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The DIBS Method... No Free Lunch continues

  • #10,261
  • Jul 31, 2012 5:11am Jul 31, 2012 5:11am
Quoting Razor_trader
Understood and to be clear I have never being able to successfully sit on my hands long enough to achieve super high end returns. I am more accustomed today to choosing entries and having logical exits that are bound by either a set targer or having price action dictate when it is time to exit. I have found my account has been much healthier over the past 12-20 months by doing so and from a psychological point of view it is easier to accept a profit (or loss) on the balance sheet, not whilst it is floating around wildly in the unrealised...

the highlighted area are where i would like to comment on:

1- Trends describe the price behaviour & takes a loooooong time to reverse!
that's why patience is key in trend trading and i really do understand the emotional burden. here is something that helped me to transition to long term trend trading, when u exit ur 1.5:1 or 2:1 trades always leave a very small fragment of the position open and leave it for a couple of months/year
do that to all of your positions and you will be amazed on how large they grow over time, it was enough to make me reconsider my targets
  • #10,262
  • Jul 31, 2012 7:31am Jul 31, 2012 7:31am
Quoting fartist
Using your own exit, how many R on average do you achieve a month?
Well I don't generally work in terms of R as I trade a few different approaches so I go in terms of % gained/lossed and as I trade with a risk range of between .5% up to 5% at times, each trade is different. Working out % and average win/loss amount is a simple formula

In terms of % last financial year I averaged over 6.4% per month. July I will close off with a gain of 31.22% thanks largely to a small SL position with a 3% risk that ran just over 5R coupled with solid returns. In total for the month I took only 16 trades for 9 wins and 7 losses. Funnily enough the 5R trade would still be in play today at around 25R with a peak of close to 50R and that was a move over 5 days, my limit was hit after 11 hours. Could I have held longer yes but 5R for 1 trade at 3% risk was more than enough.

Find a suitable approach and trade it comfortably is how I go. I can hand losses, essentially they are budgetted for before executing the trade. If people can go the tails then cudos for them but I found long ago that it doesn't gel with my inability to sit on my hands for longer than a few days to let things mature.

RT
  • #10,263
  • Jul 31, 2012 7:37am Jul 31, 2012 7:37am
Quoting Razor_trader
Understood and to be clear I have never being able to successfully sit on my hands long enough to achieve super high end returns. I am more accustomed today to choosing entries and having logical exits that are bound by either a set targer or having price action dictate when it is time to exit.
Vouched you, I think you have earnt it.
Razor

Thx for the v. Realistically, few traders are able to parlay small gains into very large R-multiple wins the way Peter and Joel describe. I believe they both admit as much.

As humans, we are all wired a different way in terms of temperament, risk tolerance, ego, experience, etc. A large part of a trader's journey is recognizing which system type(s), e.g breakout/momentum, pullback, reveral, best fits his makeup. This includes money mgt technique. You have found the combination that best suits you, and this may change over time (the adage, "there are old traders and there are bold traders, but there are no old, bold traders" comes to mind).

I did not see anyone on the original thread comment on this, but I view the value of Peter's posts as more the introduction of a solid concept and less a mechanical system that every trader should strive to follow blindly. The concept is that volatility is mean-reverting -- it will go from an extreme back to its average -- and IBs represent an extreme, a temporary collapse in volatility via a bar's range contraction. This mean reversion concept explains why you many times get a mini-explosion in price out of that IB. Toss in the bonus that per-trade risk is reduced, and IBs can be quite attractive from a trader's standpoint.
  • #10,264
  • Jul 31, 2012 7:39pm Jul 31, 2012 7:39pm
Quoting Razor_trader
Well I don't generally work in terms of R as

Find a suitable approach and trade it comfortably is how I go. I can hand losses, essentially they are budgetted for before executing the trade. If people can go the tails then cudos for them but I found long ago that it doesn't gel with my inability to sit on my hands for longer than a few days to let things mature.

RT
Thanks for sharing Razor, i really appreciate it.
Yes i do agree on the part whereby you let your trade run is solely up to the individual on their risk tolerance and patience.

As for risking % of account, again it boils down to individual. For me im happy with a 1% risk per trade and totally fits my risk tolerance.

