The DIBS Method... No Free Lunch continues | Page 384 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

The DIBS Method - No Free Lunch Returns 13 replies

No Free Lunch but all the Free Coffee you can drink 736 replies

Peter Crown's DIBS method revisited 14 replies

DIBS Method EA 11 replies

Problem using Dibs EA 4 replies

Attachments: The DIBS Method... No Free Lunch continues
Exit Attachments

The DIBS Method... No Free Lunch continues

  • #7,661
  • Apr 17, 2009 9:58am Apr 17, 2009 9:58am
Quoting highneb
For forex trading to replace the day job one would need minimum starting capital of $300,000 or £200,000. Risking that amount with your local friendly broker is problematic considering many go bust or simply disappear.

Also if the average spread on trades is 2 pips and average pips per trade (winners and losers) is 50pips, then we have to make over 8% just to get past the spread! (because the winning trades also have to pay the spread on the losing trades).

Thats not easy.

It is only possible to win with day trading if the spread is extremely...
Wow, not sure on your source of information but to say you need a minimum 300k in order to trade full time and for a living is quite rediculous. There are far more factors that you have neglected to weigh in. Also the fact that you talk of the roulette wheel with the number zero breaking bank accounts would depend on whether professional roulette players play there entire bank balance every spin which is absolutly no chance.

The spread is inevitable part of trading, no different to commission on other market forms. The only time it is of major concern is to scalpers due to there activity in the market. Longer term traders wash the spread off without even thinking about it. Im sure the 50 pip risk would be of more concern than the 2 pips spread.
  • #7,662
  • Apr 17, 2009 10:06am Apr 17, 2009 10:06am
I have accounts with TradeStation and Interactive Brokers, both of which are solid financially and have clients with 7 & 8 figure accounts (mine are somewhat smaller...), so the broker issue does not need to be a problem. I only trade DAX and EC futures with one pip spreads, although I'm not sure the spread is quite so critical the way Razor is trading.

I know several who are trading for a living with a lot less capital than $300k, although at least $50k. It does of course depend on what you consider a "living" to be. I can say that since making a key change to my trading method whilst on vacation in February, I have averaged >$400/day with only one losing day; only one losing trade was >1% (it was -2% because I inadvertently put on double position size after switching my platform into sim-mode to see how it split the exits if I doubled size, then forgot to reduce size when I switched back to live). I still make stupid mistakes almost every day and do a great deal of work on myself to improve this critical statistic (which IS improving, albeit slowly - it's critical because eliminatnig a very small number of bad, as opposed to simply losing, trades would double my average return). This on accounts in which $50k was allocated to day trading at the beginning of the year.

So it is possible, but as I am sure Razor knows, better to keep an alternative source of income going until you are consistently making ALL your required income from part-time trading in a relatively stress-free way. That last phrase cannot be over-emphasized : I have seen some lovely people's lives fall apart through the stress of trading. I also know people doing VERY well trading on daily and weekly charts and am working hard to add my method to longer timeframes (age-wise, I am more Christmas Turkey than Spring Chicken ).

So good luck, Razor - where there's a will, there's a way, but almost infinite patience is needed at all times.



J.
  • #7,663
  • Apr 17, 2009 10:34am Apr 17, 2009 10:34am
Quoting highneb
can't help but agree with the person who said 'hope you trade profitably for 6 months before quitting the day job'.

Making a full time living from forex would be exceptionally difficult. These markets are so full of random noise, plus having to overcome the spread means 95% of people fail.

Lots of people on these forums claim they are making $$$ on a regular basis, unfortunately (and the odds on winning back this up) most of these claims are either fantasy or irrational exuberence after a winning trade.

