwell, the beauty of this method and forex in general is there are always offers on the table and you are best to take the offers that have more chance of playing in your favour. NFP and rates announcements are great is you are on the right side of the fence, however when you are wrong you will kick yourself harder than celebrate if you are right.

Since I took the view of a couple of others and didn't take any positions ahead of the numbers today, I did some very manual stepping through of some positions for March. I did this without any discretion - ignoring any indicators of price action, S/R, or anything. I wish I was a programmer (the last time I wrote any code it was 10 years ago at uni and the languages have all changed now), if I was I could try to build methods to exercise discretion.

I tested four pairs only:
EUR-USD
GBP-USD
EUR-GBP
EUR-CHF

I did the following:
1) Since I don't have access to charting systems yet and just use IG Index's spread bet charts (they are much better than DealingDesk's charts, whom I actually use for the trades), I allowed +/- 1pt on an band (i.e if it was just outside, I took it as an inside).
2) I took the most pessimistic view if I was looking at an ambiguous band (e.g. where the band might have gone against me before I entered, rather than stopping me out afterwards)
3) I used my exit criteria of once at 2:1 R:R, I applied the 20% stop for the next 24 trading hours, and thereafter used a 30SMA (on the close) as the signal.
4) I took any entry, irrespective of price action, news for that day, etc.
5) I applied money management of risking 1.5% of my equity of £10k (since I am effectively risking 2 units until the free-ride brings it back to one unit). I bought the appropriate £/pt quantity (as I use spread bet), rounded down to the nearest £, to meet that money management limit. However I have NOT applied limits to the number of buys I have made before going free-ride (which I realise is bad MM). I also compounded all profits/losses into the next trade.
6) I only took an entry between 0600 and 1600 GMT, and counted an IB on the 0500GMT candle as valid.

RESULTS

EUR-USD
23 trades, of which 4 were stopped out for a loss, 6 stopped out at free-ride, and the remaining 13 returned a profit.
Up 463 Pts.

GBP-USD
13 trades, 8 stopped for loss, 2 stopped for free-ride
Down 80 Pts.

EUR-GBP
20 trades, 6 stopped for loss, 3 stopped for free-ride
Up 785 Pts.

EUR-CHF
26 trades, 8 stopped for loss, 3 stopped for free-ride
Up 393 Pts.

Overall, up to March 16th, I made in excess of 1600 points, and from then on it was a loss of 80 points. Whilst this is a very unrepresentative sample, adding some discretion to the system would improve the performance further. Thought I suspect that there are some out there who are trading successfully using DIBS with zero discretion applied.

Applying the MM rules described above turned £10k into £20k in 2 weeks, and then it remained at £20k for 2 weeks.

I'm not sure how much use any of this is, but I thought it was quite interesting.

Nice work

This are good results for a rough back test and they confirm what Peter and Nathan have done previously.

I will give you my results for March and let me just say I am stunned and impressed.

I started my journal from the 9th, with my first logged trade on the 16th.

For march I took 16 trades.

5 Winners
8 Lossers and
3 Free trades.

This equates to a 38% win, quite small I know. (I didnt count free trades as trades)

While that Win ratio may seem pitiful and not enough to sustain account growth (according to those who say you need 51% minimum to make money) then heres this.

My total pips for March (2 weeks) was 802 over 16 trades which equates to 50 pips per trade. My account growth was 39% and my maximum drawdown was 12% during the bad week.

This was what suprised me. With a less than 50% win I still increased my account quite nicely. It could have been better if I didnt take 1:1 on half my lots as on 4 of my 5 trades then market never came back so these results could have doubled and made more of a difference.

So for those who come in and tell me that there needs to be changes here and there and that DIBs cannot be profitable, well I say try first, ask questions later. If you stick to the rules then you can profit significantly with right mindset and MM.

Good day to you all and I look forward to some nice results for April.

I blew half my account (fortunately not a complete wipeout!) on having the mindset that to make money you needed to have more winners than losers; It was only on reading PC's first posts that the penny dropped that reward vs risk is what it's about, and that 30% winners with the rest a mix of stops at fixed or no loss, one still makes money - even though on the losses, you are effectively losing double the risk.

It really showed itself on the weaker pairs - taken in isolation, GBP-USD actually MADE money (about £800) despite having negative points (I went and checked the maths twice to make sure there wasn't an error as I was surprised by it).

I worked through it without the free-ride in place, and although I was up by 160% instead of 100% in cash, it was a much choppier ride - with my account at one point being down 30% from the previous high. Whilst realistically that will happen, my stomach for a choppier ride is not that good so I'll take the free-ride system as the one for me.

And that is exactly what nathan discovered. With out the 1:1 the profit factor of this method was about 6 points higher than with the 1:1 however the equity curve was a lot smoother. Having the free trade effectively gives the mindset of relaxed freedom whilst you are still making money on whats left on the table.

The other side of the coin is that whilst you may risk 50% less than the person not taking 1:1, yes you may not make more money in the short term, however the drawdown of the none 1:1 could and usually would be much greater. If you look over history at the number of trades that went in your favour by your risk value then reversed to stop you out you could calculate that whilst you only lost X lots, the person applying the otherside would have lost X multiplied by 2.

So in effect it is all relative. Whilst you earn slightly less because you take some off the table, you loss less when things head your way before returning against you.

In alot of studies, drawdown % can be relative to your equity curve. Meaning that some systems can have an earth shattering drawdown % however the returns are very significant. Find me a person though that is still mentally capable of trading with big drawdowns just to see if there is light at the end of the tunnel. Me I prefer my small drawdowns because there will be a time when my account is at a level where I can safely live of the profits. Time is everything and those who expect the results quicker than they can handle, usually end up bust, or in a dark corner in the fetal position whispering to themselves.

Take care friend

exellent work done by Slide Dog..thanks for work

Here are a few questions for those who successfully use DIBS method:
- Do you immediately jump in into trade when 6.00bar is broken out or you wait for better entry (discount)?
-How do you select which currency (par) you will trade for current day?
-Do you use pending orders?
Thanks in advance

Discretion is part of the system, playing blindly all dib's will lead to very large drawdowns and in most cases in testing it was a complete wipe out.

approx numbers as i don't have the details in fromt of me.

Backtested GU to Jan 1st 2005 to Jan 1st 2009

+60,000 pips won
- 40,000 pis lost
over all gain 20,000 pips over 4 years
max drawdown 2,000 pips
max lossing trade 95pips
largest winning trade 1600 pips

so overall the system looks to produce an average of 5000 pips a year, but i found that inreality most of the winnings came during 2008, which has been one of the hardest years to trade according to the old timers.

this is with some discretion, and when we read PC posts we know he looks at Higher Tf charts - so is he using PA to guide his direction - if we had applied a Daily Tf pa setup to guide us, last week we'd only been looking for longs.

just my view and i'm still working out my own trading issues.

regards

MPP

best of pips

nice setup GU

let's see