Thanks for the clarification.
What I meant by time was to check the timestamps on the entries and see if the losers fit into a section of the day. That may be whole lot easier than seeing which trades profit at what time of the day. EG you may find that most of the losers are trades initiated prior to midday. Just an idea?
Hi everyone. Sorry to say but I donât think I can continue working on improving this âstrategyâ, at least for now. The results indicate it is marginally profitable, being conservative, maybe 80 pips ON AVERAGE per month. But prepare for some massive drawdowns and monthly losses. Losing 200 pips in a month is very possible. But that is balanced by being able to make 300 pips, hence why I emphasise AVERAGE.
However, I feel there would be better strategies out there which I would like to test with my limited time.
The major weakness with this strategy is the fact that since your SL is double your TP, consecutive losses really do hurt. It may only take a few horrific bad months of ranging prices to put you in the red. And Iâm not comfortable with the timespan of the data that Iâve tested, (my broker will only let me go back to August 2010). Iâve backtested approx 14-15 months at the 30M timeframe.
The other thing I donât like about this particular strategy is that it is time intensive. I suppose you could design an EA since the strategy is somewhat simple, otherwise youâre gonna be babysitting your order for up to 12 hours, updating your SL every time a new candle forms.
But if you want to use the PSAR, this is what I learned:
Surprisingly the Asian trade session provides the best win:loss ratio. I tested five months to see which trade sessions had the best win:loss ratio, and the results were:
Asian session: 96:50 losses (1.92)
European session: 135:78 losses (1.73)
US session: 71:52 (1.37)
So I decided to go back and test five months trading in the Asian session ONLY, but total profit fell! So it looks like while the Asian session provided more winners than losers, the scale of the winners were less than the European or US sessions. The European session provided the highest total profit, followed by the US, then Asia. You also pay the least spread during the European session so thatâs my recommendation. 
Hello,
Well at least it didnât take you 297 pages (or however many it was i.e. âParabolic SAR - thatâs all!!!â) to come to this conclusion!!! LOL!!!
But Iâd say ânot so fast buddyâ!!! What IF it were possible to PREDICT the MOST LIKELY (PROBABLE) direction that a market is going to move in for a given period (letâs say for the coming week for example)???
Take a look at this link:
Jan Arpsâ Tradersâ Toolbox Online Store
Take a good look at the chart example (sort of top, right, under âMy Accountâ and the asking price for the indicator). Thatâs a daily chart. If you were presented with such a chart and believed that there was a very high probability of the âprice reflectionâ being correct: then which Parabolic SAR trades are you going to take (short or long)???
I donât have a definitive answer as to whether or not Wilderâs âAdam Theoryâ has merit or not. But Iâve decided to begin tracking it / checking it on a WEEKLY basis just to see if there is any merit to it. If there is: it could most certainly change a lot of things (not only this system of yours). Iâm very sceptical about things such as this but there are many reasons that Iâm now thinking that maybe, JUST maybe, thereâs something more to this type of thinking and that itâs not just âmumbo jumboâ or âwishful thinkingâ on Wilderâs part. I didnât know this but heâs not the FIRST and ONLY person to have come up with such a theory which Iâve now found out. Fractals, Fractal Geometry, Geometry, The Delta Phenomenon, etc. etc. etc. Iâm not saying that this is an âexact scienceâ (neither does Wilder) although, ASSUMING that the chart example is NOT âcherry-pickedâ, it would have been a âno brainerâ to go short at the open on the Monday, set your SL to 2% of your account, and take profit just before the close on Friday OR take only short trades for that week (barring one or two days) with whatever trading system you were using. Alright: the chances are that the example IS âcherry-pickedâ unfortunately. However: it would be easy enough to backtest for any period given the time and the effort (or given TradeStation)!!! LOL!!! And thatâs another thing thatâs âperked my interestâ: BARRING only two âAdamâ or âprice reflectionâ indicators for MetaTrader (that âsort of workâ) there seem to be dozens available for TradeStation (and other âprice reflectionâ or âgeometricalâ indicators). I donât know if that means anything. What I DO know is that TradeStation is what âthe main dudesâ use (at least for trading stocks and futures anyway). So I have to ask myself: why would ANY PROFESSIONAL trader be even REMOTELY interested in something like this??? Alright: my âvalue systemâ or things that I take into account when assessing the validity of something MAY be (to some anyway) âquestionable at bestâ. But letâs see anyway. Itâll take only a few minutes, over a weekend, to âplot Adamâ for the coming weeks. And who knows what the outcome may be. Put it this way: ANYTHING that eliminates even a quarter of the whipsaws from any system would have my âvoteâ as it were!!!
