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  • #8,781
  • Oct 8, 2009 9:00am Oct 8, 2009 9:00am
Quoting foredog
Yes but if you are long 4 and short 5 then you are short 1..that is a fact.

doesn't matter how you word it or if you have two accounts or whatever you still would have a net short position.


say you keep open you're long, and open a short of the same amount then (forget spreads etc). If you make 50 pips on the short, you've still lost 50 on the long. So net P&L 0.
Exactly.

I think some people are getting confused with the concept of Infinite Yield by confusing themselves with the trade set up. If you open a trade at 120 with a stop loss at 119.50, UNLESS 119.50 gets hit (OR you close the trade manually) then your trade is still literally on the table.

In the event that a new order is created in the opposite direction then the new limit, if you choose to put one in would act in the same manner as the previous order, the only thing you have done is made profit on the new order, or in the event that your new order is stopped out then you would make a net loss on that trade. In either event the limit or stop loss would act as the key point.

Depending on your broker it may be handled in different ways, but the idea is really that if you are long X lots and you get a signal to short X lots, if that new order is executed then you are effectively hedging your position. How that new position is set up will really define how the situation plays out.

The concept of Infinite Yield is that a position at X point is in play until either it is Stopped by a SL or a manual stop. You could have multiple positions running in different directions, however it is important to note longer term Trend so that in the event of a counter trend trade you take a limit at some point.

The other option is only trade 1 direction, what for the pullbacks and trade them. Look at the daily and weekly chart for longer term direction and trade the trend.

Razor
  • #8,782
  • Oct 8, 2009 1:38pm Oct 8, 2009 1:38pm
Quoting foredog
Save clogging up the thread with bizzare "hedging things"
Ok foredog. I NEVER had the intention to get some opinions about hedging. Maybe english as my second language or choice of words made it unclear. Im really sorry for that. And Im also sorry for "cloggin up the thread".

What I was asking was this. Suppose you have gigantic uptrend (for example EURGBP) and you are at its beginning. I assume fixed % risk per trade.
You enter LONG with 40 pips SL (position size x). Trade is going well and next day you get VALID REVERSAL DIBS trade (SHORT) with SL of 10 pips (position size y). This would make the position y being 4 times the size of x. So given the knowledge that you can´t predict the trends, you will stand NET SHORT (y>x). Later, you will get stopped out and your very nice little LONG which could´ve made you a killing was stopped out.

I am asking this because it happened to me on several occasions and I wanted to know how others handle this kind of situation (no need to spill out the beans, but rather get some interesting ideas).

Bluefish

P.S. @Razor : thanks for Your reply
  • #8,783
  • Oct 8, 2009 2:35pm Oct 8, 2009 2:35pm
Quoting bluefish
Ok foredog. I NEVER had the intention to get some opinions about hedging. Maybe english as my second language or choice of words made it unclear. Im really sorry for that. And Im also sorry for "cloggin up the thread".

What I was asking was this. Suppose you have gigantic uptrend (for example EURGBP) and you are at its beginning. I assume fixed % risk per trade.
You enter LONG with 40 pips SL (position size x). Trade is going well and next day you get VALID REVERSAL DIBS trade (SHORT) with SL of 10 pips (position size y). This would make the...
Crossed wires i guess.

If it's in a large uptrend then don't take the short. If you are taking the short you must believe that the uptrend is over, exit the long and lock in that profit and then go short the full amount for the short.

Otherwise, if you do as you mentioned and sell the larger amount all you are effectively doing is closing out the long and taking a smaller short position.

You either have to be long or short, you can't be both.
Hope this helps.
  • #8,784
  • Oct 13, 2009 2:39pm Oct 13, 2009 2:39pm
Fully loaded with DIBS trades, short gbpjpy from 17 sept, short cable from 24 sept, long eurusd and short usdchf from yesterday...two thirds profit out at 1:1 on all trades = free trades
  • #8,785
  • Oct 14, 2009 2:57am Oct 14, 2009 2:57am
Bakuli (hi mate) PM'ed me but I've not posted enough so I can't PM back. So I'll post his questions and my reply here.

