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The DIBS Method... No Free Lunch continues

  • #7,721
  • Apr 21, 2009 11:46am Apr 21, 2009 11:46am
Quoting icarusfx
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
To Icarusfx.

Yes. I'm glad you took that one also.

I'm letting mine run though.

I'd like to try DIBS short term and long term on 2 different demo accounts to see how the different approaches compare. But I'm just not fast enough to do that yet, so I'll stick with what's been working until I get up to that kind of speed.

Are you taking profits early on all DIBS trades? If so, has that approach been profitable in the long term?
  • #7,722
  • Apr 21, 2009 11:50am Apr 21, 2009 11:50am
have you guys tried trading dibs on the daily TF? what close would i be looking at for that? last week's close or last month's close?
  • #7,723
  • Apr 21, 2009 11:57am Apr 21, 2009 11:57am
Quoting fxnoob08
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.

First of all :

Is that a live account ?

Secondly -


Today you went short on USDJPY - Fine,

You see the problem with R:R ratios is, you don't know what RR you are going to get out with.

In DIBS, we know from zinc6's research that you get out what is it 50% of the time at 1:1, so that means you have a 50% chance of getting the whole trade as a "free trade", the other 50% of the time you are going to lose money straight out the door.

Where you make your profit is a) Filtering bad trades and b) Getting extreme R:R ratios on some IB's.



Your R:R is probably (the best way of expressing it is) 2:1+x (Where x is the variable part of it, and can be a minus or a + )

Yeah you got it, it's 2:1+(the free ride OR the loss)



It makes no difference if you trade DIBS on GBPJPY because just because the swings are bigger means nothing because the Inside bars on the GBPJPY are bigger than the size of bars on the Majors.
  • #7,724
  • Apr 21, 2009 12:03pm Apr 21, 2009 12:03pm
Quoting Jigsaw
First of all :

Is that a live account ?

Secondly -


Today you went short on USDJPY - Fine,

You see the problem with R:R ratios is, you don't know what RR you are going to get out with.

In DIBS, we know from zinc6's research that you get out what is it 50% of the time at 1:1, so that means you have a 50% chance of getting the whole trade as a "free trade", the other 50% of the time you are going to lose money straight out the door.

Where you make your profit is a) Filtering bad trades and b) Getting extreme R:R ratios on some IB's.



Your...
yes it's a live account. great post it's all clear now.

The thing is i had been doing great just exiting ALL of my positions after initial investment was covered. so if i risked 20 pips in two lots, i would exit the two lots when i got my 20 pips.

i made over 200 pips in a couple of days.

as soon as i started trying to get the free ride, I lost.
  • #7,725
  • Apr 21, 2009 12:19pm Apr 21, 2009 12:19pm
Quoting fxnoob08
yes it's a live account. great post it's all clear now.

The thing is i had been doing great just exiting ALL of my positions after initial investment was covered. so if i risked 20 pips in two lots, i would exit the two lots when i got my 20 pips.

i made over 200 pips in a couple of days.

as soon as i started trying to get the free ride, I lost.

Hey,

I understand about doing great, but I don't know how long you have been trading this method. Inside bars are bars of indecision in the market. I honestly do not think there is profit to be made at 1:1, so you either got lucky with the streak or you were "filtering out" the bad trades if you get me.

I don't mean to be an asshole and what I say is to benefit you, but if I were you I would return to demo for a while before risking my money, then again I am a twenty year old student, so you might have greater access to cash than me . You seem like you haven't got to grips with the DIBS method, in particular the "leaving trades going" side of things.

I would definatley be only risking . . . Maybe. 1%, personally if I traded DIBS the whole time it would probably be closer to .5% risk a trade.



I don't trade DIBS anymore myself, but the consistent losses it gets, makes it psycholically a very hard method to trade. It's probably the reason why I don't trade it myself anymore.


Anyway, back to my point.

1) If you are exiting at 1:1, you got to filter out the bad trades.

Ever hear of I4Bars ? They are profitable.

And Inside bar which has an Inside bar before it, they are really profitable and I will trade them all day long in certain areas.

Stuff like . . If you have a Bias in which direction the Market is going, or even if you "traded with the trend" I suppose would be good.

A big weakness of DIBS trading is that it is easy for price to come back and hit your stops.

2) If you are going for the "free ride" method you have to leave them going for a "good length" of time.

Analysis of what's happening on the higher timeframes would help you a lot there.


I am ranting here I think :|


As for DIBS on the Daily timeframe, I think there is no value to be found in it, considering the whole idea of DIBS is to build big positions in certain directions and then exit them, I don't think there would be enough inside bars, but I might be wrong,


Best Regards,
Jig
  • #7,726
  • Apr 21, 2009 12:26pm Apr 21, 2009 12:26pm
Quoting Jigsaw
Hey,

I understand about doing great, but I don't know how long you have been trading this method. Inside bars are bars of indecision in the market. I honestly do not think there is profit to be made at 1:1, so you either got lucky with the streak or you were "filtering out" the bad trades if you get me.

