Quote:
Originally Posted by dpaterso
The problem is that, like I said before, you eventually end up in a sort of 'hedge' situation e.g. EUR/??? and GBP/??? and then EUR/GBP - they can't all show a profit at the same time!!! One has to go down for the other to go up and while I thought that this would not be an issue with this indicator i.e. it really does not care what's up and what's down - you profits are negated after a while (that's quite a word that - negated)!!!
|
There are two reasons that this shouldn't be a problem, and one way that it DEFINATELY won't be a problem:
1. If you are trading inversely related pairs, then the PSAR should be on opposite sides of each pair, and your trades should be placed opposite to each other too. This way you won't have a hedge, you'll have two winning positions.
2. If you find yourself in a hedge, you'd probably find that the PSAR trends will be out of phase with each other. This means that you will have a hedge for a period of time but you will take profits at different times, making both trades profitable ones. this theory would be shot to pieces by a very stong trend. Many people have tried to make EA's on this principal alone, but they'll eventually wipe out an account during a stron trend in one direction. As you said "What pair goes up and down and up and down and up and down all day?" Well, none of them will do that forever.
3. The way to avoit this is by NOT trading inversely related pairs or crosses of two of your existing trades. It would be best to run a long term test on a lot of pairs to determine the most profitable pairs and only trade those. You might end up sticking to 5 pairs or less, but you won't be over-exposed to the market getting yourself margin called again.