Parabolic SAR - that's all!

[pip huntter]

Originally Posted by dpaterso

Hey Akram,

I bet I know who is 'smiling all the way to the bank' right now!!!

GBP/CHF???

Regards,

Dale.

lol yeah u right it is booming big time!! and i think it will continue to drop more and more the Alligator looks really hungry.

But u know the problem is that this is the only pair i have which is getting a very good profit it is 200 pips at the moment but i have lots of killing loss yesterday which i descide to close same like what u did inorder to min. my loss so i am still on negtive so far but this pair i think will pay off (hopefully!!!)


Akram

[dpaterso]

I'm glad it's going well although it's lousy when you are making a profit on one thing and you have to first cover your losses on your previous positions before your account balance starts getting bigger than it was the day before!!!

I have two open positions on GBP/USD (at my 'other' broker) and I've had those two positions open for nearly three of four weeks now (they're short positions) and I could NEARLY close them off yesterday but now - it looks like this pair is on it's way down (until next week that is i.e. if the Fed cuts rates next week you watch this pair go through the roof).

I don't know if this 'strategy' would interest anyone but it sure seems to work for me (that's why I've had these positions open for so long):

I open a position based on Parabolic SAR and if I have not made a profit but Parabolic SAR gives me a reversal signal then I 'hedge' the position fully based on that (new) signal. When I get another Parabolic SAR reversal signal I close out the 'hedge' (it's always in a profit at this point) and this profit then gets added to my account balance (but does not increase available margin). At this point I'm now trading in the original direction again and, as the price is now moving in my favour again, the loss on the original position starts diminishing and, hopefully, if the price keeps going in the 'right' direction, then the original position also turns to profit. If it does not and another Parabolic SAR reversal comes the you just repeat the process. In other words - my Parabolic SAR stop loss is not a 'stop loss' but a 'stop order' in the opposite direction.

I'm not sure that I'd 'advocate' this 'strategy' on forex pairs though. The reason being is that with the Indices there is an almost 99% chance that at some point they will get back to the price of your losing position - be it in a day, a week, a month, or even a year. With forex pairs though this does not seem to apply and they can stay at a certain level for 'decades'!!! Also - there is no interest payable or receivable on the Indices so it does no matter how long you keep the positions open.

That's probably why I'm a lot 'calmer' with my 'main' trading i.e. I don't mind if the position turns against me - I'll just take profit in one direction - and - when it turns - I'll take profit in the other direction (but this last 'profit' is not really 'profit made' it's more like 'loss eventually reduced to zero' if that makes sense).

For those of you that want to 'try' it at Delta - you have to enable the 'Trade with logical positions' option BUT I don't advocate it's use on forex pairs - just mentioning it for interest sake (unless one of you has an idea to 'optimise' this 'strategy' for trading forex pairs).

It does require A LOT MORE PATIENCE (believe it or not) because it takes longer to make money if you land up in a fully hedged position because you have to wait for the swing both ways before you realise your total profit on both positions. You also have to be careful that you don't land up in a situation where you have one position that's in a loss and the hedge position is ALSO in loss and just keeps moving 'to and fro' because then you are in a range and you have to wait for a breakout in one direction or the other. This normally happens when the prices of the two positions differs too much i.e. the original positions was 'hedged' too late so there is a huge gap between the two prices.

The good thing about it though is it totally avoids having to write off any of your capital and thus ensures that you don't feel like I did yesterday.

Also - once the positions are fully hedged - you're immune to anything and everthing (like 'spikes' and 'bad data' and stuff like that) and you don't have to worry that your broker is going to try and 'f**k you' while you're not looking!!!

I 'stumbled' across this a long time ago - while I was listening to an interview with the CEO of a major investment company. He was being asked 'so how much did you lose because of the drop in stocks over the past couple weeks' and his reply basically was that they did not lose ANYTHING because they NEVER close out a 'losers' i.e. if they see that the market is going down they will 'hedge' their positions and wait for the turnaround. Like I said - this works with stocks. Basically it seems to be based on the principle of 'only ever going long' (like in the good 'ol days) i.e. you buy stocks - they go up - you sell them - not like today where you can 'sell' (or go short) something that you never 'bought' in the first place.

This 'strategy' is one of my 'best kept secrets' so don't show anyone!!!

Anyway - just passing time!!!

Regards,

Dale.

[john_tse]

Hi, how do the system works exactly?

I have been reading the posts and i dont know if i have to trade in m30 or not, and if i have to use another thing.

Please help me.

[pip huntter]

Originally Posted by john_tse

Hi, how do the system works exactly?

I have been reading the posts and i dont know if i have to trade in m30 or not, and if i have to use another thing.

