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The DIBS Method... No Free Lunch continues

  • #8,841
  • Oct 29, 2009 6:51am Oct 29, 2009 6:51am
lol lost the point somewhere there....

not many new traders will be in a position to trade DIBS correctly and very few will realise that their not and why...

regards
  • #8,842
  • Oct 30, 2009 1:28am Oct 30, 2009 1:28am
The truth is that even with a 1000 dollar account and playing 10 cent pips, there may be some trades that see you risking more than 1 percent of your capital

But that is part of the fun of learning.............


I say this as I am holding on to a 100 pip profit on the GBP/USD and waiting for it to fall below my trailing stop.....99 pip........98 pips...........it really sucks when the hourly close doesnt clearly take out your trailing stop......

Almost as annoying a deciding to take an inside bar that has been broken on the opposite side.......



Quoting icarusfx
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...
  • #8,843
  • Oct 30, 2009 4:52am Oct 30, 2009 4:52am
morning razorboy, it may just be me...is this sentence finished?

"The truth is that even with a 1000 dollar account and playing 10 cent pips, there may be some trades that see you risking more than 1 percent of your capital"

and

"when the hourly close doesnt clearly take out your trailing stop"

er a trailing stop is hit or it's not! do you mean a manual close to a ma of some sort?

kind regards

ic
  • #8,844
  • Oct 30, 2009 5:11am Oct 30, 2009 5:11am
Quoting razorboy
The truth is that even with a 1000 dollar account and playing 10 cent pips, there may be some trades that see you risking more than 1 percent of your capital

But that is part of the fun of learning.............


I say this as I am holding on to a 100 pip profit on the GBP/USD and waiting for it to fall below my trailing stop.....99 pip........98 pips...........it really sucks when the hourly close doesnt clearly take out your trailing stop......

Almost as annoying a deciding to take an inside bar that has been broken on the opposite side.......
I too am alittle confused.

In the end if you have got a 1:1 for half set then trail the lot with a longer frame ema or something. I personally hate, and thats a strong word, but I do, trailing stops of the trailing pip by pip nature. They are hit far to early when looking for bigger gains. Plus you get into the habit of looking at them and emotionally getting involve, much the same as you seem to have done.

As for the inside bar, im not sure what is meant by the message. If the IB was to be taken long but it broke short then great, perhaps you get it later on. You can still take the IB even if it has broken one way and comes back later, I do and sometimes you will find that the momentum of the spring back bust straight through the Inside bar and past the other side.

Razor
  • #8,845
  • Oct 31, 2009 6:21am Oct 31, 2009 6:21am
Sorry, I forgot to quote the message i was making reference too. People were talking about appropriate position sizing and I was saying that even with at 1000 dollar account and playing 10 cent pips, you can still be risking too much relative to your account size - I have been trying to build a big enough data set to determine optimal F for the dibs method


When I use a trailing stop - either a 20 or 40 sma of the close, I only close out a trade if price closes on the wrong side of the moving average. Again, I am still trying to build a large enough data set to determine what period of trailing stop to use.

I have been attempting to figure out what PC uses to filter out the "breakouts that have a 2 to 5 times larger edge than others" - my only thought at this point involves using the moving average you are going to use as a trail as a buy/sell line. Only take long DIB trades that set up above the moving average and short trades that set up below the moving average - this is in addition to going long on up days and short on down days. - the logic being that I can't enter a trade when the entry signal is on the wrong side of my close signal...






Quoting razorboy
The truth is that even with a 1000 dollar account and playing 10 cent pips, there may be some trades that see you risking more than 1 percent of your capital

But that is part of the fun of learning.............


I say this as I am holding on to a 100 pip profit on the GBP/USD and waiting for it to fall below my trailing stop.....99 pip........98 pips...........it really sucks when the hourly close doesnt clearly take out your trailing stop......

Almost as annoying a deciding to take an inside bar that has been broken on the opposite side.......
  • #8,846
  • Oct 31, 2009 6:24am Oct 31, 2009 6:24am
Um, how did I get emotionally involved? I think you may be reading a little too much into my post................

Quoting Razor_trader
I too am alittle confused.

In the end if you have got a 1:1 for half set then trail the lot with a longer frame ema or something. I personally hate, and thats a strong word, but I do, trailing stops of the trailing pip by pip nature. They are hit far to early when looking for bigger gains. Plus you get into the habit of looking at them and emotionally getting involve, much the same as you seem to have done.

