[Ingot54]

Dale - firstly ... let me encourage you to keep EVERYTHING together on one thread - this is important so that we can all stay together. The danger is that we will lose the work you have already done, or all end up following different threads and missing the main one.

It matters little what transpires during the journey ... at the end it will be clear that we left no stone (or indicator) unturned in the quest.

I really like your original hypothesis ... (remember your famous one-liner: "I'm so happy I could sh*t!")

Well, the PSAR signal used over daily or weekly TF are great, and I hope we don't move away from that. The evolution here is a result of trying to place the PSAR in its rightful environment ... TRENDING. We have to be careful that we don't introduce too many other indicators out of a mercenary desire to jump into trades.

If that happened, the PSAR could be relegated to just another signal, instead of the main game in town. I have never felt at ease with stochastics, and rarely take much notice of RSI, but I have trading friends who do use them well.

I really do like the MACD, and I'll explain ...

MACD is unique because it is both a LAGGING indicator and a LEADING indicator, as well as a MOMENTUM indicator. As such, I am hopeful that it will come up trumps as the ideal companion to accompany your PSAR in formulating the ideal system. Used correctly, I don't think you need any other.

One of the most important principles in Technical Analysis is that MOMENTUM peaks before PRICE. In other words, momentum provides a warning that decline/rally in the price may be imminent.

Just to rehash, for those who need to understand MACD a bit better ...

The standard (or default) model for MACD is the 26-12-9 setting, but as I shall show later, other settings do have a useful place.

There are 2 lines formed in drawing the Moving Average Convergence Divergence Indicator. The first is the "main" line, formed by subtracting the 26-period EMA (Exponential Moving Average) from the 12-period EMA. After that line is constructed, a 9-period EMA of THAT line is overlaid on top of it, and we call that the "trigger" line or more commonly the "signal" line.

The most important signal MACD can provide us is the CROSS of the ZERO line. Depending on the cross, the signal is bullish or bearish ... no need to go further on that right here.

Gerald Appel who devised the MACD recommended the following setting be applied:

17-8-9 for BUYING
26-12-9 for SELLING, following a strong bullish run.

I am uncertain how to apply that, given we go long/short on currencies. I have the opinion that one will get us into position faster at the beginning of a move, while the other will assist exit at the completion of the move.

Using daily or weekly TF excludes much of the "noise" and should see the account build nicely with little stress. (Ka-Ching! ... love that sound!)

MACD can be used with or without the histogram. The histogram is not essential, but is a strong visual aid or visual signal which becomes very useful when flicking through many charts to select trading candidates for the watchlist. It is good for traders to learn to do without the histogram initially, until they become adept at spotting the EMA cross-overs, and learn to spot the crosses at the zero line. After that, the histogram can be used to speed the process.

So ... with that background, how does the MACD signal that the chart is TRENDING, and thus validate the PSAR signal? Remember it is a leading/lagging AND momentum indicator, so it will quickly point to trend reversals ... the perfect partner for PSAR.

To check whether the currency is TRENDING see where MACD is in relation to the ZERO line. If MACD is FLAT or stays close to the zero line, the market is RANGING, and you simply put that trade on the back-burner and move to the next chart. No use trying to force a trade if the indicators are warning to "wait".

However, and this is the biggie ... IF the MAIN line crosses the SIGNAL line from below the zero line, it is a STRONG signal to go LONG.

If the MAIN line crosses the SIGNAL line from above the zero line, it is a very strong SHORT signal.

If the PSAR agrees, then we have ourselves a very juicy trade.

We don't need to be trading too many at a time - far better to load up on the successful trades, than spread the margin too thinly on multiple trades.

The reason I say that is because the higher liquidity pairs are the ones with the USD, plus the GBPJPY or EURJPY. There are usually about 8 currency pairs eligible. You might not get much action initially, but you should find that as you get established in this system, you will be more waiting for an exit signal than an entry signal.

And remember, it is in the exit that the money is made.

Hope that makes sense - and please add to, or correct where I may have erred.