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The DIBS Method - No Free Lunch Returns 13 replies

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Attachments: The DIBS Method... No Free Lunch continues
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The DIBS Method... No Free Lunch continues

Great post here by therealthinghttp://www.forexfactory.com/showthre...41#post2108541

Now we have "long tails" to think about.
Seek not to change the world; seek only to change your mind about the world
Quoting gez40
Great post here by therealthinghttp://www.forexfactory.com/showthre...41#post2108541

Now we have "long tails" to think about.
Yep!

If you have seen a PDF which I have attached somewhere in this thread (not so long time ago) there is this post of -therealthing- too there.

By the way - it is really about the "secret" of this method.

Take care!
With regards to the earlier conversation as to whether PC takes every DIBS trade, I think he does take all, if not most, DIBS trades, but puts more size on the trades which he believes have a higher probability.

This is a reoccurring theme in stuff Joel has written in various places.
Quoting dim4ik42
I have made some summation of greatest posts of greatests thoughts of this thread. May be you will find this useful.

Take the PDF-file

Good luck!
And here it is.

Look forward to reading it, thank you.

Gez.
Seek not to change the world; seek only to change your mind about the world
From Joel's blog:

Quote
What if you "knew" something extra about a system that most examining traders might miss? "Knowing" that certain subsets of trades definitely had greater potential than others? Wouldn't that encourage your adjusting a larger size for those trades if you could quantify that greater edge?
My understanding:
-Only buy on up days in up trends,
sell on down days in down trends
-After London open.

IMHO, there is little you can do to spot the long tails before hand. They might even prove psychologically difficult to take at the begining, like most successful trades. Only "secret" I see is take all the trades that set up by the rules.
That way you won't miss the one tail that will make your year or even your career if well managed.
I am also quite sure that not all days are propicious for long tails' births.
Patience is magic
Quoting dim4ik42
PC is telling us great things bettwen words. Or just very straightforward. We just do not want to get them. So what?
Am I the only one here who thinks that sometimes what traders post on here gets torn apart, analyzed, re-analyzed and more.... sort of like different religions with the Bible.

There are fundamentalists, mystics, and secret socities. They all read (and get) what they want.
Yes jake, you are correct.

The dibs method is the easiest method I've ever seen, a five year old could pick out the trades. It seems to me it's a real traders method, but most people on here don't have the patience or mindset to use it properly, they want 5% a week, profits every day, 90% hit rate etc The 'secret' of dibs is management, nothing more, nothing less, management of the trades once you're in and the management of your thoughts (alot will struggle to keep level headed when losing 10 trades on the bounce or not to bail out when their trade has made a r:r of 1:5 or 1:10). It seems statistically it should supply a 20% + return over a year, if you went to a large banking corp and proved you could make them 20% a year, they'd pay you millions.
Are you guys making 20% per year? Many competent backtesters have stated that the system will not return 20% per year blindly following the rules.

Maybe it does maybe it doesn't, but if you think it does it would be good hear if you can back your view with evidence?
Quoting Chinadiapers
Are you guys making 20% per year? Many competent backtesters have stated that the system will not return 20% per year blindly following the rules.

Maybe it does maybe it doesn't, but if you think it does it would be good hear if you can back your view with evidence?
This is a great post by PC, someone back tested DIBS and got $127 return per $100 risked.
http://www.forexfactory.com/showthre...67#post2616367

Great name Chinadiapers.

Gez.
Seek not to change the world; seek only to change your mind about the world
Quoting Chinadiapers
Are you guys making 20% per year? Many competent backtesters have stated that the system will not return 20% per year blindly following the rules.

Maybe it does maybe it doesn't, but if you think it does it would be good hear if you can back your view with evidence?
I have no evidence, it's what PC stated from computer tests i think, others have agreed with this sort of return.
I've looked at the last 6 months on Eurusd and whilst the method is profitable the profit for this time all comes from within a very short period, approx 2 weeks, which was 31/8 - 15/9. If you look at a 1 day chart you'll see this was the steepest trend of the year.

Three exit strategies were all profitable, 52% actually reached 1:1.

Even looking at this short period it shows how testing this method is, long periods of treading water and drawdown, you have to be able to hold on to the trades and ride them out.