Anyway: enough about âAdamâ (it probably doesnât belong here anyway).
I would agree with you: there are better ways (systems) of making money but that require more time and effort (that I think we, including you, all knew from the start). But: the way you worked on this and tested it and presented your findings was great and I believe all the encouragement etc. was well deserved. And as I say: I donât, at THIS stage anyway, think that âall is lostâ.
Regards,
Dale.
I think this sytem has merit. I started live trading AUDUSD with this setup last week and emerged a winner. If we limit our trading times to active markets and use a filter like the Better Volume indicator, I believe we can do very well. Letâs keep this thread going! :35:
Letâs encourgage KK to continue! :10:
Well I actually did some more research today. I was studying strategies to exploit breakouts at the start of the European session, and while trying different indicators, I went back to the PSAR. 
I backtested around seven months of data, and came up with a win:loss ratio of 2.04655:1 for the first 3 hours of the Euro session. To get this win:loss ratio, if youâre first trade is a loss, then skip all future trades for the day (since you are only trading the start of the Euro session, youâll rarely have two or more trades within 3 hours). If you took all trades without skipping any, the win:loss ratio plummets to 1.69:1.
I then calculated the average win and loss from another PSAR test I conducted during the entire euro session for different months. The average win was 21.09 pips and average loss -37.92 pips. This includes an assumed spead of 1.8 pips. This data spans the entire Europe session instead of just the morning, so it isnât completely âcleanâ. However, the win:loss ratio for the entire European session was found to be 1.906:1 versus 2.04655:1 for the morning. So if you want to improve your win rate, it seems trading in the morning is best? I assume this is because of the early London breakouts which will fly through the old PSAR dot from the more-quiet Asian session.
Using the morning win:loss ratio that I calculated, youâll win 43.15 pips for every 37.92 pips lost. So for approximately every three trades, youâd earn 5 pips (alternatively, youâd earn around 1.7 pips per trade).
I then tried to correlate ADX with wins and losses, but found very little correlation whatsoever, even though ADX is supposed to identify trends. For wins, the average ADX was 25.62 and for losses, the average ADX was 25.25.
Wow! Disappointing results.
There must be a way for this to work. Must be.
Hello again.
Well Iâve got a lot more to say about this but for now just one thing to note:
Remember that ALL of Wilderâs trading systems and indicators were designed to be used on the daily timeframes. And all of his indicators (ADX, RSI, as but two examples) have a default value of 14 DAYS. And thatâs not a âthumb suckâ default. It represents ONE HALF of the trading period i.e. ONE HALF of ONE MONTH (on average). The figures vary but mostly youâll find even with other trading systems (Larry Williamsâ stuff for example): the default EMA periods that he uses now and then are either 13 DAYS or (more recently) 26 DAYS. Bill Williams: pretty much the same âdealâ. What Iâm saying or asking is that have you tried to see on the DAILY charts what ADX(14) is telling you and then only taking trades on the 30-minute timeframe in the direction indicated by +DI and -DI (and if youâve got a LOT of patience only take these trades when ADX and / or ADXR is above 20 - 25 and rising??? Just a thought.
Regards,
Dale.
Dale,
Thanks for the updateâŚexcellent infoâŚI will be doing some daily research based on your recommendations!
