Craig, thanks for your view! My experiences on VS are based on my initial studies on VS, about which I posted bactesting results a while ago. Then I did not have any idea of using VSSTOP, but experimented with different C factors and ATR period lengths. I also have messed a bit with VS when demo-trading, and I did not utilise VSSTOP then either.
Quote:
Originally Posted by chdorry
J - That green line you see on the chart is the same as the pink with the exception of the constant multiplier being 2 instead of 3 (or 3.1). My understanding of how its used is two ways:
1 - To get in earlier
2 - To get out earlier
As the VS is somewhat analogous to an "intelligent trailing stop", you will always see the green line SAR closer to the close than the pink line. So this can be used to SAR when the price breaks through the green line (instead of waiting for it to reach the pink). Using this on entry or exit can change the results you will get, as if you're long and you use the constant of 2, you'll be more responsive to a pullback that *might* not be a reversal of the trend.
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I would say that at least do not do it for both at the same time! A factor of 2 simply does not seem to work alone for VS. I have been considering VSSTOP for exit only, and I have been thinking to do some re-backtesting by using VSSTOP as a trailing stop. It might be interesting to look at the entry as well, but personally I have the gut feeling that it would not be a good idea.
Anyway I firmly believe that a trailing stop is a good idea to use. I just don't have any experience when to place that stop, and therefore my original question: would you prefer using the "standard" SAR for exiting when VSSTOP would still yield a loss, or would you rather take a loss at VSSTOP right at the beginning, should the trade go against you right ahead?
My backtesting indicated that each pair seems to have some level above which it would be quite reasonable to lock the profits, as it is more probable that the trade will turn against you after that level, if you use the standard SAR for exit. I think that VSSTOP works quite in the similar way and it might be good to take it into use only when the trade is well on profit. On the other hand, if you use the standard SAR in the beginning, it might be better for the whole trade, but then you'd better have the famous "titanium balls". But again, I have no data to back my thoughts as far as VSSTOP is considered, and therefore I would be most interested to hear real-world experiences about this.
J.