I know 6 months isn't a great testing period, only 129 trades, and several years worth would be required across different pairs, but it does give you insight into the method.

ps yesterdays trade at 11.00 GMT, in 3 hours you'd have reached 1:3, another 2 hours and you'd have been stopped out.
Quoting Chinadiapers
Are you guys making 20% per year? Many competent backtesters have stated that the system will not return 20% per year blindly following the rules.

Maybe it does maybe it doesn't, but if you think it does it would be good hear if you can back your view with evidence?
Here is a backtest for a simple EOD system which trades the daily EURUSD since inception till current on close/open prices. No compounding and a generic 10:1 leverage is applied.

This simple system can trade with 3 max consecutive losers, with a starting capital of only $10,000 and fearlessly trade $100,000 sized lots, programmed in only eight lines of code...

Attached Image (click to enlarge)
Click to Enlarge Name: Screen Shot 2011-12-21 at 10.03.35 PM.png Size: 31 KB


and yet it turns out this simple age old formula is inefficient.

There is a smarter way...

What if I used this simple system as a position indicator for another system (see "hot hand") which allows me to define my entry, exit, risk with very fine granularity relative to the size of the trend I have a chance to follow?

I wonder what would happen...

20% a year would be a disappointment wouldn't it?
Quoting gez40
This is a great post by PC, someone back tested DIBS and got $127 return per $100 risked.
http://www.forexfactory.com/showthre...67#post2616367
Yes we have all read this (see conversation 2 - 3 pages back), a post on a forum is hardly justification for every tom dick and harry claiming dibs returns 20%.

Quoting gez40
Great name Chinadiapers.
Thanks
Quoting NoahEffect
20% a year would be a disappointment wouldn't it?
If you say so
Quoting NoahEffect
Here is a backtest for a simple EOD system which trades the daily EURUSD since inception till current on close/open prices. No compounding and a generic 10:1 leverage is applied.

This simple system can trade with 3 max consecutive losers, with a starting capital of only $10,000 and fearlessly trade $100,000 sized lots, programmed in only eight lines of code...

Attachment

and yet it turns out this simple age old formula is inefficient.

There is a smarter way...

What if I used this simple system as...
I agree. Can you explain a bit more on the 'rules'? I do believe if you incorporate different filters onto price action type trades then you will have a lot more success.

Is this taking Long on previous long bars, short on short etc..? If you don't mind sharing that would be interesting.
We are our own best indicator.
Well chaps...after thinking i had DIBS sorted a year ago, the markets and my misunderstanding of the nuances came back to bite me in the arse. 2.5 years of trading it, and 5 long months of backtesting it later (unfortunately i did the backtesting and the live trading the wrong way around, however it's unlikely i'd have known what to look for without this prior 'live' experience), i made a huge breakthrough this last week. This is for anyone reading this wanting to extract it's edge....you will get no where with this strategy if you wish to trade it systematically, unless you've backtested your interpretation of DIBS, and exhausted every possible avenue which you think may hold the key. Then once you've done that, keep looking, and looking, and looking. If you're still trying to figure it out after going through your own "abyss" or "abysses", then you've probably got what it takes to get near the right answers (no guarantees though!). Best of luck.
I must admit, I`ve only just understood the "hot hand" principle, I thought it was about taking buys/sells relevant to the previous days close but having re-read PC`s posts over crimbo I realise I have misunderstood the rules.

Will try again with DIBS.

Gez.
Seek not to change the world; seek only to change your mind about the world
I'm new to the thread here but am not new to trading or the DIBS method, I still have a L-O-N-G way to go before I finish reading all this but the thing I seem to run across the most is the trade time. So here is a time clock for all you guys that can use the help............ TradeTime
Not sure what you mean by systematically. To me it can mean manually taking all the trades that set up or trading mecanically. Please precise.


Quoting mr_p
Well chaps...after thinking i had DIBS sorted a year ago, the markets and my misunderstanding of the nuances came back to bite me in the arse. 2.5 years of trading it, and 5 long months of backtesting it later (unfortunately i did the backtesting and the live trading the wrong way around, however it's unlikely i'd have known what to look for without this prior 'live' experience), i made a huge breakthrough this last week. This is for anyone reading this wanting to extract it's edge....you will get no where with this strategy if you wish to trade...
Patience is magic
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