The founder of a major forex brokerage...
Heres the fact. More people loose money and ultimatly blow accounts for these reason:

1. Attachment to money. Emotional unable to execute and follow through
2. No Trading Plan. Random market entries
3. Under capitalization. speaks for itself
4. Fear and Greed.
5. Excessive Leverage
6. Inadequate risk controls. No SL's, moving SL's to stay in loosing trades
7. Lack of market understanding. Not having some basic understanding of fundamentals
8. Impatience. Over trading just to be in the market
9. Lack of interest in Trading. Thinking it would be all fun and games
10. Unwillingness to accept you are wrong. Can be a multitude of things but more or less blaming everyone/thing else for bad trades or good trades that didnt work

I have searched high and low for 'trading failure due to spread costs' and i couldnt find anything reliable on it. The above reasons are everywhere. You learn them when you first embark into any market form. Spread costs are part of trading just like paying taxes are part of life. SO long as you trade, you will pay a spread or commission. Unless you are trading some really bizarre cross pair where the spreads are much greater than 10 pips then the spread is really just part of your execution.

As for the 5% being up after a year in something that could take you 5-50 years to fully understand is about right. If im reading it right it is not a managed fund, but traders who have money store for personal trading purposes. If it was a profession managed fund then I would be concerned.

How long did you have training wheels on your bike before you took them off. I bet even with training wheel there were stumbling points, even after you take them off you would stumble at times. It is part of learning and developing.

If you are considering trading, you really need to change your attitude and views. At the moment they are all wrong. Being pessimistic about things, regardless of what they are, will get you no where fast.
  • #7,664
  • Apr 17, 2009 11:12am Apr 17, 2009 11:12am
Here is another example of using chart patterns combined with DIBS to help us identify lower risk entries and possible beginnings of larger trends.

I think the GBP/USD is headed lower, based on what I see on the charts. (Thankfully, we are all still entitled to our own opinions, wrong or right. )

Allow me to briefly explain:

Take a look at the weekly chart first. Although still climbing from the March low, if we don't see a close today above the 1.4846 close from two weeks ago it appears to me that the market may have put in a weekly swing high and price may be headed lower, possibly down to the 1.4100 area or maybe lower. That is the latest daily swing low and would also be near the fib 61.8 retracement from the low in March to the high of this week.

I may jumping the gun, because there is a strong possibility that price could make another spike upward to stop me out at any time but considering that there is also the outside chance that this is the beginning of a swing down toward the 1.3650 area makes it interesting. If it is, the r/r ratio and the possibility of that large move seem to make it worth a shot anyway.

But you also have to keep in mind this is my thinking and my reasoning, but still I'm thinking this one has potential.

(Reminder: I'm not an analyst, so I could be full of bull too. )

So, on we go...

Looking at the hourly chart I want to point out a few things that caught my eye. Keeping in mind that chart patterns, like beauty, are in the eye of the beholder, I am seeing a head & shoulders top in the circled area. I have the neckline marked with a yellow line which has been broken to the downside. Classic technical analysis would say there is a high probability that price would retrace to this line before heading lower, which it has not actually done. It did come close but not technically perfect. However, I'm trading DIBS not retracements and due to the strong move down through the neckline and retracement that did not make it above the top of the second DIBS I'm going to say thats about it for the test. It also stopped just short of hitting 1.4850 and price seems to like to bounce off round numbers sometimes. All this makes me be hopeful I will be right.

So in my opinion there are several factors in my favor on this trade. And it is about the lowest risk I can see. So I'm short where the chart is marked. But only time will tell, so... Now I wait.

You see this kind of stuff all the time so there are some good opportunities to trade this often enough not to take just any old entry you happen to see.

(Also wanted to say I'm in free trades on the EU today and UC from yesterday.)

Great trading to you,
Dave
Attached Image(s) (click to enlarge)
Click to Enlarge Name: dibs gu w1-a.gif Size: 47 KB
Click to Enlarge Name: dibs gu h1-a.gif Size: 68 KB
  • #7,665
  • Apr 17, 2009 11:29am Apr 17, 2009 11:29am
Nice trade, Dave.

I think it's essential to think things through for oneself : understand the method and why it succeeds when correctly & consistently executed.
  • #7,666
  • Apr 17, 2009 12:22pm Apr 17, 2009 12:22pm
Hi guys,

Having read all the thread ( lots of coffee required ) and studied , and thought about the DIBS method, I'm taking the plunge, not that plunge is the right word, and commencing trading using the DIBS strategy.

Two things caught my attention .. firstly, the sheer volume of posts and the vociferous defence of the strategy by several regulars, who clearly make it work and try to convince the doubters otherwise.
Secondly, is the fact that PC's first post was simply to reminisce about the days in the pit, and only later did he start to drop a few hints and tips, rather than posting an all singing, all dancing "here's how to make a million" trading strategy.

