Please could I have some opinons on this:
I have looked at James’ System (the 45 - 100 Pips a day EUR/USD) and although it does work - because of waiting for a confirmed MACD cross - I have noticed that you get into positions far too late.
I have played around with the settings of the Parablic SAR and found that by increasing the Initial / Step value to 0.7 (from the default of 0.2) and trading solely on the Parabolic SAR ignoring MACD you get into positions far earlier.
I have looked at the charts and buying when the first Parabolic SAR dot appears at the bottom of a candle or selling when the first Parabolic SAR dot appears at the top of a candle (they must be fully formed candles not Doji’s) seems to increase profit quite substantially.
Am I missing something here? I do not have Jame’s experience or expertise but I am just wondering why this is obviously not a recommended strategy?
Any thoughts and opinions are welcome (for some or the other reason I seem to be being ignored on the forums. I hope I have not upset anyone. If I have I can assure you that it was not intentional).
Regards,
Dale.
I can’t speak for James, but let me ask you:
Is it a safer trade when you wait for the MACD lines to cross?
In other words does ignoring the MACD create more trade risk?
Thanks for the reply.
That is the strange thing i.e. the thing that I was looking for i.e. increased risk but I don’t seem to be able to see it on the charts and that’s why I am concerned.
Put it this way - the MACD Line is already heading toward the Signal Line when the first Parabolic SAR Dot appears - and it only crosses after the appearance of about the third Parabolic SAR Dot and from what I can see you have the same risk as you have when the MACD Line crosses the Signal Line and then runs parallel to it or turns in the opposite direction the only difference being that even if this happens you have entered a trade much earlier because of the Parabolic SAR and at very least would exit at break even or the cost of the spread.
I have also noticed that the steeper the ‘angle of attack’ as it were of the MACD Line in relation to the Signal Line the more sure you can be the it will actually cross and not reverse (on longer time frames of course).
Help.
Regards,
Dale.
Just been doing some more testing and experimenting with Parabolic SAR and MACD.
If you want to see a thing of absolute beauty then open the USD/CAD 4 Hour Graph with Parabolic SAR set to Initial / Step = 0.03 and Maximum = 0.4 and then show MACD with default settings.
Check out where you would have entered your Shorts (only Shorts based on the fact that their is a downtrend). If you acted on the MACD cross around 13 April 2007 and opened a Long position you would have lost a fortune by now. Acting on only the Parabolic SAR signal to open a Short position you would have made a fortune (relatively speaking of course).
What I find interesting is that even although MACD crossed the signal line at quite an angle of attack and stayed above the signal line until 20 April 2007 this was in total contradiction of the trend (even the signal line and oscillators were moving up but the whole thing was trending down). How about that!
If had entered a trade on 20 April 2007 based on the MACD cross and waited to exit that position based on the direction of MACD i.e. waiting for the trend upwards because that was what MACD was showing me and then exit when MACD changes direction - hell - I would have waited a very long time and lost a lot of money on this one.
I would post my graph here but I keep having problems posting just messages let alone attachments. Does anybody know if and when this is going to get fixed - or is there a fix that I don’t know about? I constantly have to refresh pages and submit and resubmit posts before thet ‘take’.
Comments on my thoughts and logic are always welcome and read with an open mind!!!
Regards,
Dale.
And some more:
Take the same pair and graph as my previous message and change Parabolic SAR settings to Initial / Step = 0.001 and Maximum = 0.2!
Have a look at the open price on 5 April 2007 (around 1.5151) and the closing price at the last Parabolic SAR dot that appears (around 1.1301)!
That my friends is $$$!
I have been experimenting even more with ridiculous figures for Initial / Step - try using 0.0001 for Initial / Step and see what happens. Look at the overall picture and tell me what you think. Using these way out values however definately leaves you open to a huge loss e.g. in this case in order for Parabolic SAR Dot to appear below a candle there would have to be a HUGE movement up which would kill you. On the other hand - with a clever Trailing Stop calculation - I think that you would be OK.
Thoughts?
Dale.
After testing some more on other pairs and Gold I ask myself ‘Could this be the ‘Holy Grail’ of indicators’?
Comments please - I’m still not sure if I trust my own judgement on this one.
Regards,
Dale.
Thank you for that.
I appreciate the thought that went into that reply and will definately take heed.
I’ll give my theory a bash just now with a small amount and see what happens. I’ll post any meaningful results.
Regards,
Dale.
Just so you know - I did not think that you were bashing me at all.
I really do appreciate replies like that.
I am trying to learn as much as I can as fast as I can.
Even being down - I am now really starting to love this whole Forex thing. I’ll tell you that just from Babypips and the forum members, and from Bloomberg, and the likes of the Forexfactory calendar, etc. etc. I have learned AND UNDERSTAND (that’s the key) more about how the world ticks over, and how every country contributes to the Global Economy, in the past couple of weeks than I have managed to learn and understand about all of these things in the past 41 years - and it really excites me!!! It has opened a whole new world of possibilities to me and I’m loving it (I think I already said that).
At least I can’t wait for the next trading day - unlike in my previous business - when I started looking for every excuse under the sun not to honour my obligations. If that is all I get out of this - then it has been worth it!
Anyway - the only thing I dislike about Forex is Sunday night - I wait faithfully for 11:00pm SA time to watch my beloved platform open - and then - nothing happens!!! So I think it is time for me to go to bed now and wake up refreshed and ‘Sieze the trading day tomorrow’ - with a vengeance.
Thanks again,
Dale.
P.S. - While I’m sleeping - please will you all answer my other questions - it’s taken me a whole day to post them!!!
Hi,
I appreciate all your thoughts. However, please remember to keep it simple. The most professional traders do.
A quick note on your modified PSAR indicator: The more sensitive you make your indicator or system, the more vulnerable you are to profit or Losses. It all depends on which risk you are willing to take and of course your money management policy.
Take care