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The Parabolic Delta Plus Trading System

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The "Para Delta" System

The Parabolic Delta Plus System was developed to improve profit taking in the Delta Plus System. The question was asked how can we take money off the table in a winning trade from a trending market. The answer was to add the Parabolic Stop to take profits on these big winners. The process is explained by Welles Wilder¨

First, I updated the Delta Plus System from 10 years to 12 years. The two parameters changes very little if any for each commodity. Cotton was the exception. Apparently, I had overlooked the best parameters for Cotton two years ago. I couldn't believe that Cotton had made a profit of $73,888 with a draw down of only $4,299. I went through every trade for the 12 years, and it was perfect. You can do the same thing if you like. In fact, you can check the results of any or all of the commodities by selecting perpetual data and beginning 1/1/1992 until 1/1/2004.

 

table1

 

So, here are the broad results. Adding the Parabolic system to the Delta Plus System at the correct profit target in the trade, helped most commodities and hurt the remaining commodities. The result was to add the Parabolic System to the commodities it helped and leave the commodities that could not be improved as they were. In other words the Delta Plus System could not be improved with on 10 out of the original 20 commodities that had a profit greater than the draw down. This was the cut off point. These 10 commodities are shown on Chart 1 and are colored Blue. The other 10 commodities that could be improved by the Parabolic addition are colored Black.

Now let's look at Chart 2. The 10 commodities in Blue are the same as on Chart 1. However, the Red commodities show the improvement made on the black commodities on Chart 1. As you will notice, most of the improvements are very significant.

 

table2

 

For example the E-mini Nasdaq went from $55,152, profit and $11,298 draw down 39% profit trades, to $95,162 profit and $12,019 draw down and 56% profit trades.

Look at Natural Gas, the heaviest contract by far. Profit: $114,296 vs. $148,993. Draw down: $20,700 vs. $12,203. 80 trades vs. 126 trades and 49% profit trades vs. 63% profit trades. Natural Gas kept my company account in the red last year. I am not going to be afraid of it this year. Losses and draw downs will be small this year with more profit trades.

Chart 2 shows the Top 17 that the Delta Plus System will be on the trade sheet for Directors.

Notice that there are 20 commodities on Chart 1 and 25 commodities on Chart 2. Why is this? The reason is that when I tested the Parabolic Delta Plus on all commodities, 5 more commodities met my qualification of having a greater profit than draw down.

All commodities were rated by the Selection Factor which is: Average Profit Per Year divided by Draw down times 100. This fairly compensates those commodities that have only been traded for 3 to 6 years.

Now here is something you must understand. All 25 commodities shown on Chart 2 are included in the category called The Parabolic Delta Plus commodities even though 10 of the 15 commodities do not use the Parabolic System.

When you put a commodity on your computer screen, if it is a Parabolic Delta Plus Commodity there will be a green or red dot on the screen. When the commodity hits the profit target, you will see two dots on the chart, and every following day a new dot will be added to the chart. If you are in a Long trade, the dots will be red. When the price goes down through the red dot, you are out with a profit. You will then see green dots moving down. You go Long again when the price goes through the green dot. You will keep on doing this as long as you are in the Long Delta Plus trade. The yellow Delta Plus line may take you out of the trade before the red dot. Click on the dot and a box will give you the price of the dot. Click on the yellow Delta Plus line to get the profit target for the commodity you are trading. Remember, if the Delta Plus is a Long trade; take only the Long Parabolic trades. If the Delta Plus is a Short trade; take only the Short Parabolic trades.

 

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