I've been a hobby trader for about 3 years off and on, only ever using money I could afford to lose, and doing just that a couple of times. What did I learn from that? well, money management firstly, as I used to blindly set stops risking 10, 15 or even 20% of my capital without a care in the word. seconldly, that sub 1 hour charts are an easy way to grey hair and chest pains!

So here I am again, with a sound mind, a strategy, and only ever risking 2.5% capital on each trade. I also have a very small starting capital, but a broker that allows me to deal in micro lots ( down to 0.5 of a mini lot! ) I thought I would post here to keep a track of my progress from the beginning, deal with the ups and downs as best I can, and look for guidance from those of you who have been doing this much longer than me.

So anyways, how has it gone?? well I started wednesday, was even for the day, thursday was down 3%, but today have ended up 16% thanks largely to getting long on USDCHF on thursday, adding on each DIB as it went up, ending up with 3 free trades which I closed out this afternoon 3GMT. ( i havent the confidence to let a trade run over the weekend yet!)

So a fantastic start, I doubt very much if I can replicate this performance, but it gives me heart, and a reason to get up at 6am every morning lol

Lets see what next week brings
All opinions stated are purely opinions.. I may be wrong!
  • #7,667
  • Edited 2:53pm Apr 17, 2009 1:51pm | Edited 2:53pm
Quoting fxnoob08
with all due respect, you have no idea what you are talking about.
Some excellent posts this evening.

In respone to your coment I have traded for 15 years (part time with a regular job) and know a little about 'the game'.

I stand by my point of view that it is extremely difficult to make a full time living in forex. Also we need a very well capitalised account. In my opinion at least $250000 to make $50000 a year (a regualr working mans wage).

The person who says is averaging $400 a day, must have huge underlying capital, otherwise this isn't possible.


Anybody who says they make an average of 1%+ per day will soon own the whole world and everything in it.
  • #7,668
  • Edited Apr 18, 2009 12:58am Apr 17, 2009 2:57pm | Edited Apr 18, 2009 12:58am
Also the analogy of 'learning to ride a bike' is hardly accurate, concidering that 100% of people eventually succeed at this while 95% of people fail at forex.

I know you guys hate all this 'pesimism', but the fact is at least 95% of forex traders loose money whether using systems or not. I wish this wern't true but it is. So in a years time 19 out of 20 people will be fodder for the brokers.

I must admit the 'forex dream' is very compelling. Using your PC like an ATM machine. No commute, no boss, no worries. And if more money is needed then up the ante! Unfortunately for 19 out of 20, the reality is more ugly: lost money and hundreds of hours lost on gambeling 'systems' that work for a while and then stop. Is this not true guys?
  • #7,669
  • Apr 17, 2009 3:17pm Apr 17, 2009 3:17pm
Quoting highneb
Some excellent posts this evening.

In respone to your coment I have traded for 15 years (part time with a regular job) and know a little about 'the game'.

I stand by my point of view that it is extremely difficult to make a full time living in forex. Also we need a very well capitalised account....
no..just no.. you don't need $250000 to make $50000 a year. you can start with 20000 and double it, or you can start with 250000 and blow out the account.
  • #7,670
  • Apr 17, 2009 4:41pm Apr 17, 2009 4:41pm
Quoting highneb
Some excellent posts this evening.

In respone to your coment I have traded for 15 years (part time with a regular job) and know a little about 'the game'.

I stand by my point of view that it is extremely difficult to make a full time living in forex. Also we need a very well capitalised account. In my opinion at least $250000 to make $50000 a year (a regualr working mans wage).

The person who says is averaging $400 a day, must have huge underlying capital, otherwise this isn't possible.


Anybody who says they make an average of 1%+ per...
highneb,

I do agree that it is extremely difficult to trade for a living and that most will never succeed. However, your comment about making 1% a day supposes that a trader would simply compound up continuously - this is of course not possible liquidity-wise (eventually), but LONG, LONG before that 99.99% of the 5% of winning traders would reach their personal "emotional limit" to positon size.

