Decision Bar traning system

Written by Tim T.

DecisionBar trading is real trading. As a DecisionBar Trader you won't get bogged down looking at countless indicators, which give diverging signals, or trying to evaluate arcane mathematical relationships. As a DecisionBar Trader you will come to understand that successful trading boils down to accomplishing four things.

1)  Identifying When a Potential Trade Exists. 3) Deciding if You Should Take the Trade.

2)  Determining the Direction of the Trade. 4) Decide When to Exit a trade.

DecisionBar Strategy indicator identifies potential trades and the direction of the trade. It also helps you to determine when to exit a trade along with stops based on your own risk tolerance and market volatility.

Risk Oscillators will help you decide whether to take a trade along with any other methods or indicators you wish to employ.

The DecisionBar Strategy indicator is our main indicator. It is very important that the strategy indicator be optimized for the instrument you are trading, as discussed in the DecisionBar Trading Manual.

The optimal sensitivity settings are different for each instrument you are trading and for each time frame. Knowing how and when to optimize these settings is the key to your success.

The sensitivity setting is an inverse setting. In other words, the lower the setting, the higher the sensitivity. Higher sensitivity settings (lower numbers) will give you more trading signals. Lower sensitivity settings (higher numbers) will give you fewer trading signals.

The default setting for the high and low sensitivity is 15/15. These settings are much too low for today's volatile markets.

Remember, the higher the setting, the lower the sensitivity. Settings of 30/30 are a good place to start. For volatile stocks and futures with wide ranges, eMinis and especially forex you may have to go to 40/40, 50/50 or even higher.

The idea is to try to filter out random moves while picking up small to large trends.

Both the high and low sensitivity should usually be set to the same figure.

To determine the proper setting, look at your chart. If the indicator gives you too many signals and a lot of "whipsaws" (moves in and out of positions too fast for a lot of near break-even trades), then decrease the sensitivity (by increasing the sensitivity setting).

The lowest sensitivity setting that eliminates the whipsaws is the proper setting.

It is important to understand that settings are not static. As the market changes, you have to adapt by changing the sensitivity settings and/or the interval you trade. The inability to adapt is the number one reason many traders are not successful.

I have a sign that says “ADAPT!!” and I keep it near my workstation so I see it often.

Most trading instruments have their own personalities. Once you find a productive interval, you can trade that interval for quite a while.

If the interval you have been trading stops being productive, try to adjust the sensitivity of the DecisionBar Strategy indicator. If that does not give you a productive looking chart, change the interval (time frame) you are trading.

Since the DecisionBar Strategy indicator puts historical signals on a chart exactly as they would have appeared, it only takes a few seconds to visually check-out different sensitivity setting.

We often get asked if a back test can be run on a certain trading instrument and interval to “optimize” the settings. The answer is no. Back tests do not “optimize,” they “average.” To find the optimal settings for “right now,” you have to look at the chart “right now.”

You will notice an indicator in the DecisionBar folder called the DecisionBar Strategy Warning indicator.

This indicator is used with the DecisionBar Strategy indicator. The DecisionBar Strategy indicator gives signals after the close of a bar; which meets the signal criteria. The DecisionBar Strategy Warning indicator gives an audio alert and/or pop-up each time it appears a signal may be imminent. It is kind of a "Heads Up" or “Warning” that you are on the verge of getting a trading signal. For this indicator to work properly you must make sure the sensitivity setting are the same as the sensitivity setting for the DecisionBar Strategy indicator.

Instructions for changing the sensitivity settings for the DecisionBar Strategy indicator and the DecisionBar Strategy Warning indicator are in the quick-start for the charting platform you are using.

Finally, a word about support. Support for DecisionBar is always free. Don't hesitate to contact our support department for help with installation, one on one training, help with maximizing your set-up and settings, and any other problems you may have.

All we ask is that you read the instructions included in your package before contacting support, so our support department doesn't get overloaded and those who really need help can get it.

Do you have a question about trading? While we can't give specific trading advice, our traders will do their best to give you honest and complete answers to your trading questions.

 

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