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The DIBS Method... No Free Lunch continues

  • #8,821
  • Oct 28, 2009 4:00am Oct 28, 2009 4:00am
Quoting ab1
Just to elaborate on my previous post, the picture below shows the open for today, marked with a magenta line....so the way I read the rules are that we are only looking for inside bars the give us long oppertunies for the day.... or can you take trades if the price goes short below the open line ? I just felt that if the price is bouncing above and below the open its showing a ranging market and would be a weak market to consider entering. I though we were looking for a strong move from the open so set the direction for the day.

Cheers


ab1...
Hi ab1

Your right about if the market is bouncing around like a yo-yo, drawing S/R lines is a good way to tell but if the market is range bound well it's range bound and not much you or I can do about it. The entry system you use is only half of what you need... you need traders awareness to help know if market wants to play ball. I'm not wanting to sound like it's all smoke and mirrors because it's really not like that at all, just some days some pairs will beat you up and some times you can tell if thats going to happen.

So yes stay away from a range bound market if your using a trending system

Bob
  • #8,822
  • Oct 28, 2009 4:32am Oct 28, 2009 4:32am
Quoting bob_inabottle
Hi ab1

Your right about if the market is bouncing around like a yo-yo, drawing S/R lines is a good way to tell but if the market is range bound well it's range bound and not much you or I can do about it. The entry system you use is only half of what you need... you need traders awareness to help know if market wants to play ball. I'm not wanting to sound like it's all smoke and mirrors because it's really not like that at all, just some days some pairs will beat you up and some times you can tell if thats going to happen.

So yes stay away...
Hi Bob

Thanks for the reply, it confirms what I thought

I was more interested though to know how you interperate the Dibs method. Lets take today for example on the EURUSD. Ive already banked 25+ pips with two thirds my position and Im letting the remaining third run a little for another 25 and I might even let it go with a trailing stop.....but my question really was, I shouldnt have even opened that position today because the open according to post #1 indicated that I should only have taken long trades today, as the open was above the previous days close.

Or am I talking nonsense and all we want is to see a break of the open in any direction following an IB.

Cheers


ab1
  • #8,823
  • Oct 28, 2009 5:12am Oct 28, 2009 5:12am
If the price is above the days open ( PC uses Euro market open) then go long... the reverse is true for short.

but really all that is about is putting your orders in the direction of the trend, PC has said that he also uses the week open price along with the day open price as an extra guide. As I said in the post above all that is worth nothing if the market is a chop shop and only you can tell that.
  • #8,824
  • Oct 28, 2009 5:13am Oct 28, 2009 5:13am
Quoting ab1
Just to elaborate on my previous post, the picture below shows the open for today, marked with a magenta line....so the way I read the rules are that we are only looking for inside bars the give us...

Hi ab1,

ok 6am gmt is a "line in the sand" if the price is above that line your looking to long an ib break...so if the ib occoures below that line you'd be playing a break to the short side. if the ib is straddleing the 6gmt line you can play a break either way.

having said that I feel it is important you understand the above method followed religiously will give many many b/e trades and losses...you rely on a couple of large winning trades, you take the many losses to get into those big trade adding to them as you go.

I don't trade ib's in the above method simply because it's not a good fit with me personally, however I do play ib's as an entry into trending and ranging markets with modest success.

Dibs is great for backtesting...do it and do it again till you go cross-eyed!!!

kind regards

:nerd:

ic

to trade successfully you need to have a plan (not in an "A" team kind of way) but you must be confident that in any given circumstance you know what your doing/going with your trade.
  • #8,825
  • Oct 28, 2009 6:36am Oct 28, 2009 6:36am
Quoting icarusfx
Hi ab1,

ok 6am gmt is a "line in the sand" if the price is above that line your looking to long an ib break...so if the ib occoures below that line you'd be playing a break to the short side. if the ib is straddleing the 6gmt line you can play a break either way.
Thanks IC

Thats the confirmation I was looking for, easy to understand and to the point

So if price action changed direction after a few hours and went say the opposite side of the earlier open and you got an IB would that still be valid or would you not consider that valid, ie maybe too indecisive ? we want a strong movement in one direction ...right ?

As far as the trade management goes I not really following that to the letter as I found too many stops get hit, so to protect profits I generally close 66% of the trade at my 1st TP, move my stop to break even and then close the balance at my 2nd TP. Im also thinking of maybe doing that but introducing a trailing stop to the second half of the trade/....not made my mind up yet.

I'm also thinking that this method is not as PC first designed it, so maybe its getting away from Dibs a little ? I think the inside bar is sound, but I personally like to bank/protect profits along the way in smaller batches.

ab1
  • #8,826
  • Oct 28, 2009 7:12am Oct 28, 2009 7:12am
ab1 - my own backtesting suggests that your strategy won't work. For DIBs to be long term profitable you have to be shooting for an R:R in excess of 3:1 and accept a %win of less than 40%.

