Dow - Which Way?

[rols]

O.K. Traders. Do you like a challenge? If so, go to this website http://www.iii.co.uk/cfd/?type=simulator

Then go to "Launch" button. A Window will "pop" up. Click Apply to open a CFD Trading account. You will be given a simulated £10,000 (I do NOT want anyone to use real money from these Buy & Sell signals I am giving or the strategy I employ alongside them). This system has been back tested over a year.

The trading plan and method is just before END of DAY trading on the DOW. This is not a Day trading system but a system that lets you live your life and not be sat a computer screen all day watching the DOW going up and down. Each trade could last up to 14 days before closing all positions for hopefully a profit. Some can last longer than this.

This system will teach you discipline and unemotional trading. If after 12 months the simulated £10,000 is below £10,000 then you can say I have failed. For this system to work you must follow ever trade exactly when prompted.

PLAN THE TRADE. TRADE THE PLAN.

My DOGS OF THE DOW are salivating at the prospect...

Must say I'm very tempted but, it's keeping it going for a year that puts me off. Anyway how does this work in real life? Bid-A-Tool must have very deep pockets + I presume he's going to double up on his losses?

Reminds me of a little story I once heard;

Moses challenges Jesus to a round of golf. Moses steps up to the tee and hits the ball. It goes sky high, misses the fairway and lands in a lake. Moses parts the water and chips the ball onto the green.

Jesus steps up to the tee and hits the ball. It too goes sky high and heads for the lake. But just before it falls into the water, a fish jumps up and grabs the ball in its mouth. As the fish is falling back down into the water, an eagle swoops down and grabs the fish in its claws. The eagle flies off over the green, where a lighting bolt shoots from the sky and barely misses it. Startled, the eagle drops the fish. When the fish hits the ground, the ball pops out of its mouth and rolls into the hole for a hole-in-one.

Moses then turns to Jesus and says,
"Have you come here to play golf or just to f*** about?!"

 

[Bid A-Tool]

I like this quote I found:

By the time the market 'confirms' what you suspected, it is TOO LATE. By the time the market passes or fails a 'test', it is too late. To be paid, you must act upon your suspicions before they are manifested.

The thing is with these indicators they confirm the "suspicions" before the event happens! Keep guessing.

Just to let you all know, that I fully intend to let you have these indicators and where to find them. I just need to create a little interest first, that's all (I think I have done that). The intention is to make this THREAD dedicated to these indicators. That way we can all help each other find even better ways to improve them (I have studied them for two years but don't know everything and don't claim too). As far as I can see they are the best I have ever seen. This is a trading community......why should all the professionals have all the fun? What do you think?

And yes I do use a "doubling" up strategy starting with 1 contract. It is better than buying 10 contracts in one go.

Bid A-Tool

 

[Bid A-Tool]

My DOGS OF THE DOW are salivating at the prospect...

Must say I'm very tempted but, it's keeping it going for a year that puts me off. Anyway how does this work in real life? Bid-A-Tool must have very deep pockets + I presume he's going to double up on his losses?

Rols.............You sound a Negative trader. Do you describe a glass as "half empty" or "half full"?

It's all a mind game. You say "double up on his losses".......but how can you say you have lost if you don't sell the contract or contracts? With these indicators it works or would you like to see what happens in a year? The thing is with this trading strategy you have to be patient and calm. Trading doesn't always go the way you want but the key is to turn a Negative situation, when it happends, in to a positive one.....Deep pockets? Depend how accurate the timing signals are!

 

[rols]

Rols.............You sound a Negative trader. Do you describe a glass as "half empty" or "half full"?

It's all a mind game. You say "double up on his losses".......but how can you say you have lost if you don't sell the contract or contracts? With these indicators it works or would you like to see what happens in a year? The thing is with this trading strategy you have to be patient and calm. Trading doesn't always go the way you want but the key is to turn a Negative situation in to a positive one.....Deep pockets? Depend how accurate the timing signals are!

Oh dear! At the end of which rainbow did you find your strategy?

I'm intrigued how somebody who has built up such an impressive business selling tools can post such naive comments when it comes to money management.

Please explain yourself....

 

[rols]

Oh dear! At the end of which rainbow did you find your strategy?

I'm intrigued how somebody who has built up such an impressive business selling tools can post such naive comments when it comes to money management.

Please explain yourself....

.......or has your mum caught you on the internet again?

 

[Bid A-Tool]

Oh dear! At the end of which rainbow did you find your strategy?

I'm intrigued how somebody who has built up such an impressive business selling tools can post such naive comments when it comes to money management.

Please explain yourself....