Please help me.

john,


how r u?I think u have to read all the thread inorder to know exactly what is happing What Dale is saying is that he is trading on a pur Psar.So when he see that the PSAR is forming a new reversal dot with the other direction he opens his postion if the dot is up he go for sell and if it is down the candel he opens a buy.this is what he called A PURE PSAR.it is very proffitbale if the market is having trends and it is not good if it is walking in sideways which we r trying to sort out to make sure and predict that the marekt is on trend and not sidways.

What i can tell u know is that u should read all the thread it will take from u good 2 days of reading that is all u need to do.

Regards,
Akram

[pip huntter]

I 'stumbled' across this a long time ago - while I was listening to an interview with the CEO of a major investment company. He was being asked 'so how much did you lose because of the drop in stocks over the past couple weeks' and his reply basically was that they did not lose ANYTHING because they NEVER close out a 'losers' i.e. if they see that the market is going down they will 'hedge' their positions and wait for the turnaround. Like I said - this works with stocks. Basically it seems to be based on the principle of 'only ever going long' (like in the good 'ol days) i.e. you buy stocks - they go up - you sell them - not like today where you can 'sell' (or go short) something that you never 'bought' in the first place.



Dale.[/quote]



ok Dale i agree with u about these compnay and how they work but u know we can't act like them as we r not like them and to hold a postion is not good as it will waste time and u probebly need this money to oepn another wining postion rather than keeping them lossing and u don't know it might be lose more and more.

Like the cdn/usd it was at some point this years 1.18 and when it went down it never touches the 1.18 or even 1.09 again it went down to 1.03 now!! and it touches the 1.08 for a day or 2 and retrace back to the 1.03.

I think we need to oepn the postion in the perfect time and close it in another perfect time inorder to get some pips out as a profit.

I think Dale we should concentrate on 5 or 8 pairs and that it coz when we do that we will have the feeling of the market and we will be able to concentrate on them rathar than concentrating on the 44 paris and by the end of the day we will never concentrate to any of them.

one more thing i think we should apply one of the indicators that can qwork with the PSAR and even if this indicator will not make us open one of the postions that if we were to open it we will get lots of profit but it might really better as it will tell us the false PSAR from the right ones.what do u think?

I mean the reson of all of us that we trade in forex is that we want to make good profit and to minmize our loss as well if our profit will be 50% every month and the loss will be 10% 0r even 25% that will be better than having the profit in one month 118% and another month the loss can be 100%!!!

Put it this way. I feel that u and me like a boxerS when we have a trade (fight) we will never avoid lots of punches but we have to have lots of punches against the other boxer to win the fight so if we try to avoid lots of punches that is coming against us that will be a bouns coz we don't like to have a fight and win on the other hands your face and mine is full of pain and scratches!!! we neEd to avoind all these scratches ( i will be happy to have just blood!!)

Regards,

Akram

[dpaterso]

Hello (Akram),

Hope you're having a good (trading) day.

As far as my 'hedging' goes - I was just mentioning it - that's all. It works perfectly for ME but it's not the thing for others (and I really don't believe you could trade forex pairs the same way). Having said that it could quite easily have worked for the 'commdoll' positions that I had open and were sitting at a loss i.e. I could have kept those positions open, hedged them, made a profit one way while Gold and Oil were going up, and then when Gold and Oil reversed, closed the 'hedge' and took profit, and then just let the loss of the original position come back down to zero and then into a profit.

I'm going to spend a lot of time this weekend checking things and checking things to see how we can get a REAL good thing going that will keep us out of bad trades and avoid false Parabolic SAR signals.

Right now - I know it's a little early - but I've closed everything - shut down everything - and I'm walking away until I feel 'refreshed' - and then I'll 'attack' this thing again 'with a vengeance'. (I'm not even 'drinking' tonight - I'm too tired so no 'Nightwish' or 'Coil' tonight)!!!

I hope you all had a good (trading) week and that you have a good weekend.

As always - I'll post over the weekend and check the thread - so any more comments or ideas will be appreciated.

Regards,

Dale.

[Benjimang]

Hey Dale, hope you're well.

I think you missed my point a bit with regards to the use of the RSI oscillator. I don't use it to time my entry INTO the market. I use it as a way of knowing when to stay OUT of the market.

For example, if a new day starts and you have a new valid PSAR dot showing a new downtrend, but your fast RSI (5) is still below 20, I'd stay out and wait for the RSI to get back into the tradeable range.

Also, if you have a new dot appear showing a new downtrend, if your RSI 5 is way over 80, but your RSI 14 is nowhere near overbaught, then that 'new downtrend' is more likely just a short term market correction, not a trend at all.

