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The DIBS Method... No Free Lunch continues

  • #9,201
  • Jan 15, 2010 4:05am Jan 15, 2010 4:05am
Well, I've tested the last 4 years of AUDUSD Daily IB with SMA20 for trailing.
If one would risk 1% per trade, he would have won:

2009 +4%
2008 +18%
2007 +5%
2006 +3%

The VERY BIG PROBLEM: you have one IB in average every year which makes you profitable at the end of it. If, for any reason, you don't take that IB (vacation, illness, no internet connection, broker feed etc) you'll finish the year with a loss.
Now, even if your EA takes all the signals the profit is too small to make a living if you have less than 2 million to start with. And remember, you must pay taxes.

If you are an optimism, your eyes will remain fixed at 18% made in 2008. There are some bad news though. The first half of the year you would have spent it at -12% drawdown.
  • #9,202
  • Jan 15, 2010 4:06am Jan 15, 2010 4:06am
Quote
This is the first test ive done on the dibs method,so i thought as i work full time 4hr bars would be easyer to trade.Some people are thinking this guy is doing it all wrong or this guy is never going to make it.Thats why im here hoping i can get some pointers in the right direction.

Everything you could possibly need in terms of guidelines is already contained within this thread.

Quoting alter
THe reason is very simple. Most of the people dont have time to watch H1 charts all day. And if they just miss 1 setup that is big runner for whatever reason they are in big trouble.
I dont think H1 entry gives you an edge. I backtested the same exit rules for trades with entry at S/R levels(smal SL) and long term trend with better results. But again you are too dependand on couple of big winners, so one wouldnt dare to go to holiday without laptop.
Wouldn't it best to trade the daily then?

I am really not sure what H4 IBs are supposed to indicate except a price compression over an arbitrary 4 hour period. Please someone correct me if I'm wrong. If you want to go longer timeframes than H1 but less than D1, I recommend the 8 hour adjusted to session times. There are already threads for both 4 hour and 8 hour IB setups, you can discuss those ideas there with people who are more familiar with them.

RE: Trading before everyone else hits their desks, this is untrue, afaik almost all pro currency traders will be at their desk clicking buttons at the open.
  • #9,203
  • Jan 15, 2010 4:08am Jan 15, 2010 4:08am
Quoting DemoForever
Its an ib and it occurs daily or am i missing something?

In fairness this thread does have a misleading name. But it is about Peter Crowns' description of a 1 hour break out method and if you take the trouble to read all of his posts I think you may see what I'm getting at. It is 1 hour. it is time specific - i.e. most trades are taken between 2 hours before and 4 hours after the London open.

H4 inside bars are great and I think Peter crowns mentions this in one of his posts. But comparing them to this specific strategy is like comparing oranges to pineapples. They're both fruit. Next question?
Gone to a better place
  • #9,204
  • Jan 15, 2010 4:20am Jan 15, 2010 4:20am
Why is it time specific?

Just to clarify why the DIBs strategy works:

An inside bar is caused by a ranging market. We all know ranging markets break out, often dynamically. Just look at a daily inside bar and then look at the hourly chart. That is, relatively speaking, a ranging market.

When a market is moving fast it's a "hot hand". Peter Crowns mentions this. Sometimes it's quite difficult to join. The lull between Asia and Europe/London occurs about 2 hour before London and then picks up pace as London opens. During this lull or during pull backs we may get a ranging market on the 5 mins charts or so, resulting in a 1 hour inside bar break out.

We use the direction of the market between 12midnight and 6 am to define our direction.

You can see the effect if you use the ATR indicator on a 1 hour chart and set it at about ATR(3). Going back through the charts a pattern will develop where the ATR drops low at certain times (DIBS trade times) of the day. By the way, this is not helpful to trade DIBs it only demonstrtes the effect.

You may even notice why New York is often difficult to trade and not as useful for DIBs. Because London and Europe now want to close their trades before the end of their trading day.
Gone to a better place
  • #9,205
  • Jan 15, 2010 4:23am Jan 15, 2010 4:23am
Quoting smikester
In fairness this thread does have a misleading name. But it is about Peter Crowns' description of a 1 hour break out method and if you take the trouble to read all of his posts I think you may see what I'm getting at. It is 1 hour. it is time specific - i.e. most trades are taken between 2 hours before and 4 hours after the London open.