Rols

I have seen more traders loose money through the bad placing of "Stop Loss" orders.

You can't deny it wouldn't work mathematically. How do you think the big boys do it? To illustrate: Take the S&P 500. It stands at 1,309.99. The doubling up process is best used for going Long on contracts (Why?...because what is the most the S&P 500 can rise........No Limit. What is the most it can fall?........to "0".

Say you decided to go Long on the S&P 500 and your strategy was to double up on contracts every 100 point fall (strict adherence). Is it not so you would make a profit some where along the bounces back up again? Mathematically it's sound......but I agree if you used this strategy above you would need "Deep pockets". You would have to work out how much money you would need in the worst case scenario.

The idea of the "doubling up" strategy is that in the above example you would only have to bounce back 50 points above your last 100 point marker to make a good profit at any one time in the process. That is where you would take profit every time.

Once you had made a profit you would start the process all over again with 1 contract only to start with......

This method does not work on 50/50 bets....so don't even bother thinking about it.

 

[frugi]

Bid a-tool most of us have probably entertained the happy notion of averaging down at some point.

I have seen [...] traders lose money through the bad placing of "Stop Loss" orders.

But I can promise you there are more of them losing much larger amounts through averaging down in similar manners to the one you describe.

Is it not so you would make a profit some where along the bounces back up again?

Yes, occasionally it can work, of course, but if you keep doing it you will eventually regret it in a big way. What if the bounce never happens, takes years to do so or the adverse excursion empties your coffers first?

In fact the worst thing that can happen is winning a few times by averaging down because then one is apt to bet even more the next time, confident in one's "strategy". (This is not to say that scaling into positions around a certain price zone in a controlled way cannot form part of a decent strategy, but you have I think suggested something radically different, as below).

1 lot = 50p per point
Double down every 100 points

SP Position Loss £

1300 L1 0
1200 L2 -50
1100 L4 -200
1000 L8 -600
900 L16 -1600
800 L32 -4000
700 L64 -9600
600 L128 -22400
500 L256 -51200
400 L512 -115200
300 L1024 -256000
200 L2056 -512000
100 L4096 -1024000

Reward if S&P rises 700 points = £350
Risk if S&P falls 700 points and stays there for 5 years = £22400 + opportunity cost

Add a few zeroes if trading ES contract at $50 per point.

If you average down and ignore the WCS then eventually you will lose all your money on a black swan event. If you truly take the WCS into account then your reward will be paltry (minuscule compared to the risk) and your money may be locked up for a very long time before the position comes good. It just ain't worth it.

That said, good luck with swing trading the Dow. It would be excellent if your system is more robust than the cynics would believe and I look forward to seeing the results.

 

[Bid A-Tool]

Bid a-tool most of us have probably entertained the happy notion of averaging down at some point.



But I can promise you there are more of them losing much larger amounts through averaging down in similar manners to the one you describe.



Yes, occasionally it can work, of course, but if you keep doing it you will eventually regret it in a big way. What if the bounce never happens, takes years to do so or the adverse excursion empties your coffers first?

In fact the worst thing that can happen is winning a few times by averaging down because then one is apt to bet even more the next time, confident in one's "strategy". (This is not to say that scaling into positions around a certain price zone in a controlled way cannot form part of a decent strategy, but you have I think suggested something radically different, as below).

1 lot = 50p per point
Double down every 100 points

SP Position Loss £

1300 L1 0
1200 L2 -50
1100 L4 -200
1000 L8 -600
900 L16 -1600
800 L32 -4000
700 L64 -9600
600 L128 -22400
500 L256 -51200
400 L512 -115200
300 L1024 -256000
200 L2056 -512000
100 L4096 -1024000

Reward if S&P rises 700 points = £350
Risk if S&P falls 700 points and stays there for 5 years = £22400 + opportunity cost

Add a few zeroes if trading ES contract at $50 per point.

If you average down and ignore the WCS then eventually you will lose all your money on a black swan event. If you truly take the WCS into account then your reward will be paltry (miniscule compared to the risk) and your money may be locked up for a very long time before the position comes good. It just ain't worth it.

That said, good luck with swing trading the Dow. It would be excellent if your system is more robust than the cynics would believe and I look forward to seeing the results.

...........So it would work then?........I just got a better idea. I think I will make a bet with the bookmaker that the S&P will hit the 100 mark in one big fall without bouncing up 50 points at any one time in the process.

Is the "Black Swan" the company that holds all your money and then goes "belly up"....never thought of that. I shall withdraw my £8 Million first thing tomorrow morning.

So Frugi. What Acceptable "Stop Loss" level would you advise for a swing trader?