I recently came across your interesting and helpful post in the DIBS thread and am very interested to learn more about your way of trading DIBS using the 4 hr timeframe. I have always been interested in trading DIBS following Peter Crown's rules ie using the 1 hr TF but unfortunately I haven't really been able to get it to work for me as I hold a full time job (so I can't trade when London is open as I am UK based). I thought about the 4 hr TF but haven't really much of a clue how to go about it until I came across your post. I wonder if you could answer a few questions to help me out. It would be very much appreciated.

I have done backtests on DIBS and understand that there will always be more losers/breakevens than winners but if left to run, the few winners will make the startegy a profitable one.

1) Could you please tell me, from your experience, the best way to determine the direction of the DIBS trade in the 4 hr TF. Do you use an EMA to determine the trend ie for eg you would only trade a long if it's above the EMA and vice versa for short ?


I run a smaller EMA signal, taken off the average of high and low, rather than the close. Generally I’ll take a dib in the direction of the last three bars’ average, but also look to higher TF as a guide as well. Either way, sometimes it will break hard the other way. Such is trading.

2) I gather you use the EMA as an exit signal . What is the "best" EMA to use trading the 4 hr TF and by how many pips would you allow the trade to cross over the EMA before you would exit the trade ?

There isn’t a best one – it what suits your style. If there was an exact system to trading, we’d all be millionaires, right? The emotion kicks in and we make mistakes, not taking trades we should have and vice versa. If you choose a small EMA, you’ll have more small winners but your account won’t grow very much. If you choose a large EMA, you’ll be relying on too few trades to make you money as (theoretically) you’ll be taking loads of free-rides for no profit. With regards to when to get out, when the price has passed through the EMA line by a third of my position size, my stop moves to about a quarter of my size the other side of the line. That way I track the EMA. The last thing I’d want to do is be long on a run of higher highs and higher lows and get out too soon – let the trend run!

3) This question relates to the size of the inside bar. Do you have a limit on the size of the 4 hr bar when trading DIBS ? Or do you trade all inside bars irrespective of size?


In a dull sideways market I’ll avoid big pip positions. I always size my positions to my money management rules. A huge couple of bars preceded by a load of small ones isn't likely to move anywhere soon and will probably hit you SL before your BE, as there is localised S/R in there.

4) Last question is about your trading platform. Are you saying you are now using a spreadbetting one ?

For the first few months I got re-quotes whenever I was up on the broker I used. Realising that MT4 has the ‘virtual dealer plugin’ so the broker can slow down your trades is a concern. The proprietory spread bet platforms seem to be far less trouble, I’m not going to name names but the one I use doesn’t offer the tightest spreads, but I’ve found to be the most reliable. I’ll sacrifice an extra pip a trade to be sure I can exit the trade.



Sorry for all theses questions but it would really help me to put all the pieces together after 2 years of not beng consistently successful at trading ( a lot of it due to poor mindset as I lost all my hard earned savings when I first started trading - by the way I have taken your advise and bought Trading in the Zone)


It’s all down to mindset. I reckon you could take near-random entries (just going with the most recent three bars’ direction as an example) and still make money if you accepted that you’d lose or break even about 75% of the time, as long as you let the winners run. Dibs is an edge on that, nothing more.

Cheers
Pinman
  • #8,786
  • Oct 14, 2009 10:55am Oct 14, 2009 10:55am
[quote=james996;3038062]Oh and I put in an average of 11 hours a day trading.Getting up at 2:30 in the morning to 1pm. Not exactly what is potrayed by the marketing gurus out there. QUOTE]


Hey James,

Thanks for your very useful posts. I am looking to implement a trading schedule just like yours, using a system based on the 1H bars that I developed myself.

