The DIBS Method... No Free Lunch continues | Page 515 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

The DIBS Method - No Free Lunch Returns 13 replies

No Free Lunch but all the Free Coffee you can drink 736 replies

Peter Crown's DIBS method revisited 14 replies

DIBS Method EA 11 replies

Problem using Dibs EA 4 replies

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

The DIBS Method... No Free Lunch continues

  • #10,281
  • Aug 14, 2012 1:02pm Aug 14, 2012 1:02pm
California - regarding your chart above:
The 4th trade (Feb.2) - shouldn't that be a short trade (because price action is below 10SMA and the price of the next bar temporarily went below the low of the signal inside bar), thus, resulting in a lost? Why did you go long there?
  • #10,282
  • Aug 14, 2012 1:40pm Aug 14, 2012 1:40pm
Quoting kokopelli
California - regarding your chart above:
The 4th trade (Feb.2) - shouldn't that be a short trade (because price action is below 10SMA and the price of the next bar temporarily went below the low of the signal inside bar), thus, resulting in a lost? Why did you go long there?
Nice catch, koko. The chart and stats have been corrected. My thx.
  • #10,283
  • Aug 14, 2012 4:27pm Aug 14, 2012 4:27pm
  •  MPP
  • Joined Jun 2007 | Status: Be yourself, everyone else is taken | 2,734 Posts
you should also consider the size of the IB compared to the previous 3 bars (aka NR4IB - narrow range of 4 bars inside bar)

this sign of compression or lack of decission in the market place, typically (not always) has a more explosive/better R:R

IB are like any other candle pattern - there all tradable, but need practice and understanding.
  • #10,284
  • Aug 14, 2012 4:44pm Aug 14, 2012 4:44pm
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

YES! i have traded/still do trade it with almost all of the "Original" rules with positive results for more than 3 years now
  • #10,285
  • Aug 14, 2012 7:32pm Aug 14, 2012 7:32pm
Quoting MPP
you should also consider the size of the IB compared to the previous 3 bars (aka NR4IB - narrow range of 4 bars inside bar)

this sign of compression or lack of decission in the market place, typically (not always) has a more explosive/better R:R

IB are like any other candle pattern - there all tradable, but need practice and understanding.
MPP, agreed. There are other considerations besides what was noted in this quick, micro-sample test, which served as a miniature proof-of-concept. Recent volatility and current momentum may be the most important considerations to take into account.
  • #10,286
  • Aug 15, 2012 10:01am Aug 15, 2012 10:01am
Quoting California
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....
Let me elaborate further on the backtesting. Backtesting by design is to capture every signal based on a set of principles. If an edge lies in that testing and a program/script can be created exactly to those rules (completely systemised) there is still no guarentee that the results will be replicated, they are there to say that over x period of time this set up was profitable and that over the same future period you will may likely see similiar results. That is why a 20 year backtested system comprising 1000's of trades holds greater respect to something that has a tenth of the trades over a shorter period of time.

DIBS and Inside Bars in there best approach (Hot Hand, volatility, certain market conditions/lead-ups/expections/national problems) cannot be put into a system, there are too many variables that change. Also, trading without a systematic approach means you will miss certain trades due to sleep, holidays, power outages etc therefore one can conclude that whilst backtesting may have definable edge, that lack of systematic trading will effect the edge.

There is also one other key element to systemising inside bars and that is there will be trade setups, so strong in the potential setup that you could safely take a greater risk with a higher probability outcome, which an EA will not do. It is designed by certain parameters and will only act in accordance to those unlike the human brain.

My example for this is Pin Bar/IB setups. I LOVE THEM, especially in what appears to be oversold/bought market conditions where the pin has good length and closes close to the open price or past it. Further to this will be when they appear at strong support, they take out a previous high or low swing point. My success with these over the years has been extremely good, regardless of the timeframe. These matter because the reward is usually quickly out over 5:1 and if they do in fact hold past a few days then there is a strong chance you have caught the top or bottom of a swing point which depending on trend direction can be a long term trade, and is usually the only time I am comfortable holding for longer than normal. I would say that a strike rate of over 80% long term wouldn't be far off the mark and that most of these trade setups I will be happy to risk a stronger portion of my equity, especially if I have grown my account over a period. I have over time experienced good periods of 30% grow in a single trade with a risk of about 1.5%. Any greater risk than that and I tend to find myself closing the trade at the first sign of trouble and therefore the gains are less, I am I guess human when seeing $10-15 per pip fluctuations compared to $30 or more creates 2 different reactions even when I look more at pips and % compared to $.