By the way. I hope no one takes this all to seriously. "It's just a bit of fun". I still think these indicators work great and would welcome any suggestions on a acceptable "stop loss" strategy along with the indicators.

Bid A-Tool

 

[frugi]

Black swan, six sigma etc. Statistically very unlikely events that have an uncanny knack of happening at the most inconvenient time, usually when one is leveraged to the hilt the wrong way. So called because we didn't think black swans could exist (well, we haven't seen one have we?) until someone stumbled across one in, I think, Australia.

"A black swan is an outlier, an event that lies beyond the realm of normal expectations. Most people expect all swans to be white because that's what their experience tells them; a black swan is by definition a surprise. Nevertheless, people tend to concoct explanations for them after the fact, which makes them appear more predictable, and less random, than they are." (Naseem Taleb)

The very few swing trades I am lucky enough to hold develop from day trades (with very tight initial stops) that go a (relatively) long way in my favour, so I can't really comment on that. Besides stop placement is a very personal thing, depending on many factors. We know so little about your system that it would be foolish and presumptious to recommend anything beyond perhaps making them smaller than your average win.

I just got a better idea. I think I will make a bet with the bookmaker that the S&P will hit the 100 mark in one big fall without bouncing up 50 points at any one time in the process.

Please don't use a bookie - I'll take the other side of that and give better odds. Just call me Ask a-tool from now on.

50 points wouldn't be enough to dig you outta the hole beyond the first few lots, mind.

The S&P is at 1000 having dropped from 1300, you're down £600 on the 4 lots and you go long 8 lots. 50 points up only clears £200. You'd need 150 points, i.e 1150 to break even. This gets worse the further it falls as you always have to climb back to half way between 1300 and where you are.

All good fun until it's real ducats on the line.

Anyway I'm not trying to be mean - give a few details of the system, av win / av loss / percentage winners / losers etc. and people will help, if you want them to. We're a bunch of old cynics but not unpleasant with it, I hope.

 

[Bid A-Tool]

Lets forget the "doubling" up thing for now.

These are the signals the indicators have given me since January 2006. The signals below were actually traded. This is what I would have posted if I had been here from January on this discussion board.

Go Long 4th January
Go Short 13th January
Go Long 23rd January
Go Short 1st February
Go Long 9th February
Go Short 23rd February
Go Long 3rd March (this signal was slightly too early)
Go Short 23rd March
Go Long 4th April (Abort position on 7th April because pattern of signal changed)
Go Long on the 17th April (The signal I gave the other day).

Can everyone go and look at their charts and see if your own signals you use, correspond with the signals above.
The problem is going to be where to place the "Stop Loss". It has to be high or low enough to allow some movement as after the signal is given as the DOW can move slightly against you the next day.

Bid A-Tool

 

[dick_dastardly]

Go Long on the 17th April (The signal I gave the other day).

Morning Bid A- Tool

I've been away for the past couple of days so I've lost the plot a bit.

May I ask you, when exactly did you enter long and at what price ?

dd

 

[Bid A-Tool]

Morning Bid A- Tool

I've been away for the past couple of days so I've lost the plot a bit.

May I ask you, when exactly did you enter long and at what price ?

dd

Originally Posted by Bid A-Tool
Go Long on the 17th April (The signal I gave the other day).

ANSWER: 11,073 after the close or you could have traded it earlier.


Technically it is better towards the close of trading. Although you can sometimes tell the signal is not going to change before then. It was like that the other day when I called it a "possible" Long in the day (I called it Long after the close) someone complained it had fallen 50 points and another said I have lost £100 on this tread. The thing is because the way the signals work I was thinking a "Stop Loss" of maybe 120 points to let the trade flow. I just feel you may loose money on the "Stop Loss" than the actual trade. Am I making sense?

Some of the trades can last 14 days depending on how the DOW is feeling. You know what it's like. You have to be a little patient sometimes. The profit would be in between each signal.

Bid A-Tool

 

[dick_dastardly]

ANSWER: 11,073 after the close or you could have traded it earlier.


Technically it is better towards the close of trading. Although you can sometimes tell the signal is not going to change before then. It was like that the other day when I called it a "possible" Long in the day (I called it Long after the close) someone complained it had fallen 50 points and another said I have lost £100 on this tread. The thing is because the way the signals work I was thinking a "Stop Loss" of maybe 120 points to let the trade flow. I just feel you may loose money on the "Stop Loss" than the actual trade. Am I making sense?

Some of the trades can last 14 days depending on how the DOW is feeling. You know what it's like. You have to be a little patient sometimes. The profit would be in between each signal.

Bid A-Tool

OK, got it now.