Great trading! :57:
Hello,
My pleasure.
Let me say this though: ADX is by no means any âmagic bulletâ. It does lag. HOWEVER: as Iâve noted somewhere else on this thread beware of the âevery last pip syndromeâ. In other words: the âideal of idealâ situations is to take a trade when the distance between the +DI and -DI lines is increasing and accelerating and ADX is rising and accelerating (after crossing over from being below both the +DI and the -DI lines to above both the +DI and -DI lines) and is above 20 - 25. Thereâs no doubt about that. The problem is that it severely limits the number of trades or trade signals that youâll get in any given month AND when looking at a chart you may want to âspit bloodâ when you can clearly see that had you NOT been following ADXâs signals or using it as a filter youâd have missed the very beginning of a very large move. Personally: this is a âdemonâ Iâve never been able to conquer. That being said: Iâm really of the opinion that if you DO have the ability to take fewer trades, using ADX as a filter (with all of the above conditions being met), then youâll in all probability find that your win/loss ratio would âskyrocketâ (in favour of the wins). At some point I even coded an oscillator for ADX that basically gave you a âgoâ if the above conditions were being met and a âget out or at least move your stopâ signal the moment those conditions had changed (this on the daily timeframes and using the 14 DAY default) but with one look at this oscillator it was VERY clear how much âpatience and restraintâ would be required to trade using ADX (and / or ADXR) as a filter (for ANY trading system). I just âdonât have what it takesâ to trade like that. Itâs a bit weird really. And it REALLY comes down to this thing of âtrader psychologyâ. Do you enter a trade KNOWING that youâve got a high probability of a) getting into a trade far earlier AND b) that youâre going to get whipsawed!!! Thereâs a âconundrumâ for you!!! LOL!!!
But thatâs why Iâm now âbanging onâ about Wilderâs book âThe Adam Theory of Marketsâ. NOT so much for âAdamâ but for all the âwords of wisdomâ in the book. Wilder says it OUTRIGHT that (for example) âAdamâ WILL be wrong at ALL market tops and bottoms BUT it will catch most of the move in the middle which is where the âmeatâ is. And I guess the same logic could be applied to ADX really. Also: I REALLY DO recommend that anybody that uses any of Wilderâs indicators actually LEARN how they are SUPPOSED to be used and you can only do this by reading âNew Concepts In Technical Trading Systemsâ. ADX is a very complex indicator and has many ânuancesâ but for the most part itâs portrayed as a simple âgo long if +DI crosses over and above -DI and ADX is risingâ (and again visa versa for short). Thereâs a lot more that ADX can tell you than that (which you may or may not want to actually see). RSI is another indicator that is largely misunderstood and if used CORRECTLY could result in catching some major moves. For one thing: this âthingâ of going long when RSI crosses the 50 line from being below it (and visa versa for short) is not even MENTIONED by Wilder. Somebody at some point in time just HAPPENED to notice that there MAY be some merit in this (but to the best of my belief soon ended up losing given that this was the core of their newly designed trading system and here Iâm not referring to ONE person Iâm referring to probably hundreds if not thousands of people).
And âtweakingâ the ADX period for shorter timeframes??? Well thereâs a âmillion dollar questionâ. Could it / would it work if, for example, you said that your trading period was 24-hours long so therefore youâd use an ADX period of 12 (and assuming youâd be trading the hourly timeframe)??? Iâm not convinced. As I keep saying: Wilder traded only commodities and only daily and ALL of his systems and indicators are heavily weighted in favour of the DAILY CLOSE. This has always been a contentious issue with me and everyone else but I do believe âit is what it isâ and until somebody âtechnically or scientificallyâ proves to me that there is no merit in this and that the DAILY CLOSE is NOT more significant than an hourly close or a four hour close then âthatâs my story and Iâm sticking to itâ. LOL!!!