These are the variables that matter, they are the variables that you can only learn from over time from taking trades, both winners and loosers, analysing and learning. They are the variables lost in EA backtests that just give you a figure that too many people accept as proof of a future successful system. Traders are successful, not systems. There are extremely few long term successful traders letting computers trade everything while they holiday in the Bahamas, if anything they operate a half dozen systems, some win, some loose and they manage there systems in a different manner.

The chart you have posted is fine, it shows what any trader is likely to see a number of times, it is what is done over time and what each person learns from the charts and there trades, regardless whether they win or loose, that will determine whether you can find those higher probable set ups that stand a greater chance of being winners.

Take care and cheers for the PM earlier

RT
  • #10,287
  • Aug 15, 2012 10:08am Aug 15, 2012 10:08am
I agree all with what RT has said.
Personally for me i take into account the relative strength of the pairs im trading which is something that cannot be back tested.

Another point is the volatility, which also cannot be back tested.

All these variables are decided by me myself and thus the IB that are taken. In fact i don't take all IB, only those that meet my criteria and has the highest probability of success.

I believe PC mention something along the lines that he knows which IB has higher prob of working out though they make look the same.

Again, forward test it. As you gain more experience, you'll develop your own filters that can further enhance your probability of success.
Whether you can or you can't, you are both right.
  • #10,288
  • Aug 15, 2012 10:38am Aug 15, 2012 10:38am
http://savepic.su/2324924.gif

Sorry, this is certainly resistance, and do not support
  • #10,289
  • Edited 10:59am Aug 15, 2012 10:48am | Edited 10:59am
Quoting Razor_trader
They are the variables lost in EA backtests that just give you a figure that too many people accept as proof of a future successful system. Traders are successful, not systems. There are extremely few long term successful traders letting computers trade everything while they holiday in the Bahamas, if anything they operate a half dozen systems, some win, some loose and they manage there systems in a different manner.
Take care and cheers for the PM earlier

RT
Razor

Thank you for sharing that post. Agreed, 100%.

To be clear, I posted the chart not as a way of showing a mechanical system using IBs, but because I did not want Patrickon's post about DIBS to influence less experienced traders into thinking that IBs do not possess an edge.

Having been fortunate enough to have begun trading at the dawn of the great Bubble Era in stocks in early 1990, I learned early on the value of discretion in trading vs. a purely mechanical approach. The weakness of the latter is that it generally does not take into account the fact that markets are not static, i.e. they change over time. Discretion takes a market's dynamism into account.

Best trading to all.
  • #10,290
  • Aug 15, 2012 11:59am Aug 15, 2012 11:59am
Alright, newbie here with a newbie question.

Should I place the Stop Buy/Sell only when the IB has moved onto a breakaway bar/candle? If so, when? ASAP? What about when the breakaway is up or down too dramatically to enter in on the Stop Buy/Sell? How do you deal with that?

Also, is this overall assessment of the strategy correct? https://docs.google.com/document/d/1...mDI/edit?pli=1
Offering $1.50 (21%)/RTL Commission Discounts at IC Markets & Global Prime
  • #10,291
  • Aug 15, 2012 12:27pm Aug 15, 2012 12:27pm
Lastly, can you enter in on a position when the breakaway occurs not on the bar immediately after the IB, but 1 or more bars afterwords. In otherwords, does the breakaway bar that triggers your entry point have to be _immediately_ after the IB?
Offering $1.50 (21%)/RTL Commission Discounts at IC Markets & Global Prime
  • #10,292
  • Aug 16, 2012 4:55am Aug 16, 2012 4:55am
Quoting California
Razor

Thank you for sharing that post. Agreed, 100%.

To be clear, I posted the chart not as a way of showing a mechanical system using IBs, but because I did not want Patrickon's post about DIBS to influence less experienced traders into thinking that IBs do not possess an edge.

Having been fortunate enough to have begun trading at the dawn of the great Bubble Era in stocks in early 1990, I learned early on the value of discretion in trading vs. a purely mechanical approach. The weakness of the latter is that it generally does not...
LOL, I wouldn't worry about Patrick. 5 comments in over 3 odds years and the last a few years ago, he is just a passer by circumnavigating the forum world or universe should I say. I reckon there is a higher likelihood that I will see Hayley's Comet in the night sky before he comes back with more 1 lined crap
  • #10,293
  • Aug 16, 2012 9:37am Aug 16, 2012 9:37am
Quoting Layzars
Lastly, can you enter in on a position when the breakaway occurs not on the bar immediately after the IB, but 1 or more bars afterwords. In otherwords, does the breakaway bar that triggers your entry point have to be _immediately_ after the IB?
No it doesnt but the strong breakouts generally happen within the first 2-3 bars after. If you find the breakout is weak with little follow through there is every chance that it may end up faking you out (ie break one way then move the other).