What kind of sleeping schedule/exercise, and/or diet do you use that gives you the stamina for such a long work day, on a consistent basis. Too many times, waking up at 2:00 AM, I cannot last past 7:30 AM EST.

Also, what kind of activities do you do to stay sharp while waiting for the 1H bars to complete. I personally do not plan to watch charts or my P&L screen during that time.

Cheers,

Jacques
  • #8,787
  • Oct 15, 2009 7:09am Oct 15, 2009 7:09am
Just taken my 1st awesome trade on the EURUSD following the Dibs and still counting with a trailing stop on

So if anyones still around on here can you tell me if an inside bar would be vaild following a very large candle ?
  • #8,788
  • Oct 15, 2009 8:50am Oct 15, 2009 8:50am
Quoting ab1
Just taken my 1st awesome trade on the EURUSD following the Dibs and still counting with a trailing stop on

So if anyones still around on here can you tell me if an inside bar would be vaild following a very large candle ?
Depends on a lot of little factors. Generally there is a reason behind the IBs the follow large moves, however depending on the size of the candle the fact may be that the volume has dried up temporarily and there is no new high/low. That in itself would make an IB.

The other side of the coin is where you are in the day. Later in the day could be the shifting of volume from one zone to another or a zone calling it a day.

I would normally ignore the IBs that come after large moves, however there is nothing wrong with looking at larger timeframes to see if there is some long term options with that particular IB.

For instance if the greater move is after finding solid support after a pullback and the trend is resuming, particulaly after a big reverse move, then the long term outlook would give reason to take a break on the trend side of that IBs.

Look for more reasons to trade and IB than just the fact that it is an IB. Far too many traders see this thread as a success because of the simplicity of trading an IB. What they fail to see is the bigger picture, they fail to understand the information around them and therefore start to just trade random Inside Bars that dont have long term prospects. We are all in this boat at the start but as time goes on you will learn to see better setups.

Well done on the trade. How long can you hold your nerve is the next test

Razor
  • #8,789
  • Oct 15, 2009 9:51am Oct 15, 2009 9:51am
Quoting Razor_trader
Depends on a lot of little factors. Generally there is a reason behind the IBs the follow large moves, however depending on the size of the candle the fact may be that the volume has dried up temporarily and there is no new high/low. That in itself would make an IB.

The other side of the coin is where you are in the day. Later in the day could be the shifting of volume from one zone to another or a zone calling it a day.

I would normally ignore the IBs that come after large moves, however there is nothing wrong with looking at larger timeframes...
Hey Razor

Some good advice in there...thanks

If you read this in time theres an inside bar forming on the GBPUSD, it follows 2 pins, or you may call these "spinning tops", etc if you know your candles. The time is GMT 14:45 (BST 15:45) and it is the pin that Im using as my inside bar.....is that cool to use pins ?

And lastly, looking back over the thread it looks like trading this method is only prefered up until about GMT 15:00 (about 9 hours) so would you see this as a valid signal as its almost time to stop ?

Im watching about 8 pairs currently, do you have a batch that you find produce the most volitility over others ?

cheers


ab1
Attached Image (click to enlarge)
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  • #8,790
  • Oct 15, 2009 10:02am Oct 15, 2009 10:02am
Quoting ab1
Hey Razor

Some good advice in there...thanks

If you read this in time theres an inside bar forming on the GBPUSD, it follows 2 pins, or you may call these "spinning tops", etc if you know your candles. The time is GMT 14:45 (BST 15:45) and it is the pin that Im using as my inside bar.....is that cool to use pins ?

And lastly, looking back over the thread it looks like trading this method is only prefered up until about GMT 15:00 (about 9 hours) so would you see this as a valid signal as its almost time to stop ?

Im watching about 8...
Since yu are still learning the method, why not trade less than the 8 pairs yu are trading, why not start with the major pairs and then diversify when yu gain experience and confidence with the strategy.

A lot of losses with this method so with 8 pairs will yu be able to stand the pressure of loss after loss....

