The DIBS Method... No Free Lunch continu (The DIBS Method... No Free Lunch continu)
This is a continuation of the DIBS approach, which begins with no free lunch but all coffee.
http://www.forexfactory.com/showthread.php?t=56907
Thanks to doubletop, at the bottom of the page are all of Peter's posts.
The above thread must be read and studied to stay up to date with this thread.
I want to thank NowAndLater for putting this content together.
Opening hours
I think MPP summed it up well:
0600GMT is always 0600GMT. GMT and UTC never move, all other times are +/- GMT/UTC. That is, London is currently GMT+1 and your broker's time is set to GMT time and never changes. BST, DST and EST change at different times, so it can be confusing.
I believe PC always uses 0600GMT so he can set up the charts and get used to the 0600GMT opening position and forget about the confusion of BST EST etc.
Peter:
"I use 00:00 CST or 06:00 GMT as my opening times. Trust me, if you have an hour off due to daylight saving time, that won't be a problem."
Great post from NowAndLater:
http://www.forexfactory.com/showpost...&postcount=679
Thank you Ozidav:
One constant in this equation is 6:00 GMT which never changes. The variables in the equation are your time zone (if you have daylight saving time) and your broker's time feed. As far as I know there are 3 possibilities for setting the start time of the day.
One constant in this equation is 6:00 GMT which never changes. The variables in the equation are your time zone (if you have daylight saving time) and your broker's time feed. As far as I know there are 3 possibilities for setting the start time of the day.
1. Simply find out that the time on your trading platform corresponds to 6:00 GMT, then adjust the start time on your trading platform to reflect 6:00GMT.
2. Change the start of the day based on London opening time (currently GMT +1). Big money doesn't start trading until after the Euro trading session opens (currently GMT +2), and actually starts trading when the London session (GMT +1) comes online. Keep in mind that due to time constraints, you may always need to adjust your trading platform. For example, some platforms are always set to GMT +2.
3. Find a broker whose time source is GMT = 00:00, such as Interbank. Therefore, 6:00 GMT will always be 6:00GMT on your trading platform. Then you just adjust the time you sit in front of your computer to account for Daylight Savings Time.
Peter Crowns charts were entered at 00:00 CST/USA. When he wrote his post, 6:00 GMT was equivalent to 1:00 CST. Therefore, on his chart, he has to adjust the start of the day once a year to account for daylight saving time in the United States. The actual start time of the 24 hour period on his chart (time feedback from the broker never changes). What changed was that he decided to start the trading day at 6:00 GMT. I believe that all the options I have described will provide you with many opportunities to make quality DIB trades. As PC himself said, if you take an hour off because of daylight saving time, it really doesn't matter that much. Let's face it: not everyone on the forum would choose 6:00GMT as the start time of the day.
What is my Enside Bar (candle) ?
A column with a high price lower than the previous column's high price and a low price higher than the previous column's low price. A stricter definition of DIBS method trading is that IB cannot exceed the limit of the previous column. This means that the top and/or bottom (high and/or low) can be equal to the previous bar. (See chart at bottom)
What time is it IB?
You can play IB at 5.00 GMT, 4.00 GMT, 3.00 GMT or even 2.00 GMT, as long as it's outside of the open day (6.00 GMT). Peter's diagram shows this.
Where to buy and where to sell:
Rule 1: We will buy on an IB breakout if the price is above the daily open; we will sell if the price is below the daily open.
Where to buy and sell is not discussed in detail. Place the buy/sell 1 pip outside the IB range and remember to add the spread.
Example: IB range is high @ 1.5500, low @ 1.5400. Buy Stop: 1.5501 + spread, SL 1.5399, BE 1.5603 + spread. Sell Stop: 1.5399, SL 1.5501 + spread, BE 1.5297. (As shown below)
Should we use IB's previous bar high/low as our breakout range?
This is not PC's rule, if you feel like this works for you, then go ahead.
What is TP? or FTT (Free Trade Target)
We want to exit half of our position at a 1:1 ratio, meaning that once you advance by a number of pips equal to the number of pips you risked (IB range + 2 (1 up and 1 down on breakout) + pip spread), then you close half of your position. This is your FTT (Free Trade Target), if this price comes back and takes you out, you have lost nothing. Do not move the SL on the remaining 1/2.