I don't mean to be an asshole and what I say is to benefit you,...
it's actually pretty easy to hit 1:1, it get's there pretty fast (but you have to settle for 20-30 pips which is usually the range of Inside bars) as soon as the IB is broken, the problem is if you want to go for the free ride, the backbone of this method, then it needs to go double that ammount in your direction. so today, had i settled for 1:1 i would have again had a winning trade in my hand. but since i had to exit at least a few pips later to go from 2:1 to 1:1 and get the free ride, it just reversed.

what method do you trade now, if i may ask?
  • #7,727
  • Apr 21, 2009 12:40pm Apr 21, 2009 12:40pm
Quoting fxnoob08
it's actually pretty easy to hit 1:1, it get's there pretty fast (but you have to settle for 20-30 pips which is usually the range of Inside bars)...
Over the long term though I honestly cannot see the 1:1 working out, that's just me, I am not saying there cannot be profit made from it, but it's just not for me I guess .

I trade J16 Price Action :

Over at this thread is where you can find us all - http://www.forexfactory.com/showthread.php?t=2331
  • #7,728
  • Apr 21, 2009 1:09pm Apr 21, 2009 1:09pm
Quote
As for DIBS on the Daily timeframe, I think there is no value to be found in it, considering the whole idea of DIBS is to build big positions in certain directions and then exit them, I don't think there would be enough inside bars, but I might be wrong,


Best Regards,
Jig

Actually Inside bar breakouts are a priced based entry method to catch a breakout from consolidated price action with minimal risk. Some people use it to try to build big positions, others for scalping. It is a tool and profit and loss outcomes vary depending on ones trading experience. That is why a trading strategy given to two different people can produce drastically different results.

I encourage all to consider the bigger picture when implementing any strategy, DiBS or otherwise. I use Inside bar breakouts when the situation merits on shorter time frames as well as longer time frames with fantastic results. My best ones have been on the longer time frames recently. But...its only a part of my overall trading methodolgy.
  • #7,729
  • Apr 21, 2009 1:25pm Apr 21, 2009 1:25pm
I'd say this trade has worked out well. Daily trend down. Shorted to downside on Inside bar (yellow dash line) to support at 1.3000
It worked out as a great short entry method for my bigger view that the market was going to sell off.
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  • #7,730
  • Apr 21, 2009 1:34pm Apr 21, 2009 1:34pm
Quoting fxmike101
I'd say this trade has worked out well. Daily trend down. Shorted to downside on Inside bar (yellow dash line) to support at 1.3000
It worked out as a great short entry method for my bigger view that the market was going to sell off.
Nice trade,

Don't get me wrong, I still trade Daily Inside bars and 1HR ones, but not as a strictly DIBS method, as you say yourself that requires a greater overview of whats going on.

I just don't think I could never make a trading plan 100% out of "Daily DIBS" trades and it would be hard to define where the "open" is like Crowns does for 1HR DIBS.
  • #7,731
  • Apr 21, 2009 1:40pm Apr 21, 2009 1:40pm
Quoting Jigsaw
Nice trade,

Don't get me wrong, I still trade Daily Inside bars and 1HR ones, but not as a strictly DIBS method, as you say yourself that requires a greater overview of whats going on.

I just don't think I could never make a trading plan 100% out of "Daily DIBS" trades and it would be hard to define where the "open" is like Crowns does for 1HR DIBS.
I understand what you meant. Like I said. Its a great tool.
  • #7,732
  • Apr 21, 2009 5:17pm Apr 21, 2009 5:17pm
Quoting Jigsaw
it would be hard to define where the "open" is like Crowns does for 1HR DIBS.
Since there are ~20 trading days in a month, and 24 hours in a day, I think you would use the monthly open price. Or maybe another day of the month depending on news reports to gauge how much money was in the market. News reports could maybe also tell you when the best times of the month are to take entries (like the first 6-10 hours of a trading day beginning at 6GMT)
Hindsight is 20/20
  • #7,733
  • Apr 21, 2009 6:13pm Apr 21, 2009 6:13pm
Quoting icarusfx
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
Icarus,

you dont know where the price will be going after your entry, so if you trade mechanicly without looking at the price action you can aim for 1:1 or 1:5 or 1:10.
If you aim for 1:10 in GBP/USD that means 12 trades will get there = 12 x 250pips = 3,000 pips.
113 trades wont make the grade = loss of 113 x 25 pips = 2,825 pips
so profit at the end of 7 months and 125 trades is 175 pips.

If the 7 months sample is correct, your best bet is to aim for 1:3 with 43 trades reaching this goal for 3,225 pips profit and 82 trades with a 25 pip loss = 1,175 pips profit over this period.
  • #7,734
  • Apr 21, 2009 8:00pm Apr 21, 2009 8:00pm
Quoting yonnie
If the 7 months sample is correct
This would be curve fitting, and would guarantee that you would never duplicate results. You might get close, but I don't think you would ever get the exact same (this is the nature of the markets).
Hindsight is 20/20
  • #7,735
  • Apr 21, 2009 8:36pm Apr 21, 2009 8:36pm
Quoting Jigsaw
Over the long term though I honestly cannot see the 1:1 working out, that's just me, I am not saying there cannot be profit made from it, but it's just not for me I guess .