Dont get me wrong, its a very profitable strategy...but yu have to let the winners run and thats separates the profitable trader and BE trader with this method.

Good Luck
  • #8,791
  • Oct 15, 2009 10:03am Oct 15, 2009 10:03am
Just out of interest I never took that trade because about 1 min before the hour it went above the other bar by 2 pips so therefore ended up as not an inside bar.....not sure if Im taking that to extremes here .....lol, but I'll just see how it develops from the side lines so to speak !
  • #8,792
  • Oct 15, 2009 10:06am Oct 15, 2009 10:06am
Quoting Fxtrader
Since yu are still learning the method, why not trade less than the 8 pairs yu are trading, why not start with the major pairs and then diversify when yu gain experience and confidence with the strategy.

A lot of losses with this method so with 8 pairs will yu be able to stand the pressure of loss after loss....

Dont get me wrong, its a very profitable strategy...but yu have to let the winners run and thats separates the profitable trader and BE trader with this method.

Good Luck
Ok so to be specific then you mean....

EURUSD
GBPUSD
USDJPY
USDCHF
USDCAD.....?...............

this is a good method...I like price action..its real and in the present...had most of my success with systems that use PA...well the little successs Ive had to date....
  • #8,793
  • Oct 15, 2009 1:37pm Oct 15, 2009 1:37pm
Quoting ab1
Ok so to be specific then you mean....

EURUSD
GBPUSD
USDJPY
USDCHF
USDCAD.....?...............

this is a good method...I like price action..its real and in the present...had most of my success with systems that use PA...well the little successs Ive had to date....
Lose USD/CAD and you have the 4 pairs Peter traded along with GBY/JPY which I believe he traded on occassions......from what I have read and the little I have learned in the 7 or 8 months I have been trading them IB's work in the 10 hours after London open just using Peters filter (up or down on the day) if you take a large enough sample size, stick to the exact same rules, trade mechanically and use strict money management (0.5% or less per trade).......
Best,
J
  • #8,794
  • Oct 15, 2009 2:22pm Oct 15, 2009 2:22pm
Quoting JamesBranson
Lose USD/CAD and you have the 4 pairs Peter traded along with GBY/JPY which I believe he traded on occassions......from what I have read and the little I have learned in the 7 or 8 months I have been trading them IB's work in the 10 hours after London open just using Peters filter (up or down on the day) if you take a large enough sample size, stick to the exact same rules, trade mechanically and use strict money management (0.5% or less per trade).......
Best,
J
Thanks for that James...I did actually find some information later in a document that pretty much answered all my questions.

But thanks again anyway
  • #8,795
  • Oct 15, 2009 3:54pm Oct 15, 2009 3:54pm
Quoting ab1
Thanks for that James...I did actually find some information later in a document that pretty much answered all my questions.

But thanks again anyway
Did yu catch the DIBS trades this week gbpjpy long from 142.04, gbpusd long from 1.5850, eurusd long from 1.4851, usdchf short from 1.02720, usdjpy long from 90.15...all trades should still be running now with more than 900pips of unrealized profit
  • #8,796
  • Oct 15, 2009 4:32pm Oct 15, 2009 4:32pm
Quoting Fxtrader
Did yu catch the DIBS trades this week gbpjpy long from 142.04, gbpusd long from 1.5850, eurusd long from 1.4851, usdchf short from 1.02720, usdjpy long from 90.15...all trades should still be running now with more than 900pips of unrealized profit
So do all you Gents/Ladies run the 4 majors plus GBPJPY ?
  • #8,797
  • Oct 15, 2009 5:40pm Oct 15, 2009 5:40pm
Quoting Fxtrader
Since yu are still learning the method, why not trade less than the 8 pairs yu are trading, why not start with the major pairs and then diversify when yu gain experience and confidence with the strategy.

A lot of losses with this method so with 8 pairs will yu be able to stand the pressure of loss after loss....

Dont get me wrong, its a very profitable strategy...but yu have to let the winners run and thats separates the profitable trader and BE trader with this method.