Change: 1:1 after closing 2/3, which will bring some profit. Alternatively, you could close 2/3 of the position after taking half the risk points, which would provide a free ride faster but would net you less if your price moves in the positive direction, but when you have doubts about DIBS or see technical levels that are too close, then this may be an approach. PC shuts down halfway after 1:1, I recommend you do the same.
There are several ways to track your stop loss on the winning balance. I would move the stop loss to the new support/resistance area, but there are other ways to do this.
What if the price of IB is higher than the daily opening price and lower than the daily opening price?
Then you catch the breakout that occurs and sell if it breaks down and vice versa.
2, 3 or more IBs in a row – which one to choose?
To be on the safe side, I would choose the largest one first.
How to avoid losses?
If you want to ask this question, then you have to start over! Read PC's post.
Peter Krones:
“Buy the breakout of the hourly inside bar if the price is “up” for the day, and sell the downside breakout of the hourly inside bar if the price is “down” for the day.
These types of trades are simple, low risk, and have high potential rewards. The only thing is, you have to be alert when they happen so you can trade! "
“What I like about these simple trades is their ability to quickly mitigate risk by exiting half the position at a 1:1 ratio, allowing you to hold the remaining position through the initial stop (the other side of the inside line) as a virtual “free trade.”
"I find the 'elegantly simple' deal is the best."
“The jobs in the market are easy because they are so simple.
Most traders make things extremely complicated. Because their minds may not be able to accept the fact that the market is basically filled based on orders. "
"Win rate is not the most important factor in finding a good trading approach. Profit potential/risk is."
“The best trades for us are those that don’t give you any retracement after the breakout”
"Trading is both simple and unconventional. It also offers some of the best risk/reward trades possible and always ensures you're in line with daily trends. It gets exciting when you're in line with weekly and monthly trends too!"
The DIBS method is one of the most reliable "unknown" methods of making money in Forex. I wish I had invented it.
I've personally been dealing with this concept for over 15 years and I know how good it can be and how annoying it can be. As you mentioned, trading during active hours is key to getting the best deals. The combination of low risk and high probability is hard to beat. Yet it remains in obscurity, which is the way with all good methods. "
http://www.forexfactory.com/showthread.php?t=56907
Thanks to doubletop, at the bottom of the page are all of Peter's posts.
The above thread must be read and studied to stay up to date with this thread.
I want to thank NowAndLater for putting this content together.
Opening hours
I think MPP summed it up well:
0600GMT is always 0600GMT. GMT and UTC never move, all other times are +/- GMT/UTC. That is, London is currently GMT+1 and your broker's time is set to GMT time and never changes. BST, DST and EST change at different times, so it can be confusing.
I believe PC always uses 0600GMT so he can set up the charts and get used to the 0600GMT opening position and forget about the confusion of BST EST etc.
Peter:
"I use 00:00 CST or 06:00 GMT as my opening times. Trust me, if you have an hour off due to daylight saving time, that won't be a problem."
Great post from NowAndLater:
http://www.forexfactory.com/showpost...&postcount=679
Thank you Ozidav:
One constant in this equation is 6:00 GMT which never changes. The variables in the equation are your time zone (if you have daylight saving time) and your broker's time feed. As far as I know there are 3 possibilities for setting the start time of the day.
One constant in this equation is 6:00 GMT which never changes. The variables in the equation are your time zone (if you have daylight saving time) and your broker's time feed. As far as I know there are 3 possibilities for setting the start time of the day.
1. Simply find out that the time on your trading platform corresponds to 6:00 GMT, then adjust the start time on your trading platform to reflect 6:00GMT.
2. Change the start of the day based on London opening time (currently GMT +1). Big money doesn't start trading until after the Euro trading session opens (currently GMT +2), and actually starts trading when the London session (GMT +1) comes online. Keep in mind that due to time constraints, you may always need to adjust your trading platform. For example, some platforms are always set to GMT +2.
3. Find a broker whose time source is GMT = 00:00, such as Interbank. Therefore, 6:00 GMT will always be 6:00GMT on your trading platform. Then you just adjust the time you sit in front of your computer to account for Daylight Savings Time.
