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The DIBS Method... No Free Lunch continues

  • #9,221
  • Edited 8:58am Jan 15, 2010 6:49am | Edited 8:58am
takingthepip, the chart was the daily chart of AUDUSD.

RussiaTrader, the exits can't be optimized and that's a fact. I know it because I can prove it. The traders who believe that 40SMA is better than 20SMA or any other indicator are in state of delusion regarding the exits. The results of a strategy is a combination of position sizing, compound interest, maximum drawdown and many other factors, some of them which can't be quantified at all. Under some circumstances one exit method is better than other but on the long run the difference between them becomes irrelevant.

And if the guru PC comes so often in discussion, I'd like to remember to all of you that PC has a way of detecting which IB has a bigger chance of becoming a winner. On other words, he optimizes the entry, not the exit.
  • #9,222
  • Jan 15, 2010 6:57am Jan 15, 2010 6:57am
daily bars........not yet in about 8 months. 3 minutes a day isnt much of an effort. If I am that sick that I cant spare 3 minutes out of bed, I may have bigger issues to worry about


Quoting alter
sure , but u never miss one? U are never on holiday, never sick....?
  • #9,223
  • Jan 15, 2010 7:16am Jan 15, 2010 7:16am
Quoting razorboy
daily bars........not yet in about 8 months. 3 minutes a day isnt much of an effort. If I am that sick that I cant spare 3 minutes out of bed, I may have bigger issues to worry about
You can program an EA and let it run for a year. Very easy for daily bars.

The problem is, if the strategy is so profitable, why don't all the funds, banks and traders have an EA which trades for them? Of course they know about this strategy.
  • #9,224
  • Jan 15, 2010 7:58am Jan 15, 2010 7:58am
Quoting Sauron
On other words, he optimizes the entry, not the exit.
I agree sauron to an extent. Entry optimisation is key ( for me) but i also feel that exit's or the maximium redeemable profit can be optimised through the use of simple s&r.

I offer a chart for discussion appologies for the writing l think my 3yo could do better with the mouse lol

exit's are now defined by pa and not just a random ma or moving stop optimised from the past.
Attached Image (click to enlarge)
Click to Enlarge Name: eurusd example.jpg Size: 134 KB
  • #9,225
  • Jan 15, 2010 8:12am Jan 15, 2010 8:12am
because you assume they all have the same trading ideas, levels of tolerance, time horizons, capital needed to deploy and risk parameters or it may just not be glamourous enough for them........

Quoting Sauron
You can program an EA and let it run for a year. Very easy for daily bars.

The problem is, if the strategy is so profitable, why don't all the funds, banks and traders have an EA which trades for them? Of course they know about this strategy.
  • #9,226
  • Jan 15, 2010 9:18am Jan 15, 2010 9:18am
You know there was a time when this thread carried alot of optimism, when the focus was on the daily action. Lately it has been back and forth banter and its just getting old and tiring. Its like watching the tennis. There are a number of people here who just feel it must be there duty to continue to feed negative energy into a method which quite frankly they will never trade. I cant understand for the life of me what you are trying to get at. Some of you posted your thoughts some 20 pages back but yet you still find it necessary to continue to backtest or look into the subject just to post the same results. Move on.

IF you havent found the method to be profitable so what! move to something else that suits your needs. If you are staying, then seriously whats the agenda. Are you going to spend another 20 pages arguing the same point. Are you trying to be the hero that protects the innocent, if you are then perhaps your time could be better spent somewhere where they are telling you how to double your account in 'X' days.

What you have here is an open method. It gives you a reference, a starting point, something to look for and trade. What happens after the trade is in place is up to you. Where you take profit is a personal matter and of course it will affect the outcome of your trades but how is that any different for any other method.

Quite simply the thread has lost its shine. I started reading through the first 50 pages when people like billfet, jarroo and PC where posting. Those post where informative, contained useful charts and information for anyone watching and the general outlook was positive. Anything negative was usually washed back out to sea. In those opening posts everything is laid out for you, the border foundation and some useful ways to trade given.

If I wasnt so busy with my business I would post more often with trades and setups but working 60+ hours a week leaves me little time to spend in front of this laptap. To the guys and girls who have helped make this thread worthwill I salute you. To those who seem to be stuck here because you have nothing better perhaps you could start an anti DIBs thread - Why Inside Bar trading is a fallacy, it would be interesting to see how long the thread lasts with 10 pages of repitition, you never know you might even get a star.

For now its over and out.