Good Luck
very sound advice. I only watch the cable and GBP/JPY plus EUR/JPY mainly, but that is because it falls in well with the other projects that I am working with. The more you trade a particular currency, the more you will recognise patterns and formations. You essentially get a feel for the currency and its behaviour and because of that you can get yourself into the opportunity flow easier than if you concentrate on a flurry of pairs.

G/U is a great pair to trade. It has been a very difficult one because of the range but there has been more than enough activity to produce winners. Yesterday was an example of an opportunity to catch a trade and if you had trades long from Monday then yesterday would have been like a bonus.

Sound advice, trade less pairs and look at higher Timeframes for confirmation that the IB you are going to take has a higher probable chance of netting you at least your money back. If you dont feel it will, stay on the sides/ No harm is done when you have no money in the market there will be plenty more opportunities out there

Razor
  • #8,798
  • Oct 15, 2009 5:43pm Oct 15, 2009 5:43pm
Quoting Fxtrader
Did yu catch the DIBS trades this week gbpjpy long from 142.04, gbpusd long from 1.5850, eurusd long from 1.4851, usdchf short from 1.02720, usdjpy long from 90.15...all trades should still be running now with more than 900pips of unrealized profit
I didnt catch them that early but I have 2 G/Js running plus a G/U running at full steam (the market hasnt taken my 1:1 which is now at 2:1).

I updated my journal with these trades.

Well done, it is these times that test your nerve. Can you now watch these trades mature further or do you take them off. Can you watch 900 become 200 or less without the fear of it going to zero. Time will tell

Razor
  • #8,799
  • Oct 15, 2009 5:48pm Oct 15, 2009 5:48pm
Quoting Razor_trader
very sound advice. I only watch the cable and GBP/JPY plus EUR/JPY mainly, but that is because it falls in well with the other projects that I am working with. The more you trade a particular currency, the more you will recognise patterns and formations. You essentially get a feel for the currency and its behaviour and because of that you can get yourself into the opportunity flow easier than if you concentrate on a flurry of pairs.

G/U is a great pair to trade. It has been a very difficult one because of the range but there has been more than...
Thanks Razor

Just one question if I may please ...

Can you just explain to me how the corrolation of say the H1 & H4 works, ie, how does looking at a higher time frame confirm the trade is good or bad ?
  • #8,800
  • Oct 15, 2009 11:29pm Oct 15, 2009 11:29pm
Quoting ab1
Thanks Razor

Just one question if I may please ...

Can you just explain to me how the corrolation of say the H1 & H4 works, ie, how does looking at a higher time frame confirm the trade is good or bad ?
I use daily and weekly timeframes and the bars before today to give me an insight into market behaviour. For instance if we have reacted from a Support/Resistance line and the bar is a confirmation of that point holding then my bias for the next day or week will be based on that. I dont take trades in the hope that I can make some quick pips, I take trades that setup to be held for longer.

I mentioned to a trading partner the other day my disgust at myself for taking profit on my AUD/USD trade that I had around 86/87 mark (it is now trading around 92.5) when my intention was to hold it for longer. I also mentioned how lucky we are as traders, provided our mindsets are for the future longevity of trading, that we have been part of the recession and subsequently the fall in value of stocks, currencies etc. From here we can reflect back to some point earlier, through our charts or personal experiece, and we can see how far the market has to travel to reach the point we were. This frustrated me more so (the AUD/USD) because I believe parity for the AUD is very close, and unless the US pulls some big news, parity may be as close as early next year. However I took profit because I wanted to close off trades however that mindset ventured from my plan. It is a lesson learnt. I, personally, dont have a problem watching a good trade turn to nothing in the quest for holding trades for longer, my only problem is that sometimes I become a victim of human behaviour and I cash in.

Information is found in candles/bars on timeframes from daily to monthly (and beyond). The information is not always correct, but in most cases it will yield you better results by adhering to them and using them to implement future trades.

Take care

Razor
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