Thus they say no 2 trader ever trades the same despite having the same system?
Whether you can or you can't, you are both right.
  • #10,265
  • Aug 1, 2012 12:59am Aug 1, 2012 12:59am
witnessing the breakdown level 1.2312

http://savepic.org/2408110.gif
  • #10,266
  • Aug 1, 2012 11:59am Aug 1, 2012 11:59am
entrance to the channel

http://savepic.org/2378431.gif
  • #10,267
  • Aug 1, 2012 8:16pm Aug 1, 2012 8:16pm
Quoting California
For those wanting to know how to build a risk model, including a discussion of expectancy, R-multiple, etc., and how these things can help a trader determine R so as to reach his/her monthly/annual return objective, this is highly recommended:

http://fxevolve.com/blog/how-to-buil...ng-risk-model/
Great video, I finally finished watching it. Many thanks for sharing. Brought back memories of all the valuable info I read from books by Van Tharp, Ryan Jones, et al, some years back. An absolute 'must see' for any aspiring trader.

I've gotten rather off the DIBS topic, so I'll exit this thread now. Thanks, everybody, for the reasoned discussion.

David
  • #10,268
  • Aug 2, 2012 1:04am Aug 2, 2012 1:04am
Quoting hanover
Great video, I finally finished watching it. Many thanks for sharing. Brought back memories of all the valuable info I read from books by Van Tharp, Ryan Jones, et al, some years back. An absolute 'must see' for any aspiring trader.

I've gotten rather off the DIBS topic, so I'll exit this thread now. Thanks, everybody, for the reasoned discussion.

David
It was a great discussion, i hope we can have more of it in the future!
Whether you can or you can't, you are both right.
  • #10,269
  • Aug 5, 2012 10:32am Aug 5, 2012 10:32am
you do not forget the entrance to the channel?

http://savepic.org/2405907.gif
  • #10,270
  • Aug 13, 2012 12:22pm Aug 13, 2012 12:22pm
Hey Members,

Is there anyone who is trading this simple method without any kind of changes or add-ons to the strategy?
I would like to ask some questions regarding the validity of an inside bar compared to the time passed since the bar is formed...

Thanks and regards
Gabor
  • #10,271
  • Aug 14, 2012 3:38am Aug 14, 2012 3:38am
Quoting g4bor
Hey Members,

Is there anyone who is trading this simple method without any kind of changes or add-ons to the strategy?
I would like to ask some questions regarding the validity of an inside bar compared to the time passed since the bar is formed...

Thanks and regards
Gabor
I'm still wondering what faustus is on about? Anyway, to answer your question. Yes. I take H1 inside bars when they look like a pause in a volatile move. Now go ahead and ask some questions regarding time passing. I can tell you I invalidate an entry if it doesn't break within the next 2 hours. It's all about strong moves.
Gone to a better place
  • #10,272
  • Aug 14, 2012 6:38am Aug 14, 2012 6:38am
Hi -- do not use this method: it is a rip off and does not work... I have backtested it thoroughly over many years and it fails miserably. THe person who first suggested this method (leonardo) is a rip off artist.
  • #10,273
  • Aug 14, 2012 6:48am Aug 14, 2012 6:48am
Quoting patrickon
Hi -- do not use this method: it is a rip off and does not work... I have backtested it thoroughly over many years and it fails miserably. THe person who first suggested this method (leonardo) is a rip off artist.
OK. Can you post your test results?

TradeStar
Haste not to Enter AND Haste not to Exit !-TradeStar
  • #10,274
  • Aug 14, 2012 7:12am Aug 14, 2012 7:12am
Everything works fine

http://savepic.org/2485509.gif
  • #10,275
  • Aug 14, 2012 8:14am Aug 14, 2012 8:14am
Quoting smikester
I'm still wondering what faustus is on about? Anyway, to answer your question. Yes. I take H1 inside bars when they look like a pause in a volatile move. Now go ahead and ask some questions regarding time passing. I can tell you I invalidate an entry if it doesn't break within the next 2 hours. It's all about strong moves.
Hi!

Thank you!