Take care friends

Razor
  • #9,227
  • Jan 15, 2010 1:28pm Jan 15, 2010 1:28pm
Quoting Razor_trader
You know there was a time when this thread carried alot of optimism, when the focus was on the daily action. Lately it has been back and forth banter and its just getting old and tiring. Its like watching the tennis. There are a number of people here who just feel it must be there duty to continue to feed negative energy into a method which quite frankly they will never trade. I cant understand for the life of me what you are trying to get at. Some of you posted your thoughts some 20 pages back but yet you still find it necessary to continue to...
Thanks for your posts Razor. It will be a shame to see you go or post less. You are one of the few posters that I look out for when I visit the forum. I don't trade DIBS but I can see the power of it and will always have an interest in it. The "long tail" that really is the goal of this simple strategy certainly created a lasting impression on me. I trade a different style but my goal remains the same like that of DIBs ie I am looking for that long tail in the face of frequent small losses.

Good luck mate,

B.
  • #9,228
  • Jan 15, 2010 2:53pm Jan 15, 2010 2:53pm
other things to consider when back testing.....

how do you handle inside bars that are straddling your trailing moving avg that you are using for your take profit/buy sell line.....this is where it gets frustrating

how far back to you look to take in an inside bar? Can you enter an IB that formed before you entered your first trade? Or from a previous trend.......

These are all questions that will add to the robustness of back testing.......
  • #9,229
  • Jan 15, 2010 3:00pm Jan 15, 2010 3:00pm
Quoting Sauron
takingthepip, the chart was the daily chart of AUDUSD.

RussiaTrader, the exits can't be optimized and that's a fact. I know it because I can prove it. The traders who believe that 40SMA is better than 20SMA or any other indicator are in state of delusion regarding the exits. The results of a strategy is a combination of position sizing, compound interest, maximum drawdown and many other factors, some of them which can't be quantified at all. Under some circumstances one exit method is better than other but on the long run the difference...
DIBS Always was and always will be a break-even strategy (over the long term). Thank you Sauron for helping put it to bed.
  • #9,230
  • Jan 15, 2010 3:47pm Jan 15, 2010 3:47pm
Quoting Razor_trader
You know there was a time when this thread carried alot of optimism, when the focus was on the daily action. Lately it has been back and forth banter and its just getting old and tiring. Its like watching the tennis. There are a number of people here who just feel it must be there duty to continue to feed negative energy into a method which quite frankly they will never trade. I cant understand for the life of me what you are trying to get at. Some of you posted your thoughts some 20 pages back but yet you still find it necessary to continue to...
I understand you perfectly my friend....been out of here since long time ago...

Jim.... I guess I can't recall his last post... Sad..

Just my last 2 cents.

It was stated hundreds of times. DIBS is a tool. Nothing more. An entry point setup. And it IS DISCRETIONARY. No mechanical trading here. PC said it loud and clear he knew which IBs to take. It's up to you to discover too.

A quick analogy, if I may:

Ask me how to treat a pneumonia.

I'll tell you one or two good antibiotics to start. Which one is the best?

Give me some patients profiles, and in a glance I'll tell you wich of them has more probability to respond better to the treatment, which has the average probability, and wich one will maybe face some trouble. Maybe then I could even add another therapeutic option. How do I know it? Years of practice. That's why PC how to trade IBs. Some day, perhaps I can reach there...

Cheers to all.

PS: Don't forget to pay attention to my sig
Many share my views with me. But I don't share them with them...
  • #9,231
  • Jan 15, 2010 10:57pm Jan 15, 2010 10:57pm
after further review of my data, I was wrong. this method is totally crap and a waste of time, money and pips.


Quoting Sauron
takingthepip, the chart was the daily chart of AUDUSD.

RussiaTrader, the exits can't be optimized and that's a fact. I know it because I can prove it. The traders who believe that 40SMA is better than 20SMA or any other indicator are in state of delusion regarding the exits. The results of a strategy is a combination of position sizing, compound interest, maximum drawdown and many other factors, some of them which can't be quantified at all. Under some circumstances one exit method is better than other but on the long run the difference...
  • #9,232
  • Jan 16, 2010 3:04am Jan 16, 2010 3:04am
I've had some time to pilfer through FF this evening and am quite glad I found this thread..Old Scotty has been operating quite differantly lately and this thread resonates in part with what I've been up to.

I notice that Peter Crowns has only posted 41 times..To bad..I can tell he knows his stuff.

I'm away from home at the moment but I am going to make reading through this thread my #1 priority while I have some freetime this weekend.

I think Peter makes a great point when he says not all breakouts are alike. Some are really of no consequence. The best trade filter for taking breakout trades is only trading when you know there is enough umph in the market to consume a lot of liquidity at once. Sometimes a great looking setup only has a small potential because theres just not enough people that will be pushed into fight or flight mode. If all you are looking at is price alone, you wouldn't even be aware of this and would get 'faked out' quite often.