For example on Monday there was a DIB short on EUR at around 1.50. For a risk of around 15 pips your could have taken 100+ and if you were still holding today be up around 240.

At the end of the day being profitable trading DIBs requires extracting the most from your winning trades. Taking partial profits, early, works against you in the long run. Of course the trade-off is much more volatility in your returns and longer drawdown periods.
  • #8,827
  • Oct 28, 2009 7:27am Oct 28, 2009 7:27am
Quoting ab1
Thanks IC

Thats the confirmation I was looking for, easy to understand and to the point

So if price action changed direction after a few hours and went say the opposite side of the earlier open and you got an IB would that still be valid or would you not consider that valid, ie maybe too indecisive ? we want a strong movement in one direction ...right ?

As far as the trade management goes I not really following that to the letter as I found too many stops get hit, so to protect profits I generally close 66% of the trade at my 1st TP, move...
yeah id agree it's not really as intended.... but as long as your profitable and comfortable trading in this manner then thats really all that matters. Your 2nd tp is all important and where the essance of dibs lies, I also feel this is the most subjective part. tp1 is a no brainer tp2 should be a variable to each trade, to just pick a trailing stop for everything wouldn't be the best way to go (but thats just my opinion)

1st tp with a move to b/e is good esp with a 66% ratio. one inportant thing to remember is when picking a dibs or ib trades we want price to move our way and as quick as possible...(doesn't everyone lol) to increase the chances of this i personally have found trades between 6-10 am gmt have better win rates! also trading "the hot hand" as pc eluded is simply having several ib's to choose from and playing the one that breaks well with the longer term trend.

dibs examples today would be eur/usd or aud/usd.

the above however are subjective in that global trend for the above pairs is long and as so these would be considered counter trend but recent moves have been lower so here in your decision lies.

hope this helps

ic
  • #8,828
  • Oct 28, 2009 7:38am Oct 28, 2009 7:38am
6am UK time whether it's GMT or BST is the start time for taking trades. The start of the trading day, according to Peter Crown, is 00:00 hours. How you trade Dibs is, of course up to you.
Gone to a better place
  • #8,829
  • Oct 28, 2009 8:31am Oct 28, 2009 8:31am
Quoting ab1
I always remember reading that with only a $2000 account and only making 10 pips per day using just 2% MM, your account will grow to $250,000 in one year....still got to prove that one out in reality , but on paper the math is true.....

Anyway had some profit yesterday from the EURJPY, let see how dibs performs for the rest of the week Good luck !

ab1
Not sure where you read it but I was taught that trading a 1K account at just 60 pips a week will give you enough to quit your job. The turnaround from 100K to 200K could be achieved every 11 weeks in which point you would remove half, rinse and repeat.

It wasnt until I started trading that I actually realised the difficulty in achieving that goal week in and week out. It is easy to run maths models to hype up our expectations, but our expectations are soon busted by reality.

If you can achieve a consistant 5-10% every month, then you are doing very well, if you can get some months well in excess of that then you give yourself some room for the not so good months. Think small and take big when they come, and only dreams of the yacht and mansion when your bank account allows it.

Take care

Razor
  • #8,830
  • Oct 28, 2009 9:07am Oct 28, 2009 9:07am
Quoting jzw
ab1 - my own backtesting suggests that your strategy won't work. For DIBs to be long term profitable you have to be shooting for an R:R in excess of 3:1 and accept a %win of less than 40%.

For example on Monday there was a DIB short on EUR at around 1.50. For a risk of around 15 pips your could have taken 100+ and if you were still holding today be up around 240.

At the end of the day being profitable trading DIBs requires extracting the most from your winning trades. Taking partial profits, early, works against you in the long run. Of course...
Hi JZ

Thanks for your input about R&R and dibs.

It seems that Ive overlooked the fact that Dibs is designed to go for the high profit trades, which from what your saying has to happen to make up for all of the losses that will get stopped out.

Today was a prime example, early EURUSD trade made 65 pips. Followed by multiple trades making a loss before that hit TP1. It was not about the pips that lost it was the fact that they all lost at 1 lot size against the earlier decreased lots size due to taking profits out a bit at a time. So I can really see your point.

Maybe what I should have done is called it a day at 65 pips, closed my trading desk and gone down the Pub until tomorrow.....

Greed !.... that will do it everytime...! Anyway need a re-think on strategy for this method ??... it proved my earlier one totally useless today....lol

ab1
  • #8,831
  • Oct 28, 2009 9:09am Oct 28, 2009 9:09am
Quoting Razor_trader
Not sure where you read it but I was taught that trading a 1K account at just 60 pips a week will give you enough to quit your job. The turnaround from 100K to 200K could be achieved every 11 weeks in which point you would remove half, rinse and repeat.