I am trading 4 EC futures contracts ($12.50/tick per contract) and 2 DAX futures (EUR12.50 per tick per contract). I have taken trades up to 10 fx cash lots (in recent months, prior to switching to futures, which I did for tight spread and accurate volume data). With my trading style, I think it would be difficult for me to trade more than 8 EC ($1m position size) or DAX. Believe me, the pressure more than doubles each time you double your position size.

I expect I can eventually average $1k / day on my current position size by trading well. With a position size of $500k (4 EC contracts), that's 0.2% return on position size (in some ways a more useful statistic than ROA).

It's doable, but not in any way easy (although it IS simple). $1k / day x 10 months a year (I take 2 months a year vacation, which shows I am not American ) = $200k, about what a director of a medium size compnay makes these days. A huge achievement in some ways, perhaps, but not exactly Georg Soros....

OK, bedtime... have a great weekend everybody.

J.
  • #7,671
  • Apr 17, 2009 9:28pm Apr 17, 2009 9:28pm
Quoting slowlyslowly
Hi guys,

Having read all the thread ( lots of coffee required ) and studied , and thought about the DIBS method, I'm taking the plunge, not that plunge is the right word, and commencing trading using the DIBS strategy.

Two things caught my attention .. firstly, the sheer volume of posts and the vociferous defence of the strategy by several regulars, who clearly make it work and try to convince the doubters otherwise.
Secondly, is the fact that PC's first post was simply to reminisce about the days in the pit, and only later did he start to drop...
Welcome slowlyslowly.

I'm going to try and be a bit more active on the thread. I would suggest you use a demo account to get a better feel of applying a DIBS trade. But then again it is quite easy to execute.

Feel free to ask any question you like. Although I assume that you have read the entire thread and gone over many past charts for study.

Again, welcome.

Jim
Indicators show the past. Price Action "Indicates" the future.
  • #7,672
  • Apr 18, 2009 1:05am Apr 18, 2009 1:05am
Quoting fxnoob08
no..just no.. you don't need $250000 to make $50000 a year. you can start with 20000 and double it, or you can start with 250000 and blow out the account.
A serious trader, inverstor or business person will talk in terms of % returns on investment capital. Loosing the whole of the original investement is not an option. That is why we need significant starting capital if we are going to make a living from trading.

Doubling or going bust are gambling phenomena.
  • #7,673
  • Apr 18, 2009 1:11am Apr 18, 2009 1:11am
Quoting jtrade
highneb,



I am trading 4 EC futures contracts ($12.50/tick per contract) and 2 DAX futures (EUR12.50 per tick per contract). I have taken trades up to 10 fx cash lots (in recent months, prior to switching to futures, which I did for tight spread and accurate volume data). With my trading style, I think it would be difficult for me to trade more than 8 EC ($1m position size) or DAX. Believe me, the pressure more than doubles each time you double your position size.



J.
Those figures are indeed impressive. Are you using DIBS or another technique?
  • #7,674
  • Apr 18, 2009 1:29am Apr 18, 2009 1:29am
Quoting slowlyslowly
Hi guys,

Having read all the thread ( lots of coffee required ) and studied , and thought about the DIBS method, I'm taking the plunge, not that plunge is the right word, and commencing trading using the DIBS strategy.

Two things caught my attention .. firstly, the sheer volume of posts and the vociferous defence of the strategy by several regulars, who clearly make it work and try to convince the doubters otherwise.
Secondly, is the fact that PC's first post was simply to reminisce about the days in the pit, and only later did he start to drop...
Hello slowlyslowly

Yes I agree about the grey hair and chest pains induced by those timeframes lower than the hourly, especially the 5 minutes. Stoplosses seem to always be hit in that timeframe.

Secondly, congrats on your UCHF trade. Please can you post the chart? Thanks.

Wishing you always the green pips
  • #7,675
  • Apr 18, 2009 2:12am Apr 18, 2009 2:12am
I have been live trading for only 7 months...

I am looking at trading dibs and am wondering how soon you trail your stops. I was thinking of the 25SMA to trail but unsure how soon to pull my SL up/dn to the SMA? Right after 1:1 ( Break Even ) seems to soon???