Well basically i wanted to know when can we invalidate an inside bar, as sometimes it seems to me that some IB levels from NY session work well in the early EU session, in case there are no new IBs or the levels were not touched during asian session.
But i wouldn't like to go against the original strategy and i think Peter is not active on this forum anymore but it would be the best to ask him.
  • #10,276
  • Aug 14, 2012 8:21am Aug 14, 2012 8:21am
Quoting patrickon
Hi -- do not use this method: it is a rip off and does not work... I have backtested it thoroughly over many years and it fails miserably. THe person who first suggested this method (leonardo) is a rip off artist.
I would love to see the backtest results too!
Thanks in advance.
  • #10,277
  • Aug 14, 2012 8:27am Aug 14, 2012 8:27am
Quoting patrickon
Hi -- do not use this method: it is a rip off and does not work... I have backtested it thoroughly over many years and it fails miserably. THe person who first suggested this method (leonardo) is a rip off artist.

Welcome back, 5 posts over 3+ years and first post since Jan 2010. I applaud your regular insightful input and hope to see you in another 3 years for your next post
  • #10,278
  • Aug 14, 2012 8:37am Aug 14, 2012 8:37am
Quoting g4bor
Hi!

Thank you!

Well basically i wanted to know when can we invalidate an inside bar, as sometimes it seems to me that some IB levels from NY session work well in the early EU session, in case there are no new IBs or the levels were not touched during asian session.
But i wouldn't like to go against the original strategy and i think Peter is not active on this forum anymore but it would be the best to ask him.
I think you can safely say reading Peter's posts a few times would not do any harm. Just taking any bar would fail this system as would placing concrete rules over how long to hold.

This is amply demonstrated by the number of people who have failed it in back testing. This brings me to my next point since your post and mine seem to have stirred some interest.

patrickon, may I ask you to oblige me by briefly describing your back test model?
Gone to a better place
  • #10,279
  • Aug 14, 2012 11:32am Aug 14, 2012 11:32am
Quoting smikester
I think you can safely say reading Peter's posts a few times would not do any harm. Just taking any bar would fail this system as would placing concrete rules over how long to hold.

This is amply demonstrated by the number of people who have failed it in back testing. This brings me to my next point since your post and mine seem to have stirred some interest.

patrickon, may I ask you to oblige me by briefly describing your back test model?
OK, I will try to 'get it' again as i thought i finally 'get it'

I could say this method is not about watching inside bar vs. daily open but at the end it actually is, because trading is all about risk control. I wouldn't like to make it as complicated as others do.

May I ask if you use this method as an add-on to your trading system or you trade solely according to Peter's rules? (its just because of my curosity)

Thanks
  • #10,280
  • Edited 1:39pm Aug 14, 2012 12:29pm | Edited 1:39pm
Quoting patrickon
Hi -- do not use this method: it is a rip off and does not work... I have backtested it thoroughly over many years and it fails miserably. THe person who first suggested this method (leonardo) is a rip off artist.
I cannot speak for the profitability of DIBS, as I have not thoroughly backtested it. However, at the risk of veering off topic a bit, inside bars themselves do provide an edge, and I capitalize on this edge in forex and commodities. In post #10231, I discussed exactly how I trade IBs on H1 and M15 during London.

On D1, using the same simple rules (longs taken above 10 sma, shorts taken below 10 sma), the edge is evident. When I read patrickon's post, I thought I would do a quick illustration of the edge that IBs have, when used in a trend. I chose the chart that happened to be open on my desktop because it contained a trade I took yesterday and had just exited today (i.e. the chart was not cherry-picked). Granted, this is not an exhaustive backtest, but I have no need for this because I trade IBs every day in more than one market. Again, this is not DIBS, it is IBs.

The attached chart shows every IB highlighted on D1 for one pair as long as it produced an entry on the bar following the IB. There was no other filter used that might differentiate higher-probability setups from also-rans.

R:R 1:1
Wins: 13 (68.4%)
Losses: 6

While not strictly about DIBS, the purpose of this post and post #10231 is to show one or two traders that, yes, inside bars do have an edge.

Having said this, because there is much disinformation when it comes to trading, one thing I learned years ago is never to take what anyone else says as gospel. Always check it out so that you can determine for yourself whether something works. Including this post.

If your mother tells you she loves you, go check it out.
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