It wasnt until I started trading that I actually realised the difficulty in achieving that goal week in and week out. It is easy to run maths models to hype up our expectations, but our expectations are soon busted by reality.

If you can achieve a consistant 5-10% every month, then you are...
Hi Mate

Thanks for cheering me up !....lol

ab1
  • #8,832
  • Oct 28, 2009 9:18am Oct 28, 2009 9:18am
Quoting ab1
Hi Mate

Thanks for cheering me up !....lol

ab1
ROFL its the best input Ive had in weeks, glad to be of service. If you need anymore disappointing advice just let me know

Razor
  • #8,833
  • Oct 28, 2009 9:52am Oct 28, 2009 9:52am
Quoting Razor_trader
ROFL its the best input Ive had in weeks, glad to be of service. If you need anymore disappointing advice just let me know

Razor
Yeah.. I bet your a real laugh at parties too....
  • #8,834
  • Oct 28, 2009 9:58am Oct 28, 2009 9:58am
Quoting ab1
Yeah.. I bet your a real laugh at parties too....

LOL fair play :oD

ab1, as long as you can take a bit of straight talk on the chin and not get on a high horse like so many other do then you can really learn from some people here... (and have the crack) in the process.
  • #8,835
  • Oct 28, 2009 6:28pm Oct 28, 2009 6:28pm
Quoting icarusfx
LOL fair play :oD

ab1, as long as you can take a bit of straight talk on the chin and not get on a high horse like so many other do then you can really learn from some people here... (and have the crack) in the process.
Yes you need to have a thick hide around I, I dont tend to hold back as nice as some, but then thats reality in this environment. ROFL

Razor
  • #8,836
  • Oct 28, 2009 11:33pm Oct 28, 2009 11:33pm
I've said it before and after reading the most recent posts I feel it's necessary to state it again. This method will not work if your not going to accept the losses. No filter in the world is going to change this reality. The more your try to avoid this fact the more your going to lose. The key to successful trend following methods is taking all of your trades and letting the winners run. The problem most people share is the fact they can't accept the losses. I think the quick answer has always been to downsize your trading size. Think about the following: If you sized your trades to represent only a max loss of 1/8 to 1/4 of 1 percent of your account you might find this game a lot easier on you life. Imagine risking 1/4 unit and facing 6 losses in a row that would equal only 1.5 percent of your account balance. You will find this is the answer your seeking. It's all about money management.By the way my recent equity high was made on September 12, after that I went into a drawdown of about 8 percent during the following 4 weeks. I then downsized from a 1/2 unit sizing scheme to a 1/4 unit sizing scheme, as I type this I,m within 2 percent of the Sept egutiy high.Once the previous high is attained I will racket back to my normal 1/2 unit size. This is the propper way to trade. Not trying to guess what the next trade is going to do.This is the easiest way to make money if your willing to subject your will to the will of the markets. You must accept what the markets will give you. After placing thousand upon thousands of trades I gave up on trying to think what migth happen next and have fully accepted the fact I never know. Just take all the trades and follow the plan. I'll get off my soapbox now.
  • #8,837
  • Oct 29, 2009 3:52am Oct 29, 2009 3:52am
Quoting ab1
Hi All

Been laying low for a few weeks, considering things with Forex, but back in action again with Dibs !

Just like to say that I feel for you guys/girls that are using this method and not on the GMT time zone. I mean its hard enough getting up pre 6am living in London, but to be up at like 1am...wow, you deserve a medal. It must be real tough when youve had a bad week...you must be thinking is it all worth it ! So you have my total respect.

Going back to basics with this system though, Have I read it wrong here but could some of the...
I run at an actual win/no-win ratio of less than 50%.

Typically I have about 35% of trades that get stopped out for a -2:1 loss (i.e. the free trade didn't kick in)
About 25% of trades stop out for no loss (i.e. the free trade kicked in but then my stop was hit, so 1:1 win and then a -1:1 loss)
The rest of my trades I exit according to my EMA line, which typically means the running trade being closed at somewhere between 0.5:1 and 6:1 (on top of the 1:1 I already took for the free trade cushion). The best was one I let to run to 15:1.

My rules for entry are to go with the trend if it is observably present, e.g. what have the previous three bars done, what has been the overall range of the last six bars and where in that range is the IB? If it's near the top of that range I'll take the long break, conversely at the bottom and heading south I'll take the short. If it's slap bang in the middle, I'll go either way and I'll either get lucky and be going with the start of a new trend. If I'm heading into an obvious S/R area I might make my free trade point somewhere just inside this. But - and this is the thing - I do lose, regularly, and that's the cost of trading - my 'rent' to the market if you like.