Since I don't have a good way to trail I can't Really see the profit potential that easily... I can see getting Risk x 1 or 2 happening well enough but it seems that the real profit is in trailing for longer time frames.
How Close do you trail and do you deside before the trade or as it developes over time?

I only have a very small account 2K
and Trade a weekly Open Range Breakout ( 2% per trade)
and a Breakout of Londons open ( daily )(1% per trade)

Bottom Line Question
Has DIBS been very profitable for each of you and how long have you been trading it?

Thank you
Jason
  • #7,676
  • Edited 1:53pm Apr 18, 2009 1:41pm | Edited 1:53pm
Quoting icarusfx
Say 1k balance, 2% = 20 20/200= .1 do they do accounts that work on lots that small?
You guys worrying about account size and risk/trade limitations make me laugh

www.forexcalc.com
www.oanda.com

I currently trade a $100 account on a 1% risk/trade basis with a non-dibs system just fine (about breakeven after 6 weeks). I will be adding more deposit money soon, because if I'm not going to buy a house this year, not sure what else I will use it on?

edit: as far as oanda goes, they are pretty well capitalized. Latest report I saw (march?) had them over $150M IIRC.
Hindsight is 20/20
  • #7,677
  • Apr 18, 2009 1:49pm Apr 18, 2009 1:49pm
Quoting highneb
Those figures are indeed impressive. Are you using DIBS or another technique?
Not that impressive : a little over 8 ticks per contract per day.
I am not trading DIBS, although I like it and am always aware when a DIBS trade triggers (I am usually already in prior to that point). I posted on this thread in response to Razor and your comment concerning trading for a living. My intraday method has evolved over many years going round & round in seemingly endless circles of silent desperation.

I've posted a few charts in recent months, including my current setup on kareem40's RSI thread. But the essence of my trading is to trade from the centre of a range, however small, not from the extreme (ie, breakout) even though about half my entries may look to the untrained eye like breakout entries. I have worked very hard at reducing my initial stop size - whilst keeping it "chart logical" - which is why my average loss is small : rarely more than 12 ticks & usually less. I have a LOT of work to do to increase my average win size and eliminate the lower probability trades.
  • #7,678
  • Apr 18, 2009 8:22pm Apr 18, 2009 8:22pm
Thanks PistolDave for the indicator and congrats in your trade, nice to see you are profitable with this method


Quoting PistolDave
Razor:

Sorry to hear about the damage to your mower. Hopefully, it won't be too much of a setback to your business. At least, your trading is doing well so that is something positive to focus on to keep you going. You have a good understanding of the DIBS system as well as other concepts, I can see. I'm glad you are sharing your experience with the other traders.

Goldbird22:

You were asking about the indicator at the bottom of my last post. It is the "TSR Daily Range Indicator" I have it attached below.
----------------

I...
  • #7,679
  • Edited 8:16am Apr 19, 2009 8:05am | Edited 8:16am
Hi Razor,

Thanks for the statistics. Looks promising.

Any ideas for the occurence/handling of IBs that point in the other direction while in a trade?

e.g. EURUSD
11/2/08 BEARISH
11/16/08 BULLISH

Taking of both signals would have required two accounts or some rule to exit the short in favor of the long.

Any idea for taking profits and pulling stops to BE or into profit?

Best regards

tdeu

Quoting Razor_trader
I have gone back through the 2008 year for the EUR and GBP USD crosses and had a rough (i repeat rough) look at the Inside Bars that occured.

Now all i did was record the date of the IB, whether the next candle activated it (so the next week gave us a trade), when it was stopped out (the stop was based on the total risk of that candle) or if the IB is still active (yes there are some candles still active so Not stopped out) and what the absolutly peak was for pips.

Now there was no measurement for profit, just the total maximum pips that the...
  • #7,680
  • Apr 19, 2009 8:27pm Apr 19, 2009 8:27pm
I have taken the Weekly dib on the GBP/JPY. The risk was much smaller this week due to a tighter range last week.

I am currently in and up 70 pips. I will keep you posted on this.

BTW it is on a demo account with a larger balance so I can get a feel for whether it is something to look for in the future.

Good week to you all.
4 traders viewing now