The above is generally the case in exhausted markets. If you trade by the rules on a lower timeframe (hourly) but the daily or weekly is reaching its ATR then you might find a lack of steam in your direction and a pullback may be coming, hence why I look for Pin/IBs or outside bar/IB that come back to the mid range on the Pin or Outside bar range to take a trade against the trend.
  • #10,294
  • Aug 17, 2012 3:16am Aug 17, 2012 3:16am
http://savepic.su/2314379.gif
  • #10,295
  • Aug 17, 2012 5:20am Aug 17, 2012 5:20am
Razor, hows it going buddy?

You really do have never ending patience!

I'm not hear to comment on dibs as its all been said time and time again. But what I'd like to know is do you know anything about pepperstone? they're based in your neck of the woods.

take it easy

ps how business
  • #10,296
  • Aug 17, 2012 11:32am Aug 17, 2012 11:32am
Quoting icarusfx
Razor, hows it going buddy?

You really do have never ending patience!

I'm not hear to comment on dibs as its all been said time and time again. But what I'd like to know is do you know anything about pepperstone? they're based in your neck of the woods.

take it easy

ps how business
Doin well bud, Ive sent you a PM.

RT
  • #10,297
  • Edited 12:54pm Aug 17, 2012 12:41pm | Edited 12:54pm
Is this a bug with the MT4 DIBS Indicator?

https://dl.dropbox.com/u/713896/dibs...ator%20bug.gif

Check out that last indicator; shouldn't that be a buy signal, not a sell?

BTW thanks for the insight Razor; appreciate it.
Offering $1.50 (21%)/RTL Commission Discounts at IC Markets & Global Prime
  • #10,298
  • Aug 22, 2012 3:01pm Aug 22, 2012 3:01pm
Hi,

quick question on my snapshot:

http://img814.imageshack.us/img814/6...01295405pm.png

When the IB formed, I put a pending order for long.
Then, price moved below the open line to a FIB 23.6 retrace level.

If it comes up now around the green circle area, is the trigger still valid? Or is it only valid if hit with the following bar and I rather wait for a new IB?

Thanks,
  • #10,299
  • Aug 26, 2012 10:35am Aug 26, 2012 10:35am
Quoting Frenchie
Hi,

quick question on my snapshot:

http://img814.imageshack.us/img814/6...01295405pm.png

When the IB formed, I put a pending order for long.
Then, price moved below the open line to a FIB 23.6 retrace level.

If it comes up now around the green circle area, is the trigger still valid? Or is it only valid if hit with the following bar and I rather wait for a new IB?

Thanks,
Its hard to say with that screen shot as it doesn't give anyone any indication of what has happened before, the trend, and bias, what time it occured (Tokyo, London, US (early, late etc).

An inside bar is best when it breaks in the direction you are looking for within the first few bars. A break on the opposite end that travels some distance nulls most inside bars HOWEVER it there is a strong daily bias, if the retracement was back to a level of solid support and their was room to the upside, if there were other factors that are playing into a LONGER term objective then perhaps a trade is still possible but I would be playing it close.

Looking at your charts, if I had the above which mean I played the longer term target my first goal after the break is for the market to move north and then on a pullback find support above the bar highs that are noted on your chart. If it goes through that or shows signs that it isn't going to work then I am OUT at the earliest time that I recognise that. I would not take a full bar loss, but I also would not move to BE or take partial off at 1:1 (I prefer stronger positions these days and prefer to cut losses in light of them occuring).

Not much can be drawn from the image and 99% of the time I wouldn't be in but hypothetically I would draw those conclusions listed.
  • #10,300
  • Aug 30, 2012 4:19am Aug 30, 2012 4:19am
This is going to seem a bit harsh but what the hell? It's better than blowing an account.

If you could draw a horizontal line with a ruler and it intersected the price for the last I don't know how many hours would you call this a "hot hand"?

Now you can call me a tosser...


Quoting Frenchie
Hi,

quick question on my snapshot:

http://img814.imageshack.us/img814/6...01295405pm.png

When the IB formed, I put a pending order for long.
Then, price moved below the open line to a FIB 23.6 retrace level.

If it comes up now around the green circle area, is the trigger still valid? Or is it only valid if hit with the following bar and I rather wait for a new IB?

Thanks,
Gone to a better place
4 traders viewing now