H4 inside bars are great and I think Peter crowns mentions this in one of his posts. But comparing them to this specific strategy is like comparing oranges to pineapples. They're both fruit. Next question?
I tell you what i will do big boy i`ll just go away and play with my pineapples!
  • #9,206
  • Jan 15, 2010 4:27am Jan 15, 2010 4:27am
Quoting DemoForever
I tell you what i will do big boy i`ll just go away and play with my pineapples!
No! Stay here and play with oranges?
Gone to a better place
  • #9,207
  • Jan 15, 2010 4:35am Jan 15, 2010 4:35am
Another reason DIBs works is the range of the bar. This is typically low because it's an inside bar and it's often in the lull period before London. This means we don't lose a lot of pips if it reverses on us (Something that can happen frequently during New York for reasons stated pervious post).

I just took the GBP/JPY inside bar. The spread spoils the trade and the strategy a bit. It's nearly a quarter of the risk.
Gone to a better place
  • #9,208
  • Jan 15, 2010 5:22am Jan 15, 2010 5:22am
Quoting Sauron
Well, I've tested the last 4 years of AUDUSD Daily IB with SMA20 for trailing...
Sauron, do you mean you took DIBs trades off the daily chart or did you take trades from the hourly? I did a quick backtest taking all DIBs off the hourly chart, from London open until 3pm GMT, AUD/USD from beginning to end of 2009 and the profits were significantly better than 4% depending on the exit mechanism.

Regards,

-TTP-
  • #9,209
  • Jan 15, 2010 5:32am Jan 15, 2010 5:32am
Quoting smikester
2 superb complimentary DIBs trades this morning, EUR/USD and USD/CHF let's see if they pan out.

This is the break out from the range I mentioned earlier.

.
hey smikester, ill put some charts up because although i'm enjoying the current exchanges i'd say it's turning some newbs white with fear lol

ok ib's show as blue on my chart
the horizontal & vertical pink lines are the start of my trading day

euro/usd chart i've doodled on to point out the res that caused the ib to form.... i would have been a little hesitant on taking a break of the ib as it was very close to recent lows so would have played a break of the low instead (but thats just me)

dibs also supported by a pin on the daily charts indicating the probable resumption of the current down trend.


usd/chf a good dibs trade with good potential... again (without going to far into it) looking at daily we see higher highs and higher lows indication a trend change. (always a good time to dibs)

kinds regards

ic
Attached Image(s) (click to enlarge)
Click to Enlarge Name: eurusd.jpg Size: 70 KB
Click to Enlarge Name: dibs usdchf.JPG Size: 87 KB
  • #9,210
  • Jan 15, 2010 5:32am Jan 15, 2010 5:32am
when using inside bars, every different timeframe and moving average exit method is going to have a different mathematical expectancy associated with it. You could use 90 minute bars if you wanted to and be successful at it

comparing backtesting results, one should state their rules they were using, especially if you are getting results that seem to deviate from the success that others have found back testing?

For example:

 

  1. Do you ever re-enter an inside bar? If so, under what criteria?
  2. if there are multiple IB's in a row, do you play each of them? Just the first? Just the last?
  3. How about your stops? Do you close out a position when it touches your trailing MA or closes against it.....
  4. Have you compared the function of two different trailing MA's on your profit total?

Given the fact that some people posting results don't even understand the original concept by PC, don't you think there is a chance that everyone who tests this method might not actually testing the same concept

  • #9,211
  • Jan 15, 2010 5:49am Jan 15, 2010 5:49am
Quoting razorboy

Given the fact that some people posting results don't even understand the original concept by PC, don't you think there is a chance that everyone who tests this method might not actually testing the same concept
very true two people will never trade this concept the same way... everyone brings their own experiences (or lack of) to the table consequently we will always get the "this is a losing system" comments!

backtesting is great but it must be done in an appropriate manner! i would not be trading from 6pm- 6am so why the hell would i look at that in my backtest? (that could be someone elses trading day in oz?) i also rule out trades due to it's position or my views at the time (i miss both winning and losing trades per se because of that).

i feel it's important for me (the trader) is looking to get into a trade in a direction and area and know why.

dibs gives a structure but you have to bring something to the table to get the most out of it.