Peter Crowns charts were entered at 00:00 CST/USA. When he wrote his post, 6:00 GMT was equivalent to 1:00 CST. Therefore, on his chart, he has to adjust the start of the day once a year to account for daylight saving time in the United States. The actual start time of the 24 hour period on his chart (time feedback from the broker never changes). What changed was that he decided to start the trading day at 6:00 GMT. I believe that all the options I have described will provide you with many opportunities to make quality DIB trades. As PC himself said, if you take an hour off because of daylight saving time, it really doesn't matter that much. Let's face it: not everyone on the forum would choose 6:00GMT as the start time of the day.
What is my Enside Bar (candle) ?
A column with a high price lower than the previous column's high price and a low price higher than the previous column's low price. A stricter definition of DIBS method trading is that IB cannot exceed the limit of the previous column. This means that the top and/or bottom (high and/or low) can be equal to the previous bar. (See chart at bottom)
What time is it IB?
You can play IB at 5.00 GMT, 4.00 GMT, 3.00 GMT or even 2.00 GMT, as long as it's outside of the open day (6.00 GMT). Peter's diagram shows this.
Where to buy and where to sell:
Rule 1: We will buy on an IB breakout if the price is above the daily open; we will sell if the price is below the daily open.
Where to buy and sell is not discussed in detail. Place the buy/sell 1 pip outside the IB range and remember to add the spread.
Example: IB range is high @ 1.5500, low @ 1.5400. Buy Stop: 1.5501 + spread, SL 1.5399, BE 1.5603 + spread. Sell Stop: 1.5399, SL 1.5501 + spread, BE 1.5297. (As shown below)
Should we use IB's previous bar high/low as our breakout range?
This is not PC's rule, if you feel like this works for you, then go ahead.
What is TP? or FTT (Free Trade Target)
We want to exit half of our position at a 1:1 ratio, meaning that once you advance by a number of pips equal to the number of pips you risked (IB range + 2 (1 up and 1 down on breakout) + pip spread), then you close half of your position. This is your FTT (Free Trade Target), if this price comes back and takes you out, you have lost nothing. Do not move the SL on the remaining 1/2.
Change: 1:1 after closing 2/3, which will bring some profit. Alternatively, you could close 2/3 of the position after taking half the risk points, which would provide a free ride faster but would net you less if your price moves in the positive direction, but when you have doubts about DIBS or see technical levels that are too close, then this may be an approach. PC shuts down halfway after 1:1, I recommend you do the same.
There are several ways to track your stop loss on the winning balance. I would move the stop loss to the new support/resistance area, but there are other ways to do this.
What if the price of IB is higher than the daily opening price and lower than the daily opening price?
Then you catch the breakout that occurs and sell if it breaks down and vice versa.
2, 3 or more IBs in a row – which one to choose?
To be on the safe side, I would choose the largest one first.
How to avoid losses?
If you want to ask this question, then you have to start over! Read PC's post.
Peter Krones:
“Buy the breakout of the hourly inside bar if the price is “up” for the day, and sell the downside breakout of the hourly inside bar if the price is “down” for the day.
These types of trades are simple, low risk, and have high potential rewards. The only thing is, you have to be alert when they happen so you can trade! "
“What I like about these simple trades is their ability to quickly mitigate risk by exiting half the position at a 1:1 ratio, allowing you to hold the remaining position through the initial stop (the other side of the inside line) as a virtual “free trade.”
"I find the 'elegantly simple' deal is the best."
“The jobs in the market are easy because they are so simple.
Most traders make things extremely complicated. Because their minds may not be able to accept the fact that the market is basically filled based on orders. "
"Win rate is not the most important factor in finding a good trading approach. Profit potential/risk is."
“The best trades for us are those that don’t give you any retracement after the breakout”
"Trading is both simple and unconventional. It also offers some of the best risk/reward trades possible and always ensures you're in line with daily trends. It gets exciting when you're in line with weekly and monthly trends too!"
The DIBS method is one of the most reliable "unknown" methods of making money in Forex. I wish I had invented it.
I've personally been dealing with this concept for over 15 years and I know how good it can be and how annoying it can be. As you mentioned, trading during active hours is key to getting the best deals. The combination of low risk and high probability is hard to beat. Yet it remains in obscurity, which is the way with all good methods. "
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