DIBS are great because they show indicision in the market, and give you a handy trade sizing method as well. For me, Peter Crowns' most telling post was the one that alluded to taking the direction of the trend in the bigger picture. Ultimately that's the way it's probably going to go!

But, I would say as a general thing to anyone using this system, stop looking at Peter Crowns' posts for pearls of wisdom and for a 'trading manual' - it isn't because Peter is a person and his psychology affects his trading. My interpretation of a DIBS trading method works for me and stops me getting sweaty palms looking at the market. Find one that works for you and you'll make steady pips over time.

Cheers
PinMan
  • #8,838
  • Oct 29, 2009 3:58am Oct 29, 2009 3:58am
Quoting james996
I've said it before and after reading the most recent posts I feel it's necessary to state it again. This method will not work if your not going to accept the losses. No filter in the world is going to change this reality. The more your try to avoid this fact the more your going to lose. The key to successful trend following methods is taking all of your trades and letting the winners run. The problem most people share is the fact they can't accept the losses. I think the quick answer has always been to downsize your trading size. Think about the...
Genius Post.
  • #8,839
  • Oct 29, 2009 5:50am Oct 29, 2009 5:50am
Quoting james996
I've said it before and after reading the most recent posts I feel it's necessary to state it again. This method will not work if your not going to accept the losses. No filter in the world is going to change this reality. The more your try to avoid this fact the more your going to lose. The key to successful trend following methods is taking all of your trades and letting the winners run. The problem most people share is the fact they can't accept the losses. I think the quick answer has always been to downsize your trading size. Think about the...
The fundamental flaw (not in your opinion) is that the account capital that new traders or amatuer traders start with does not give them the feeling, trading on .25%, that they are getting any return for time.

When you start you general have some idea that you would like to turn the 1K to 100K TOMORROW and the only way to get close is the leverage everything to the max to get returns. Problem is loosing. You loose a leveraged trade here and there and boom there goes your capital. HEY lets filter this junk.

There is no easy way about it. I tried and failed and succeeded at getting a small account to work for me but what I learnt was precious to me personally. It is only now trading a more sizable account that I can firmly agree with the above. Take small sizes and build them up. You loose a few and you dont recognise it some much. I trade up to 2% (and that is rare) when I feel everything is moving my way but most occasions it is less than 1%. Most of my calculations I round down aswell and not up.

It is very difficult to do this with a 1K account and leverage yourself in a sensible manner. In most cases if you have a large stop loss you need to trade micro lots which just seem to take ffffffoooooooorrrrrrreeeeeeeevvvvvvveeeeeeeeerrrrrrrrrrrr to mature and in the end you feel you have put in all that work and achieve perhaps $50-$100 not taking out for losses. Thing is, it takes a person with long sighted persective to really appreciate the skills that doing the immediate above will teach you. In the end if you trade 5-10% with 1K then you are giving yourself bad habits for trading more than that.

If you want to appreciate the pain of loosing then join reality and open a 50K + account and trade it recklessly, you will learn pretty quickly that it isnt an option.

Nice post mate.

Razor
  • #8,840
  • Oct 29, 2009 6:44am Oct 29, 2009 6:44am
Quoting james996
I've said it before and after reading the most recent posts I feel it's necessary to state it again. This method will not work if your not going to accept the losses. No filter in the world is going to change this reality. The more your try to avoid this fact the more your going to lose. The key to successful trend following methods is taking all of your trades and letting the winners run. The problem most people share is the fact they can't accept the losses. I think the quick answer has always been to downsize your trading size. Think about the...

Hi James...

well you've made some good points esp with position sizing! but i would respectfully disagree with an assumption that has been made..

"The key to successful trend following methods is taking all of your trades and letting the winners run"

I trade part time (I've another business ) I could not take all the DIBS trades available due to time contraints and having backtested late into the night for many many nights over many months came to the conclusion that i could not trade dibs in it's original form as missing just one enrty that would prove to be the 25:1 bla bla or "pay off" trade would leave my account looking somewhat meek with the compariative trade off with my time, effort and goals (which are not overly lofty).

I do indeed let winners run and use ib's as an entry but my mm differs (i am a 1-2% fellow) and i move my stops up to > b/e on my first tp, my 2nd tp is a little more adaptive and dependant on several factors all with the aim of keeping with and adding to a runner.

anyway i agree with the above statement but with the clarification of all my trades will not be the same as all your trades!

You Must....trade your plan and plan to win!

like you i can't recommend/push/hammer backtesting at people enough and testing over a couple of months doesn't cut it getting lucky happens but not much and you will give it back to the people who have a statistical edge gained buy some serious screen time, correct understanding of the playing field and their position upon it!

ok this many come accross as disjointed post (i was called away a couple of time) so my appologies.

kind regards
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