Also, when you have a confirmed breakout, all that happens is lots of other traders are put in a tough place. In the marketplace, it is the losers job to replace the old batch of losers. You just need to know where the new batch of losers are positioned and wait for the stampede to begin while hiding behind a bush with your rifle.

Winners don't move the market like the losers do. Winners gently push the losers over the cliff.

So anyways..Thanks to Peter Crowns for posting here.

Scotty B

This is a duplicate post..I just realized it should be here too.
  • #9,233
  • Jan 16, 2010 6:19am Jan 16, 2010 6:19am
Quoting highneb
DIBS Always was and always will be a break-even strategy (over the long term). Thank you Sauron for helping put it to bed.
so what the hell are u then doing here!
  • #9,234
  • Jan 16, 2010 1:11pm Jan 16, 2010 1:11pm
Quoting smikester
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.
This reminded me of an issue that has been bothering me for a while...

The slippage, commission and spread for DIBS are very important when backtesting as they can turn a profitable backtest into a losing one. Therefore it is very important not to over-estimate the spread as well as not to under-estimate it. Here, I'm talking about using Oanda as the broker (as I know this best), so there will be no commission, precious little slippage and relatively small spreads - which can still mount up and can be a signficant proportion of the risk.

I see that in the rules we add or subtract half the spread from any stop orders. This will mean that any orders will get hit as they should (e.g. the mid-price may not hit the buy stop but the Ask price would). However this will also overly penalise the system as if you buy and sell on stop and limit orders you are not in effect paying the spread - it can only change whether your order gets hit or not.

Therefore when backtesting DIBS I have been not charging spread on the initial entry, target profit and stop loss - only on the moving average exit.

How does this resonate with those who actually trade DIBS?

Regards,
Timek
  • #9,235
  • Jan 17, 2010 9:31am Jan 17, 2010 9:31am
Here is a really excellent article, which really compliments the DIBS method.
http://www.investopedia.com/articles...-timeframe.asp
  • #9,236
  • Jan 17, 2010 1:09pm Jan 17, 2010 1:09pm
Sorry, it's for subscribing the thread while I easily can read thru all posts here before actively joining the discussion if needed. Thanks!
  • #9,237
  • Edited 3:39am Jan 18, 2010 2:13am | Edited 3:39am
@razor trader

in life there are always two flipcoin sides, namely good&intelligent postings and destroying postings.

like in trading,there are wins and losses.

but this is not a reason to throw in the towel and stop trading nor a reason to stop reading and discussing this thread.
  • #9,238
  • Edited Jan 19, 2010 10:36am Jan 18, 2010 6:46pm | Edited Jan 19, 2010 10:36am
I was about to start doing some back testing on the Euro/USD and figured, aw what the heck, lets put it (well most of it at least) on FF for all to see. I am basing the strategy on IB's but am using different parameters compared to the approach I run on the G/U and U/J. I want to change the risk profile a bit.

Here are the basic Parameters

1. Daily bars only.
2. Data starts Oct 1 1999
3. Sunday night candles are ignored
4. Daily candle starts at 6 pm est

Chart set up
1. 50 period simple MA - based on close
2. 21 Period Bollinger bands

IB definition

A bar that has a lower high and higher low than the previous bar. Equal highs and/or lows are acceptable
Entry Rules

Long
Every IB's that closes above the 50 SMA - the candle itself may touch/straddle the SMA. IF there is a success of 2, 3 or 10 IB's...all will be taken. This means that some IB's may be taken days/weeks after they have formed

Exit - in this specific order................
1. 1/2 off when candle closes above the top of the channel
2. 1/2 when candle closes below midline of the channel

I will not take 1/2 off or close the trade if the candle close below the midline of the channel without price previously closing above the channel. I will either follow my exit plan or let the trade stop out

Stop loss - opposite side of the IB plus 6 pips

Re entry
Once you have been stopped out if an IB you cannot re enter using that same IB, unless it is sitting on/touching the 50 MA or price has gone against you, touched the 50 ma and come back thru an IB that you got knocked out of. So if you are in an uptrend, you take an IB, there is a retracement, you stop out and price then continues your way, you do not re-enter except according to the above rules

Short trades - do the opposite

This back test will not involve position sizing/money management.

Any questions?

I hope to have this done in a week or so. I will post approximate results when completed.......I can't do all the work for you guys and girls
  • #9,239
  • Jan 19, 2010 8:09am Jan 19, 2010 8:09am
razorboy

Are you taking bars that straddle the 50 sma or just above or below?

Thanks.
  • #9,240
  • Jan 19, 2010 10:31am Jan 19, 2010 10:31am
I will take those that touch/straddle the 50 ma.

Quoting DemoForever
razorboy

Are you taking bars that straddle the 50 sma or just above or below?

Thanks.
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