As for the inside bar, im not sure what is meant by the message. If the IB was to be taken long but it broke short then great, perhaps you...
  • #8,847
  • Oct 31, 2009 2:51pm Oct 31, 2009 2:51pm
anti-martingale all the way

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...
  • #8,848
  • Nov 1, 2009 1:43am Nov 1, 2009 1:43am
Quoting razorboy;
Um, how did I get emotionally involved? I think you may be reading a little too much into my post................
Just from the count down that was involved in your post, part of which I was unsure whether was completed or not

Quoting razorboy;
I say this as I am holding on to a 100 pip profit on the GBP/USD and waiting for it to fall below my trailing stop.....99 pip........98 pips...........it really sucks when the hourly close doesnt clearly take out your trailing stop......
Nothing personal meant about it


Razor
  • #8,849
  • Nov 2, 2009 8:54pm Nov 2, 2009 8:54pm
I just want to say how thankful I am for all you wonderful forex traders! It feels so lonely out here trying to learn this on my own. It is so difficult to find the right people to teach you what you need to know. I have owned my own businesses and have never seen anything in my life that had such a long learning curve. I have spent a good bit of money trying to learn forex. I have been studying forex for over a year now solidly every single day and am still on a demo account. I have put in many long hours like I am sure the rest of you have. Having others share their insight and knowledge makes such a difference. I have learned a lot here and hope to someday give back what I have been given down the road for others who come along after me. Some of the information I have gained here is worth much more than what I have paid for some other people's information. Thank you all for sharing and many thanks to you, Forex Factory, for hosting this site!
  • #8,850
  • Edited 4:13am Nov 3, 2009 2:10am | Edited 4:13am
i entered long E/G at 0.9030 at GMT 0200 following inside bar at GMT 0100. Exit Half position at 0.90365. Other half is still running. SL is at the low of IB at 0.9020.

I use DIBS in 1H as entry. Trendlines, resistance and support line to determine trend.

Update: Got stopped at 0.9020 at GMT 1000
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  • #8,851
  • Nov 3, 2009 2:07pm Nov 3, 2009 2:07pm
Quoting razorboy
When I use a trailing stop - either a 20 or 40 sma of the close, I only close out a trade if price closes on the wrong side of the moving average. Again, I am still trying to build a large enough data set to determine what period of trailing stop to use.
The problem with an trailing stop based on an hourly SMA is that overnight the market is less volatile letting the SMA catch up to the price. What I've noticed is that the biggest EUR winners have to be held for multiple days and almost any SMA is going to take you out early.

On the point about what PC used to have higher probability trades - are people sure is was a technical filter? Again the reason for asking is that if you look at the biggest EUR trades they occur when the DIB happens in the morning and then there is a major economic news release which pushes the market in the same direction. A DIB breakout occurs before the news and the news just kicks the market further. That was the case last week when the Euro lost 1.50.
  • #8,852
  • Nov 4, 2009 4:05am Nov 4, 2009 4:05am
Quoting lynnsmom
I just want to say how thankful I am for all you wonderful forex traders!...
This system, DIBS, is known to have an edge. But everything I'm seeing on here is about traders trying to improve their win/loss ratio and generally to avoid losses. Let me spell it out in clear terms: HAVING A WIN/LOSS RATIO OF GREATER THAN 50% WILL NOT AUTOMATICALLY MEAN THAT YOU ARE PROFITABLE. I lose regularly, small and often, and I occasionally win big. I can only do that by cutting my losses and letting the profits run. At the end of the day, every time you take a trade, one of two things will happen: you'll either be stopped out for your accepted loss, or you won't. The point at which you take profit is what will determine your success, because the temptation is to never let a winning trade turn into a losing one. Pschologically this is very difficult, so the free trade concept at 1:1 helps as you'll still lose often, but a good percentage of the non-winning trades will be for no loss.

With the exception of some scalping and contrarian systems, the only way to make money is to ride the trend. You have to stay on the trend, and add to it if you get further signals to do so. Invariably you'll give up some of your high-profit point when you hit your exit signal, in my case an EMA line.

As a test, pick a smaller EMA line as your exit trigger and backtest a year of 4H candlestick charts on any major pair - you can do this with any MT4 demo account. Some of the more ranging markets will be slightly more profitable, or lose less, but if you trade 5 or 6 major pairs (which is what I do) this is more than offset by letting the big trends run, rather than exiting them early when what looks like a reversal turns out to only be a retracement.

I'd say to Lynnsmom - stop 'testing' in demo, and get trading with a micro broker or spread bet platform where your risk per trade is not enough to hurt you financially, but enough to 'irritate' you when you lose. As an example, start with a $500 account and risk 2%, taking half as profit at 1:1. Your risk at the start is $10 per trade. Get used to losing money, and follow your rules rigidly - the entry, direction, where there is anything filtering against the trade, and the exit strategy. Get used to seeing a trade that once it has gone free and is up to 2:1 then gets stopped out. That's how it works - you've got to get to the point where you just go 'ah, well, never mind'… Only when you are comfortable with the 3-steps-back-4-steps-forward that is trading should you increase your account. If you have sweaty palms, you aren't trading 'lucidly'. If you follow your rules, the likelihood is that you'll be up after about 3 months. You'd be unfortunate to be break even, and you'd be very fortunate if you'd doubled your money. I've been trading for four years and I had three months with only 20% growth and a different 3 months with nearly 80%. It's not a smooth growth line.