From what you said in post 66 ( the horse has bolted post ), I thought you had missed the move. I must have misunderstood you.

Thanks for the clarification.

dd

 

[counter_violent]

There is some merit in bid-a-tool's method regarding trade management. Ref.... Bird Watching in Lion Country by Dirk du Toit, would be a very similar approach.

Even with this trade management approach Catastrophic stops MUST be used at all times.
The premise for the original trade MUST be intact.

The problem here is this .....no one has any idea what it is that is being evaluated....ref Secret Indicators ( nothing new under the sun ) so for anyone following these calls trading with real money, without first understanding what it is they are following, deserves to be taken to the cleaners.

 

[Lightning McQueen]

Lets forget the "doubling" up thing for now.

These are the signals the indicators have given me since January 2006. The signals below were actually traded. This is what I would have posted if I had been here from January on this discussion board.

Go Long 4th January
Go Short 13th January
Go Long 23rd January
Go Short 1st February
Go Long 9th February
Go Short 23rd February
Go Long 3rd March (this signal was slightly too early)
Go Short 23rd March
Go Long 4th April (Abort position on 7th April because pattern of signal changed)
Go Long on the 17th April (The signal I gave the other day).

Can everyone go and look at their charts and see if your own signals you use, correspond with the signals above.
The problem is going to be where to place the "Stop Loss". It has to be high or low enough to allow some movement as after the signal is given as the DOW can move slightly against you the next day.

Bid A-Tool

Hi bid
my own signals do not coincide with yours on an EOD chart for the period you have given us
I can replicate your short signals but not your longs with one indicator looking now for a second indicator that replicates your longs

looks good to me so far

Don

 

[JillyB]

Hi bid
my own signals do not coincide with yours on an EOD chart for the period you have given us
I can replicate your short signals but not your longs with one indicator looking now for a second indicator that replicates your longs

looks good to me so far

Don

Give me a clue as to what indicators you're using - I think I'm having a blonde moment here.

 

[Lightning McQueen]

Give me a clue as to what indicators you're using - I think I'm having a blonde moment here.

im not going to steal the thunder on someone else's thread maybe he might spill the beans after he's toyed with us for a while longer

anyway I cant do the longs yet they are all over the world and I cant pin them down yet

short signal good though. checked back to December 03 :cheesy:

 

[Bid A-Tool]

Hi everyone. I don't want everyone to think I am messing about with traders minds. I am not familiar with a lot of the technical charting tools that traders use. As traders, no doubt you will have your favourites and will have settled on just 1 or 2 that give you the edge. If you are having trouble replicating the signals I have given then this indicator appears to have the edge. It is this part that I find fascinating.

When I said "secret indicators" I meant they are secret in the sense of I feel many traders don't know about them. The truth is I will spill the "beans" on what is being used. I don't know everything about them. I feel we should help each other and dedicate this tread only to this particular indicator. It will make it simple with no news stories included. Personally I love technical analysis.

Well the DOW went up again today and crude hits $74 a barrel. That proves you shouldn't listen to the news. With these indicators news doesn't matter.

By the way there are a few signs the indicator is weakening on the DOW. I am not calling it short but beware on going long. I would be wary about shorting this on the next signal because of the large rise the other day. I would be happier to go Long on the next signal that it generates. I personally think the downturn from this high will be short lived and a new Mid turn uptrend will begin.

If it makes you feel any better me and a friend have been having a competition over the last few years. Since finding indicators, I been winding him up. He stopped emailing me last week (spoiled sport - still good friends though).

There appears to be quite a few cynics out there. I think this is because many have been disappointed by very expensive packages. I have been ripped off before as well. I have a determination to find the ultimate signal along with the interpretation. You are welcome to help if you want.

Bid A-Tool

 

[JillyB]

Well I, for one, am eager to know more. This indicator intrigues me. Is it a common one, that most charting packages have or is it a specialised one that only say e-signal or Tradestation have?

As I don't trade with either of these, and just rely on the charting package with CMC, would it work for me?

Please tell us more.

 

[Lightning McQueen]

There appears to be quite a few cynics out there. I think this is because many have been disappointed by very expensive packages. I have been ripped off before as well. I have a determination to find the ultimate signal along with the interpretation. You are welcome to help if you want.

Bid A-Tool

Hi Bid

I have now successfully recreated your system apart from the long signal on 23/01/06 which isn't called until 26/03/06 all the others are accurately shown now on my chart
even the long signal of 3/03/06 shown failing then coming good on 3/01/06
The rate of change indicator may be useful to avoid these false signals and allowing closer stops
my next efforts will be to work out the best stop level which i will post for you

well done Bid A-Tool

Don