By the way (given that Iâve now mentioned âAdamâ here again): I âsolvedâ âAdamâ on Sunday afternoon, for the week ending 09/12/2011, for EUR/USD and simply went short at market when I woke up on Monday morning and placed my stop where âAdamâ would have me place it. Lo and behold: that trade (as I type this) is worth +337 pips. âBeginner Adam Theory Luckâ??? Time will tell I guess. And just to ENSURE that I cannot post an example of the trade when it is over and be accused of âcurve fittingâ the trade âafter the factâ I purposely emailed someone with my âprojectionâ on Sunday. Alright: itâs just on a small âno deposit $20 bonus accountâ (FOREX only unfortunately) that I found so I really didnât care less what happened to it but thought I may as well use it to test âAdamâ (because it was useless to me for anything else). I ASSUMED that at this particular broker that a 0.01 lot size of EUR/USD was a nano-lot but not so i.e. theyâre micro-lots so right now that account has more than doubled so Iâm figuring that if theyâre monitoring this little account theyâre MIGHTILY âpis*ed offâ by now!!! LOL!!! To add insult to injury I should try to withdraw the $30 Iâve made in profit SO FAR and THEN see what happens (if I ever get it)!!! LOL!!! Alright: NO thought was given to risk or money management (well thatâs not STRICTLY true i.e. if they WERE nano-lots then there would have been no problem but, and had âAdamâ been wrong, well the account would have gotten margin called WAY before my stop loss was hit so donât go âsalivatingâ over the more than 100% gain in three days i.e. had they indeed been nano-lots then the account would be nowhere NEAR doubled)!!! LOL!!! But Iâll keep testing. Put it this way: letâs just SAY that âAdamâ has merit. Since Monday morning, trading EUR/USD, on ANY timeframe, Iâd have only taken short trades (using this system that is being detailed here or, for that matter, simply using Parabolic SAR on its own). I mean: EUR/USD has gone down âthree days straightâ so far which is exactly what âAdamâ predicted would happen (although I have to admit not to the same DEGREE as it HAS INDEED fallen). The point is: âAdamâ correctly predicted the âmost PROBABLE directionâ that this pair would move in for the coming week. If thereâs any merit to it: thatâs âGoldâ man. Thatâs âGoldâ!!! LOL!!!
Regards,
Dale.
Great post Dale
Hello.
Thanks marshalmax. Thatâs the nicest thing anybody has said to me for a long time. Maybe Iâve not âlost my mojoâ after all!!! LOL!!!
Regards,
Dale.
Hi Dale,
Shame on youâŚnow Iâm hookedâŚstudying The ADAM Theory :59:
Please continue with your fascinating insightsâŚmuch appreciated!
Bob
Hey Bobkat,
Sorry!!! LOL!!!
Take a look at the posts on this thread too (Iâve just posted there) (if you have not already that is):
Basiccally Iâm âcrosspostingâ here. âAdam needs a home (thread)â really!!! LOL!!!
Regards,
Dale.
More. please⌠:21:
Hi
I trade daily the dax,dow and eur/usd
I have found that by adapting psar from standard deviation to 0.10 AND 0.11 you get better results on
15 minute chart.
I tried useing 5 minutes but had a number of false trades.I now check 1m ,5m and 15min timeframes.
I use intertrader advanced charts and am only looking for 40/50 pips a day.
I use the psar as my stoploss and use a trailing stop set at 10 pips to try and maximise.
very good thread
Hi - I know this thread is basically dead but this strategy has some potential. All it needs is a few filters. - And trailing stops for taking advantage of getting more out of trend moves instead of keeping a cold SL/TP of 2/1
Here are some iâve come up with:
I have a few more filters (like the minimum slope of the 240 LWMA, the maximum difference between the close of the entry candle and the 240 LWMA to prevent mean extension, etcâŚ) but first I would like to make an EA for what iâve described so far and backtest that to see if more filters are neccessary. Im going to try to learn MQL4 and will post results asap. I will also try to post some images to make the system more clear. BTW if u know MQL4 feel free to code an EA 
Greetings Dale (LOL!!!). Itâs ages since we last met at your place.