I'm now at the point where I'm risking over £2000 per trade, and there is no way I'd be able to trade this position size 'lucidly' if I'd just funded my account to the tune of £100k (not that I had that kind of cash lying around!). I'm not meaning this as a boast, I'm trying to make the point that I started out with a small account and it has grown over years of patient and methodical trading. So the feeling I have now when I risk £2000 is the same as when I was risking £10, £20, £50, or £100, because I am staying in my 2% rule. For me this isn't about yachts and supercars, it's about my kid's education and to be financially independent rather than 'filthy rich'. I'm also clear that it will take another four years of patient dibbing to get there.

Finally - to those that have messaged me to what my exit EMA is: I've explained why I use the one I use is personal to me in my previous posts, and why mine isn't necessarily going to work for you.

PinMan
  • #8,853
  • Nov 4, 2009 11:53am Nov 4, 2009 11:53am
DIB formed on EUR before econ data this morning. Unfortunately got a poke and reverse before a clean break.

Arguable should have re-entered the breakout over 1.4770
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  • #8,854
  • Nov 4, 2009 4:40pm Nov 4, 2009 4:40pm
Quoting jzw
DIB formed on EUR before econ data this morning. Unfortunately got a poke and reverse before a clean break.

Arguable should have re-entered the breakout over 1.4770
Yep those ones can hurt.
  • #8,855
  • Nov 4, 2009 4:45pm Nov 4, 2009 4:45pm
Quoting Razor_trader
Yep those ones can hurt.
Too add to this, do you look at any other TF than 1 hour. The past few days/weeks on the 4 hourly have offered some great potential IBs. I could tell looking at them (browsing) whether they would have been valid but all have gone at least 1x and 1 is still in play from yesterday.

Just my advice, but start panning for IBs in the higher bracket with the weekly or overall trend as a "sort of" filter. I say sort of because it is really the only filter, apart from discretion, that I used to take IBs in 1 direction or the other.

Razor
  • #8,856
  • Nov 4, 2009 4:49pm Nov 4, 2009 4:49pm
Screen shot with some of the IBs I was talking about. Again I havent studied these to see which ones would be viable but they do show that you dont get topped and tailed in the next bar.
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  • #8,857
  • Nov 4, 2009 5:01pm Nov 4, 2009 5:01pm
Quoting Razor_trader
Screen shot with some of the IBs I was talking about. Again I havent studied these to see which ones would be viable but they do show that you dont get topped and tailed in the next bar.
Razor
I have noticed that many hourly IB's seem to fail due to top and tailing.
Maybe 4 hourly is the way to go ?
every Saint has a past. Every Sinner has a Future
  • #8,858
  • Nov 4, 2009 6:46pm Nov 4, 2009 6:46pm
Quoting james996
Well all I like to state is the fact that I've been trading IB's on the hour charts on the major pairs for the last six years and have experienced nothing but positive growth in my account. The hardest part of trading is sticking with something long enough to experience a positive outcome. I'm not trying to convince anyone this is the holy grail but it does represent the bulk/core of my trading and has provided my family and myself a really good standard of living. I encourage all to do a backtest of five years or more and than decide the merits...
Hi James
I hope u r still on this thread

I've just entered in the thread

I've seen in your post you traded for 6 years IB method on the 6 majors,but I'd like to know if u r strictly using the rules of the first post of this thread,i.e do you avoid IB candles on 6.00 GMT?
Account deleted
  • #8,859
  • Nov 5, 2009 2:29am Nov 5, 2009 2:29am
Quoting turnip15
Razor
I have noticed that many hourly IB's seem to fail due to top and tailing.
Maybe 4 hourly is the way to go ?
Without trying to filter hourly you will get alot of stop outs. The benefit (of the hourly) being the small risk to carry through to your 1/2 off at 1:1 is usually much sooner and there are ample opportunities to get higher rewards. 4 hourly and dailys are a trade off. There are less of them and the hold period for 1:1 is much longer in most cases.The upside is a very basic filter called "trend" which if you stay on the right side of with the higher timeframes you can usually come out on top.

I loved hourlys for the simple fact that you can get more often than not your 1:1 minimum before either having a continued trade or being stopped out.
  • #8,860
  • Nov 5, 2009 6:31am Nov 5, 2009 6:31am
Quoting turnip15
Razor
I have noticed that many hourly IB's seem to fail due to top and tailing.
Maybe 4 hourly is the way to go ?
Is that a problem? What is your expectation for the %win?
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