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The DIBS Method... No Free Lunch continues

  • #7,701
  • Apr 20, 2009 10:16pm Apr 20, 2009 10:16pm
Quoting yonnie
I can imagine he would have an emergency stop of say 2 x 20-day ATR in the market and will look at his chart at the end of the day to make a decision to avoid being taken out by a spike intraday.

You can look at the swings and decide what it would take to stay in till the end of the swing.
Somebody earlier in this thread mentioned that to stay in would take a stop of 1 1/2-2 x 20-day ATR.
Thanks for bringing that back up! I either forgot about it or missed it. Will take a look and see what I think.
Hindsight is 20/20
  • #7,702
  • Apr 21, 2009 4:45am Apr 21, 2009 4:45am
Quoting PistolDave
------------

Razor, good start to the week!

I'm looking forward to seeing your journal as you post your results.

I have also been thinking about how to make maximum profits with the DIBS system.

Two main schools of thought seem to be apparent as how to manage when you enter and exit a trade:

1) Set a profit target at 1:1, 1:2, or whatever, take the profits at those amounts and compound your account and trade larger size as your account grows.

Or,

2) Get into a risk-free trade as often as possible, and trail a stop if possible and...


Hi Dave...

well i think there's rooms for a middle ground here or a 1.5 if you will.

Sorry if i sound like a stuck record but Discretion is the key! if you in a trade, it's going well but you getting close to historical resistance etc etc i see nothing wrong with reacting to a failed test or setting tp at that point. i don't think people should trade blindly from fixed r/r ratio's or just stay in until your stopped out 20 sma or not. If the above trade breaks the resistance then take a position again... ok so you left 20 pips on the table but you would also have avoided the drop of 80-150 or more pips to your 20sma if that were hit... or don't retake the positon and bask in the 1:10 that you've just made and look for a new position somewhere else or take a break.... have a kitkat.

what i'm saying is there is a middle ground or no hard and fast rules, i know this way to be profitable and showing a very pretty equity curve /

I do believe #1 to be profitable but 1.5 easier to live with from an equity curve pov.

each to there own....

regards
  • #7,703
  • Apr 21, 2009 5:39am Apr 21, 2009 5:39am
you guys better look at that post of zinc6

he looked at 7 months of data; not enough but it does give an indication.

The best pair was GBP/USD, 125 trades over this period; assume 25 pips IB candle
72 trades went to 1:1, balance stopped out = 475 pips profit
52 trades went to 1:2 = 725 pips profit
43 trades went to l:3 = 1,175 pips profit
32 trades went to 1:4 = 875 pips profit
26 trades went to 1:5 = 725 pips profit
12 trades went to 1:10 = 175 pips proft

If average IB candle 30 pips profit would be 20% higher.

Enough profit over 7 months?
  • #7,704
  • Apr 21, 2009 6:27am Apr 21, 2009 6:27am
Not seeing much out there, there is bound to be some catching up from yesterdays moves so Im gonna turn in for the night. Only managed a few hours sleep last night due to random things.

See yas tomorrow
  • #7,705
  • Apr 21, 2009 6:42am Apr 21, 2009 6:42am
Quoting yonnie
you guys better look at that post of zinc6

he looked at 7 months of data; not enough but it does give an indication.

The best pair was GBP/USD, 125 trades over this period; assume 25 pips IB candle
72 trades went to 1:1, balance stopped out = 475 pips profit
52 trades went to 1:2 = 725 pips profit
43 trades went to l:3 = 1,175 pips profit
32 trades went to 1:4 = 875 pips profit
26 trades went to 1:5 = 725 pips profit
12 trades went to 1:10 = 175 pips proft

If average IB candle 30 pips profit would be 20% higher.

Enough profit over 7 months?...
hey yonnie the "12 trades that went to 1:10 = 175 pips profit" can't be correct!? 12 trades making 1:10 and only 175 pips that just doesn't add up... I mean 1 trade on gbp/usd hitting 1:10 you'd expect 175pips or more as 175/10 = a 17.5 pips ib (inc spread) so it can't be correct for 12 trades.

so with this in mind i would worry about the accuracy of the other figures although on first glance they seem more than plausable. (could be a typo)

regards
  • #7,706
  • Apr 21, 2009 8:05am Apr 21, 2009 8:05am
One break even USD/JPY and one losing EUR/GBP DIBS trade so far today. I don't see anything on the 1 HR at the moment, but there's a short setup on the 4HR USD/JPY of moderate risk.

It's too big for my MM rules though.

  • #7,707
  • Apr 21, 2009 8:35am Apr 21, 2009 8:35am
Quoting takingthepip
One break even USD/JPY and one losing EUR/GBP DIBS trade so far today. I don't see anything on the 1 HR at the moment, but there's a short setup on the 4HR USD/JPY of moderate risk.