This thread has been dormant for years but I thought I might be able to add a new insight, since all of the above discussion is based on single currency pairs, whereas I am looking at a full basket of pairs treated as a unit.
I recently installed a PSAR EA on a demo account. Itâs a plain and simple EA, no fancy filters, but itâs robust and does everything well. It has a PSAR trailing stop. I set it loose on 28 pairs, trading only the London and New York sessions on the four hour time-frames. That typically gave me up to 10 simultaneous open trades at a time. I noticed that on most days the TOTAL floating balance was almost always positive initially, even as no pair on its own was doing anything special. I soon realised that treating the entire basket of 28 pairs as a single entity and ignoring any particular pair seemed effective. Of the 5 days Iâve been playing with this (and all during this very slow end-of-year period) I have had 3 days >10%, 1 ~B/E (breakeven) and 1 losing day.
So it occurred to me that if I could have a setting in the EA whereby all trades for that day are closed when price reaches -x% or +y% (one would soon learn what numbers work during which conditions, Iâm toying with -3% and +10%), then one might have a very useful tool. A âmove to B/Eâ setting after total profit moves to, say, +4% might also be helpful. At present I have been doing this manually.
I think it works because even on a short, counter-trend trade that would normally be stopped out (the bane of PSAR in non-trending markets) there are usually 3 or 4 PSAR dots initially before it reverses and gets stopped out. If one leaves such losing trades to âmatureâ they will be stopped out, but for a while they hover around B/E and donât represent a major loss. At the same time, there will be some other trades in the basket that are moving into profit. This allows an initial profit spike across the entire basket of trades that can be banked after 6 or 7 hours (thatâs the theory, anyway!!). This is very early days and during an unrepresentative period of the year, but I plan to continue doing this to see what happens.
Alistair
So, following on my previous post I have set up 3 demo accounts with the PSAR EA identical apart from the following:
Based on consensus that an unfiltered, unmanaged PSAR strategy is not successful, I am not bothering to run this obvious experimental control. I should also have another one running on a 24 hour basis, but any more instances of MT4 on my machine (I have 7 currently) might cause it to catch fire!
I will be recording daily results on a spreadsheet and will report back perhaps weekly to let you know how it goes (if there is anyone out there still reading this old thread!).
For the record, here are my settings:
Trading TF is H4, times to place trades: 08h15 GMT to 15h00 GMT (all open trades will continue through the NY session until they hit TP or SL or I close them), lot size is 3% of balance, stop of 40 pips, TP of 60 for now, might increase or dispense with this later - remember I will be closing all trades at the end of each day. Iâm not going for big individual trades, but am interested in what the entire basket of 28 trades does, so itâs going to be unusual (I think) for any trade even to reach 60 pips, (but if 20 reach 20 pips each âŚ), PSAR is set on 0.035 and 0.8, rather than the usual 0.02 and 0.2, based on wanting to keep the dots closer to price movement to lock in profit quicker, D1 PSAR filter is set on default in order to keep a more continuous trend profile, move to breakeven is on 35 pips. Over time I have become comfortable with this fairly tight B/E setting - itâs always a case of compromising between giving a trade space and keeping things tight. Iâve been in a âtightâ phase over the last two years.
I think thatâs it. Iâm excited to see what happens starting tomorrow (Tuesday 2 Jan), even though the year doesnât really get going until next week - canât sit on my hands any longer!
Alistair
Hi Alistair, I run a PSAR cBot (cTrader) with a very similar strategy AF settings @ 0.009 and 0.5 for one strategy and a âscalpingâ version in the tick charts with AFâs of 0.11 and 0.1.
Both use a 200 WMA Slope (Colour) to give trend guidance to the logicâŚie: only Buy (PSAR Signal) on the MA Green and only Sell (PSAR Signal) on the MA Red⌠stops a lot of the false signals that can be generated by the PSAR when price is ranging.
Looking forward to see your resultsâŚ