right i've some work to do

take it easy all
  • #9,212
  • Jan 15, 2010 5:57am Jan 15, 2010 5:57am
Quoting Sauron
Well, I've tested the last 4 years of AUDUSD Daily IB with SMA20 for trailing.
If one would risk 1% per trade, he would have won:

2009 +4%
2008...
thats why the EXIT is so important. i think a 20SMA is too simple.
the exit can change the result of a trading setup dramatically.
  • #9,213
  • Jan 15, 2010 6:03am Jan 15, 2010 6:03am
i think before you focus on the exit being too simple, we should find out what sort of rules and filters were used for entering and adding positions

This approach will not work if you do not stack on positions as the opportunities present themselves.........you need to press your winners and be much bigger when you win than when you lose........(Phantom of the pits.)


Quoting RussiaTrader
thats why the EXIT is so important. i think a 20SMA is too simple.
the exit can change the result of a trading setup dramatically.
  • #9,214
  • Jan 15, 2010 6:04am Jan 15, 2010 6:04am
Quoting razorboy
when using inside bars, every different timeframe and moving average exit method is going to have a different mathematical expectancy associated with it. You could use 90 minute bars if you wanted to and be successful at it

comparing backtesting results, one should state their rules they were using, especially if you are getting results that seem to deviate from the success that others have found back testing?

For example:
[list=1][*]Do you ever re-enter an inside bar? If so, under what criteria?[*]if there are multiple IB's in a row, do...
razorboy When i posted my results the only thing i was interested in was
some feedback as to if other people had similar results as me or if i was barking up the wrong tree! No offence intended.
  • #9,215
  • Jan 15, 2010 6:11am Jan 15, 2010 6:11am
I wasn't being specific to you or anyone else....feedback is always important

Quoting DemoForever
razorboy When i posted my results the only thing i was interested in was
some feedback as to if other people had similar results as me or if i was barking up the wrong tree! No offence intended.
  • #9,216
  • Jan 15, 2010 6:12am Jan 15, 2010 6:12am
Quoting icarusfx
some newbs white with fear lol
I hate that newbs word. We're all here to learn. By the way, your charts are not showing the time scale? Could you show the London open?
Gone to a better place
  • #9,217
  • Jan 15, 2010 6:23am Jan 15, 2010 6:23am
Quoting sinner-
Everything you could possibly need in terms of guidelines is already contained within this thread.



Wouldn't it best to trade the daily then?

I am really not sure what H4 IBs are supposed to indicate except a price compression over an arbitrary 4 hour period. Please someone correct me if I'm wrong. If you want to go longer timeframes than H1 but less than D1, I recommend the 8 hour adjusted to session times. There are already threads for both 4 hour and 8 hour IB setups, you can discuss those ideas there with people who are more familiar with...
H4 does not indicate anything to me, just give u fixed point where u can enter, that teaches u to be disciplined. I dont think DIBS is about the entry but about exit , I just wanted to share my observations. Im not going to trade it for reasons some guys have already mentioned...u can not aford to miss big runner. The same is valid for daily setup.
  • #9,218
  • Jan 15, 2010 6:31am Jan 15, 2010 6:31am
i play daily bars.......it takes about 3 minutes a day......your day can start at what ever time you want it to, all you need is a customized chart to see the bars on that time frame.


Quoting alter
H4 does not indicate anything to me, just give u fixed point where u can enter, that teaches u to be disciplined. I dont think DIBS is about the entry but about exit , I just wanted to share my observations. Im not going to trade it for reasons some guys have already mentioned...u can not aford to miss big runner. The same is valid for daily setup.
  • #9,219
  • Jan 15, 2010 6:38am Jan 15, 2010 6:38am
Quoting razorboy
i play daily bars.......it takes about 3 minutes a day......your day can start at what ever time you want it to, all you need is a customized chart to see the bars on that time frame.
sure , but u never miss one? U are never on holiday, never sick....?
  • #9,220
  • Jan 15, 2010 6:39am Jan 15, 2010 6:39am
Quoting smikester
I hate that newbs word. We're all here to learn. By the way, your charts are not showing the time scale? Could you show the London open?
yeah i'm not a big fan of it either it just seemed an appropriate use.

anyway to clarify (although i'd be worried if anyone couldn't work it out at a glace) 1h charts.... oh and the vert pink line is 8am cet (7am gmt FO LO is the candle after) but i apply my trading from 6am gmt (horizontial pink line).

regards
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