It's too big for my MM rules though.

hey ttp, I can't work out what usd/jpy you took? im short atm after just hitting free trade (moved stops to b/e so at lease +1%) i missed the early entry that would have provided the same 1%.

was tempted by nzd/usd short buy the rising trend and being slightly above the open ward me off....(trade would be a free trade lvl now) ah well.

not that much happening for me atm.... back to work
  • #7,708
  • Apr 21, 2009 8:36am Apr 21, 2009 8:36am
risk reward ration question:

maybe I'm missing something but if you go long 2 lots at say 1.2550. SL at 1.2525 and exit half of your position at TP 1.5075 how is that 1:1????

you exit for a 25 pip profit and get stopped out at breakeven if it goes against you then the risk reward ration is actually 2:1....

am i missing something here or do i need to go back to pipschool.
  • #7,709
  • Apr 21, 2009 9:12am Apr 21, 2009 9:12am
Quoting fxnoob08
risk reward ration question:

maybe I'm missing something but if you go long 2 lots at say 1.2550. SL at 1.2525 and exit half of your position at TP 1.5075 how is that 1:1????

you exit for a 25 pip profit and get stopped out at breakeven if it goes against you then the risk reward ration is actually 2:1....

am i missing something here or do i need to go back to pipschool.
hi fxnoob08

well i believe the calculation were based on tp points on a single trade rather than the 2 lot system in an attempt to explore r:r lvls

just a guess i can't speak for the author

as for r/r

on the 2 lot system 1 would express the r:r in each lot separately as in

Lot A = 1:1 so 1% risk for 1% gain

Lot B = 1: well thats also 1% risk for ? gain (depends how you trade it )

hope this helps

ps usd/yen trade lot B b/e hit me stop so this trade would look like:

lot A = 1:1
lot B = 1:0 (as i moved stops to breakeven then got stopped out)

so as a whole 2:1 on that trade which looks horrible from a r:r point of view but doesn't express the possible return.
  • #7,710
  • Apr 21, 2009 9:23am Apr 21, 2009 9:23am
Quoting icarusfx
hey ttp, I can't work out what usd/jpy you took? im short atm after just hitting free trade (moved stops to b/e so at lease +1%) i missed the early entry that would have provided the same 1%.

was tempted by nzd/usd short buy the rising trend and being slightly above the open ward me off....(trade would be a free trade lvl now) ah well.

not that much happening for me atm.... back to work
It was the 5AM GMT IB on my system. It went free ride, and I let it run and got stopped out.

There's a short setup on the EUR/GBP at the moment which I've set a sell stop on.
  • #7,711
  • Apr 21, 2009 9:41am Apr 21, 2009 9:41am
Quoting takingthepip
It was the 5AM GMT IB on my system. It went free ride, and I let it run and got stopped out.

There's a short setup on the EUR/GBP at the moment which I've set a sell stop on.
snap....

and i see the yen 1 sorry must have hit your stop almost to the pip (don't you just hate it when that happens.
  • #7,712
  • Apr 21, 2009 10:07am Apr 21, 2009 10:07am
Quoting icarusfx
hi fxnoob08

well i believe the calculation were based on tp points on a single trade rather than the 2 lot system in an attempt to explore r:r lvls

just a guess i can't speak for the author

as for r/r

on the 2 lot system 1 would express the r:r in each lot separately as in

Lot A = 1:1 so 1% risk for 1% gain

Lot B = 1: well thats also 1% risk...
hmm thanks for the reply. so what you are saying is if my stop loss is 20 pips and i have open the trades with to lots, then i take my first profit when i hit 40 pips profits. 40/2 = 20 1:1 RR then just the let rest ride. otherwise, if you exit half of your position once 20 pip profit is reached you'll only be taking home 10 pips.
  • #7,713
  • Apr 21, 2009 10:23am Apr 21, 2009 10:23am
Quoting fxnoob08
hmm thanks for the reply. so what you are saying is if my stop loss is 20 pips and i have open the trades with to lots, then i take my first profit when i hit 40 pips profits. 40/2 = 20 1:1 RR then just the let rest ride. otherwise, if you exit half of your position once 20 pip profit is reached you'll only be taking home 10 pips.

well no...

our trades are split into two

( 1) we risk 20 pips to make 20 pips so 1:1 for that trade. agreed?

(2) it's the variable reward nature of the 2nd trade (taken at the same time with the same stop but variable tp) that can only be calculated upon termination (stop hit, tp hit, trailing stop hit etc)

make sense?
  • #7,714
  • Apr 21, 2009 10:42am Apr 21, 2009 10:42am
Quoting icarusfx
well no...

our trades are split into two

( 1) we risk 20 pips to make 20 pips so 1:1 for that trade. agreed?

