Hey Dale.. how has your weekend been? I've been studying the SI and I think I have it down, I just had a few questions I wanted to ask just to confirm that my understanding is 100%...
1. When you enter initially (after above/below a significant swing point) the INITIAL SAR is the MOST RECENT swing point in the other direction, so if you are going short then the SAR is the most recent high swing point, correct?
2. After this, the SAR doesn't change until a new low swing point is made, which then makes the most recent high swing point the new SAR. This repeats itself every time a new low swing point is made, correct?
3. You don't use the trailing index SAR unless the ASI reverses on itself 60 points away from the most favorable ASI since you were in the trade. When you do this, the SAR becomes the most extreme price since the 60 point drop, which usually is going to be the high/low that occurred on the day that the ASI dropped by 60 points.
4. The SAR used is always the closest one calculated, so if you have a 60 point ASI change which triggers the trailing index sar, if the "standard" SAR calculated by the previous high/low swing point is still closer to the price, then you are still going to use that as the SAR regardless of the trailing sar being activated.
5. I was pretty sure about this one, but just to make sure: The SAR is if the price closes above/below that point, not if it simply hits that price sometime during the day.
Also, I was wondering what you did in a certain circumstance which seems to happen sometimes with the TBP system, I've having a bit of a dilemma. For example, I went short gold on wednesday night at about 938, and my target was 903 or 904 I think. The price went within a dollar of this target, but it ended the day at 918 or so. I was wondering if you would take the profit on this trade since it is favorable for you, and then just reopen the same position at the current price with the updated target, which is 906 I believe. I think this is a good idea because you are basically "locking in" these profits even though the target wasn't hit, but since you are reopening the same position you are still going for the target, so for example I would reopen the same position at 918, going for the target at 906. To me this seems like a good way to "insure" some profit on the trade without giving up any more potential profit since you are reopening at the current price and still going for the same target level you would be going for if you had never closed the original trade.
In other words: No matter what, if at the close of the day your TBP position is showing a profit, take it and then reopen the same position at the current market price going for the same target/stop loss that you normally would.
Anyway, hope this makes sense as I believe this may be a way to slightly improve the TBP system, and I look forward to your feedback..
-Nick
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