Know what I mean? Not sure if I was very clear with that.

-Benjimang

[pip huntter]

Originally Posted by Benjimang

Hey Dale, hope you're well.

I think you missed my point a bit with regards to the use of the RSI oscillator. I don't use it to time my entry INTO the market. I use it as a way of knowing when to stay OUT of the market.

For example, if a new day starts and you have a new valid PSAR dot showing a new downtrend, but your fast RSI (5) is still below 20, I'd stay out and wait for the RSI to get back into the tradeable range.

Also, if you have a new dot appear showing a new downtrend, if your RSI 5 is way over 80, but your RSI 14 is nowhere near overbaught, then that 'new downtrend' is more likely just a short term market correction, not a trend at all.

Know what I mean? Not sure if I was very clear with that.

-Benjimang

Hello benjimang,

can u send us a graf to understand what u want ot say

Dale,

this week wasn't good but i am sure next week will be much better (i hope so)

I hope that u have the right formula now!!

Akram

Thanks

[Bocajunior]

Dale,

I've been reading this excellent thread up to page 10 so still have some reading to go before I complete it, but many thanks for all the effort and work put it.

cheers

[dpaterso]

Hello Bocajunior, hello everyone!!!

Bocajunior: thanks for the kind words and compliments (but do remember that I only STARTED the thread - the thread has continued to go on because of the input of some very good people who have contributed some excellent ideas - which I am going to try and 'summarise' below).

OK - well folks - I have spent a LOT of time looking at charts and stuff this weekend - and - this is what I have come up with (you probably won't like it - and some of you have already 'stated' that using 'pure' Parabolic SAR is a recipe for disaster - so - to those of you who said it - sorry - but I HAD to find out for myself):

Basically - it boils down to this: do you want to make 'SURE' money - or do you want to use my 'shotgun' approach?

My 'shotgun' approach (I'm repeating here for the sake of clarity and to 'sum up') basically means that you take a Parabolic SAR entry signal on EVERY SINGLE PAIR AVAILABLE TO YOU when you get a Parabolic SAR entry signal and - as previously stated - you either EXCLUDE the 'commdolls' OR you make sure that the direction of Parabolic SAR on Gold and Oil is complementary to the direction of Parabolic SAR on the 'commdoll' pair. You use Parabolic SAR for your stops / stops and reverses. You only trade the daily charts. You make sure that you have LOADS of margin. You make sure that you don't 'bail out' early. That's it!

Now for the 'SURE' money:

I know this is a pain - I know it's going to limit the number of trades - and I know that all it is is 'throwing' more indicators at the system BUT from where I sit - after checking each and every single daily chart - not only my 44 forex pairs at Delta - but also the Dow, Nasdaq, S&P 500, DAX, FTSE, Gold, Oil, Silver, even Soybeans and Natural Gas (need I go on) - this is what I have found:

Daily charts only.

When you receive a Parabolic entry signal to go short:

You ONLY take the position WHEN:

RSI is above 70 (or has recently been above 70 and has turned down i.e. has been above 70 within the preceding 1 to 3 bars and has turned down AND is still above 50)
Stochastics are above 80 (or have recently been above 80 and have turned down i.e. have been above 80 within the preceding 1 to 3 bars and haev turned down AND are still above 50)
MACD must have crossed down
Akram's 'Alligator' lines are NOT intertwined (or at very least 'look' like they are changing direction i.e. at very least the 'lips' (or green line) must have crossed the 'teeth' (or red line) and the 'jaw' (or blue line))
ADX is equal to or above 20 (and if you have ADXR then it must also be above 20)

Assuming that your entry EVER meets ALL of the above criteria:

Once Parabolic SAR has 'locked in' your profits on the daily timeframe you switch to the next shorter time frame available to you and start tracking Parabolic SAR on this timeframe until stopped out. You DO NOT stop and reverse at this point. You have the option at this point to take another position on this timeframe IF Parabolic SAR reverses again on this timeframe with the proviso that Parabolic SAR on the daily timeframe still going in it's original direction i.e. you have not (would not have) been stopped out on the daily timeframe yet. You NEVER stop and reverse i.e. you wait for all of the above criteria to be met before taking another position.