(2) it's the variable reward nature of the 2nd trade (taken at the same time with the same stop but variable tp) that can only be calculated upon termination (stop hit, tp hit, trailing stop hit etc)

make sense?
im not sure i follow you. i know you let the second lot run for a free ride after initial risked pip is attained.

but if the inside bar has a range of 20 pips and you go short 2 lots(so you can exit and let the other run) then you are risking 20+1+spread, lets say thats 23 for usd/jpy (2 pip spread)

then if the trade had gone against you right away, you would have been out of 23 pips or 46 dollars.

if the trade had gone in your direction then you must exit one lot at + 46 pips in order to take home the 23 dollars and be at 1:1 then just let the rest ride.
  • #7,715
  • Apr 21, 2009 11:32am Apr 21, 2009 11:32am
im not sure i follow you. i know you let the second lot run for a free ride after initial risked pip is attained.

Yes

but if the inside bar has a range of 20 pips and you go short 2 lots(so you can exit and let the other run) then you are risking 20+1+spread, lets say thats 23 for usd/jpy (2 pip spread)

Fine.

then if the trade had gone against you right away, you would have been out of 23 pips or 46 dollars.

That's correct.

if the trade had gone in your direction then you must exit one lot at + 46 pips in order to take home the 23 dollars and be at 1:1 then just let the rest ride.

Yeah, but it's now a FREE TRADE. Because if the trade comes back against you NOW.

You will be +23 dollars on the first lot
And -23 dollars on the second lot.
So you would breakeven on that trade.



You are thinking too much in terms of Dollars and lots.

Think in terms of Percentage risk. it's way better
  • #7,716
  • Apr 21, 2009 11:32am Apr 21, 2009 11:32am
Quoting fxnoob08
im not sure i follow you. i know you let the second lot run for a free ride after initial risked pip is attained.

but if the inside bar has a range of 20 pips and you go short 2 lots(so you can exit and let the other run) then you are risking 20+1+spread, lets say thats 23 for usd/jpy (2 pip spread)

then if the trade had gone against you right away, you would have been out of 23 pips or 46 dollars.

if the trade had gone in your direction then you must exit one lot...

right i think you've got confused on the premise somewhere...

using your example a dibs trade will look like

2 x 23 pips right 1st tp is 23pips, the other lot is left to run when 1st tp is hit(free trade) with whatever trialing stop you like ma sar etc

if the trade then comes back and hit your stop your out for -23

so trade total = + 23 -23 = 0

if the trade never hits 1st tp and is left to stop loss then you -46 (both fail)

or your +23 + whatever you get from the second trade say 1:10 or 230
then your trade would be 23+230 = 263 with and initial risk of 46

so 46/263 or 1:5.7 ish
  • #7,717
  • Apr 21, 2009 11:34am Apr 21, 2009 11:34am
Quoting Jigsaw
im not sure i follow you. i know you let the second lot run for a free ride after initial risked pip is attained.

Yes

but if the inside bar has a range of 20 pips and you go short 2 lots(so you can exit and let the other run) then you are risking 20+1+spread, lets say thats 23 for usd/jpy (2 pip spread)

Fine.

then if the trade had gone against you right away, you would have been out of 23 pips or 46 dollars.

That's correct.

[i]if the trade had gone in your direction then you must exit one lot...
wish you'd done this before i started to reply lol
  • #7,718
  • Apr 21, 2009 11:37am Apr 21, 2009 11:37am
Quoting icarusfx
wish you'd done this before i started to reply lol
Lol sorry I hate when people do that when im replying
  • #7,719
  • Apr 21, 2009 11:37am Apr 21, 2009 11:37am
Quoting icarusfx
snap....

and i see the yen 1 sorry must have hit your stop almost to the pip (don't you just hate it when that happens.

well we're looking good takingthepip!

I'm taking profit now ish

off home and this trade will take me to over 4% for the day

goodnight all

i'm off home to the family
  • #7,720
  • Apr 21, 2009 11:39am Apr 21, 2009 11:39am
Quoting Jigsaw
im not sure i follow you. i know you let the second lot run for a free ride after initial risked pip is attained.

Yes

but if the inside bar has a range of 20 pips and you go short 2 lots(so you can exit and let the other run) then you are risking 20+1+spread, lets say thats 23 for usd/jpy (2 pip spread)

Fine.

then if the trade had gone against you right away, you would have been out of 23 pips or 46 dollars.

That's correct.

[i]if the trade had gone in your direction then you must exit one lot...
so in essence, as soon as you enter a trade your risk reward ration is 2:1 and we are counting on a free ride to make up most of our wins?

today i went short on the usd/jpy. my stop loss was 25 pips, it reversed before i could exit 1 lot, it was up only about 23 pips lets say.

ended -50 dollars in the loss.

as most bars on the majors are usually about 30-40 pip. we need the breakout to be at least double that ammount. seems like a strategy more suited for the gpb/jpy as the bar ranges are huge.
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