I trade J16 Price Action :

Over at this thread is where you can find us all - http://www.forexfactory.com/showthread.php?t=2331
It depends on how you manage your trades. The ultimate basis and the theory behind infinite yield is that you dont exit your other lot unless it gets stopped out.

The concept is almost impossible for an individual to comprehend and acknowledge if he hasnt recognised has happened in the past. It is also a very emotional concept because it basically throws caution out the window and at times would lead to large postions going for nothing. If you where in a trade, a single lot at the base of the last bull run that lasted 6 odd years, then you could comprehend the power of trading this way. The ultimate goal is to maximise your trade to its fullest potential whilst staying completely neutral to your emotions.

Now the exitting at 1:1 does help somewhat in that we now recognise that the trade that is on the table isnt going to cost us anything. If you could simply forget about that trade then you could benefit. You would simply go onto looking for another trade.

As I mentioned, on the EUR with the last bull run, which was probably the smoothest trend of the majors, you could have turned a potential 30 pip risk into a potential 7500+ pip winner. Would you have lasted that long, 99.9% would say no (including me).

The long term profitability comes down to how conservative you are as a trader. If you can accept that you may loose a potential large winner, where the ultimate outcome is zero cost, to perhaps hold on the winner that will multiply your account then you will find the power in this methodology.

However, this method is a Money Management method, and it is possible to implement with any system/strategy. We simply use it for Inside Bars.

Hope this clears some confusion
  • #7,736
  • Apr 21, 2009 9:28pm Apr 21, 2009 9:28pm
Quoting cosgrove
This would be curve fitting, and would guarantee that you would never duplicate results. You might get close, but I don't think you would ever get the exact same (this is the nature of the markets).
no curve fitting IF this 7 months sample is the same for 7 years or 14 years.........

and the good thing was that every IB was taken between 6.00 and 16.00GMT

for long term traders EUR/USD was even better with 17 trades out of 137 trades still standing at 1:10
  • #7,737
  • Apr 21, 2009 11:49pm Apr 21, 2009 11:49pm
Peter Crowns posted recently (post no 7100) and disclosed that another time period is as much viable as the 6.00 GMT time frame.......
Did anybody do some backtesting to see what this other time frame is?

The backbone of this strategy seems to be to collect a lot of small positions and take your profit weeks/months down the track. In the meantime you accumulate a lot of small losses, because only about 50% of the trades will go beyond 1:1 for at least a breakeven trade and 50% of the trades will close out at a loss.

So for most people its not easy to handle a lot of losses and good run-up trades that end up breakeven on a daily basis and a few big profits in a few weeks/months.

I`m starting to wonder if it is profitable to accumulate against the long-term trend.......anybody backtested this?

thanks
  • #7,738
  • Apr 22, 2009 3:52am Apr 22, 2009 3:52am
Quoting takingthepip
To Icarusfx.

Yes. I'm glad you took that one also.

I'm letting mine run though.

I'd like to try DIBS short term and long term on 2 different demo accounts to see how the different approaches compare. But I'm just not fast enough to do that yet, so I'll stick with what's been working until I get up to that kind of speed.

Are you taking profits early on all DIBS trades? If so, has that approach been profitable in the long term?

morning ttp,

well the quick answer is yes i close practically every trade "early" but at no fixed r/r, i treat each trade differently due to a multitude of elements, the ones i let run i do so with a moving stop once the trade has attained certain lvls and i also move stops on my 2nd trade to b/e once the first is hit (most of the time) thus giving me at least 1% on any trade that hits my first tp.

I'm fairly choosy in my entries as i've written and don't take everything and anything but it works for me. I've been profitable for quite some time and would conservatively say at least 4% a week..... i'll not say more as i don't want a backlash from the dickheads that seem to appear to pass judgement on anyone with a modocum of success.

regards
  • #7,739
  • Apr 22, 2009 4:00am Apr 22, 2009 4:00am
Quoting yonnie
Icarus,

you dont know where the price will be going after your entry, so if you trade mechanicly without looking at the price action you can aim for 1:1 or 1:5 or 1:10.
If you aim for 1:10 in GBP/USD that means 12 trades will get there = 12 x 250pips = 3,000 pips.
113 trades wont make the grade = loss of 113 x 25 pips = 2,825 pips
so profit at the end of 7 months and 125 trades is 175 pips.

If the 7 months sample is correct, your best bet is to aim for 1:3 with 43 trades reaching this goal for 3,225 pips profit and 82 trades with a 25 pip loss...
ah my apologies yonnie i miss read the initial post.... so to conclude i'd say the test wasn't all that realistic with entries set at 25 continually but insightful with regard to avg profitable range. (be it in only a 7 month period that has been tumultuous so say the least)
  • #7,740
  • Apr 22, 2009 4:08am Apr 22, 2009 4:08am
oh takingthepip

i closed the short yesterday as it was heading for resistance (seem to have a bottom in place) and was at the end of the trading day + i was just happy with my lot from the trade (slightly more aggressive %) i wasn't looking long term.

regards
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