When you receive a Parabolic entry signal to go long:

You ONLY take the position WHEN:

RSI is below 30 (or has recently been below 30 and has turned up i.e. has been below 30 within the preceding 1 to 3 bars and has turned up AND is still below 50)
Stochastics are below 20 (or have recently been below 20 and have turned up i.e. have been below 30 within the preceding 1 to 3 bars and have turned up AND are still below 50)
MACD must have crossed up
Akram's 'Alligator' lines are NOT intertwined (or at very least 'look' like they are changing direction i.e. at very least the 'lips' (or green line) must have crossed the 'teeth' (or red line) and the 'jaw' (or blue line))
ADX is equal to or above 20 (and if you have ADXR then it must also be above 20)

Once again - assuming that your entry EVER meets ALL of the above criteria:

Once Parabolic SAR has 'locked in' your profits on the daily timeframe you switch to the next shorter time frame available to you and start tracking Parabolic SAR on this timeframe until stopped out. You DO NOT stop and reverse at this point. You have the option at this point to take another position on this timeframe IF Parabolic SAR reverses again on this timeframe with the proviso that Parabolic SAR on the daily timeframe still going in it's original direction i.e. you have not (would not have) been stopped out on the daily timeframe yet. You NEVER stop and reverse i.e. you wait for all of the above criteria to be met before taking another position.

By the way: the 'rules' for the 'commdolls' STILL apply here.

The only other way that I can think of (actually I did not think of it but Benjimang did): don't base your 'entry' on RSI and Stochastics - but base your 'non entry' on RSI and Stochastics. In other words - If RSI and Stochastics are NOT at their limits then take the trade. In other words - if RSI is above 70 and Stochastics are above 80 and you have a Parabolic SAR entry signal to go long then that trade would be a disaster and of course the same would apply to a Parabolic SAR entry signal to go short when RSI is below 30 and Stochastics are below 20. I would say that as long as RSI is between 0 and 50 and Stochastics are between 0 and 50 - with both pointing up preferably - then take a Parabolic SAR entry signal to go long - and if RSI is between 100 and 50 and Stochastics are between 100 and 50 - with both pointing down preferably - then take a Parabolic SAR entry signal to go short. This would increase the number of 'valid' trades.

That's it - that's the BEST I can come up with.

Like I said - this will certainly limit the number of trades that you do - BUT - if all of the above criteria are met - you can be almost 100% sure that the position is a 'winner' - and I would go so far as to say that you could even break the 'maximum margin' rule for these trades i.e. increase your lot sizes or number of positions by a SUBSTANTIAL amount (basically to make up for the fact that you're not going to be doing too many trades from now on). From what I can see - there is only profit to be made doing it this way - no losses - BUT - if you think the original 'pure' Parabolic SAR method require patience and self control - you've got another thing coming - following these rules requires you to look for 'patience' and 'self control' in places that you never even knew existed!!! That is the key!!!

You could (obviously) exclude as many or as few of the criteria mentioned above - it's just a question of how much of a risk you are prepared to take. Put it this way - for every one of the criterion that you exclude - reduce your lot size or number of positions proportionately.

This 'system' has now gone from 'low' or 'no maintenance' to 'quite a bit of maintenance' but - like I said - there is no easy way or 'shortcut' to making money.

OK - well - that's it! I just KNOW that I'm not going to be able to 'discipline' myself to this extent - BUT - I'll sure give it a try!!!

The alternative: buy the book and we can start trading the actual trading systems detailed in the book - these are price based - not indicator based - and they will work in both trending and ranging markets. Sorry - like I said before - we cannot run a thread on these trading systems if nobody has the book as I cannot post the 'inner details' of the trading systems as this would be in infringement of copyright and very much unfair to the author.

On the other hand - my 'shotgun' approach still appeals to me. You know - we (I) keep forgetting that Parabolic SAR is very rarely wrong - and the only reason that I started having doubts was because of the losses that I took last week BUT in retrospect - like I said before - those losing positions were ALL bad 'commdoll' trades e.g. Gold was in an uptrend BUT I had a Parabolic SAR entry to buy GBP/NZD! That type of thing.

Another edit:

By the way - Gold and Oil are 'teetering' on the edge of a cliff in my opinion - and if they fall - I'm getting my money back and then some!!! Gold has cost me an absolute small fortune since I started trading for a living - so much so that I have not been near it for about four months now - but - it (Gold) 'owes' me BIG TIME - so - I'm here - waiting patiently - with 'open pockets'!!!

And yet another edit:

Actually - to demonstrate the above - the 'perfect' entry - I have attached a chart of Gold. All that is needed now is an RSI failure swing above 30, Stochastics to remain above 80 for a day or two, a Parabolic SAR entry signal to go short (I don't even think I'm waiting for MACD on this one i.e. an RSI failure swing above 30 is very rare and a very powerful signal). ADX is at 59.46 and ADXR is at 50.54. 'Now THAT'S what I'm talking about' (anybody watch 'Mythbusters')???

Regards,

Dale.