Good morning everyone, nice to see some more new posts, and thanks for the input.
Akram:
That’s seems to be ‘the beauty’ of this ‘simpler’ system i.e. it does not matter that on one timeframe you are being given one signal and on another timeframe you are being given a different (contradictory) signal - just follow the SMA or EMA rules.
Glendon and Rob,
Thanks for the posts.
OK - let me ‘recap’.
You are NOT using Parabolic SAR for your ‘initial trend entry point’ anymore if that makes sense.
In other words - your initial entry point is the point where the price CLOSES above or below the 50 EMA (EMA seems to work better by the way).
Your initial stop and reverse point is the 50 EMA and this remains the case UNTIL Parabolic SAR has started to lock in profits. Once that happens you then start using Parabolic SAR to keep profits locked in.
Edit:
(By the way - you’ll also notice that by using this ‘method’ you no longer have those HUGE initial stops that you would have had had you been using ‘pure’ Parabolic SAR. Remember that you also need to ‘tailor your stops’ to the size of your account).
If you get stopped out by Parabolic SAR (which at this point HAS to be at a profit) you then only take future Parabolic SAR trades in the same direction. You never stop and reverse based on Parabolic SAR.
That’s all there is to it.
I don’t agree that it’s like driving a car with your eyes closed.
As a matter of fact - now that I’ve read and digested that statement - I think that’s a far better description of the ‘old’ ‘system’ and ‘rules’.
In other words: Parabolic SAR is a trend following indicator - nothing more - nothing less. The 50 EMA is telling you that a trend has started. So - why not buy or sell into the trend and THEN use a trend following indicator i.e. Parabolic SAR to lock in your profits?
In my original ‘system’ I would be basing my entry on Parabolic SAR and then HOPING that a trend would start. Then we (I) added all of those other indicators and the end result as far as I’m concerned has been less than ‘stellar’ - not to mention the fact that if you then wait for all of those indicators to ‘align’ or confirm a trade - you could very well wait a very long time to trade - and then STILL be wrong - and that’s exactly what’s happened.
As far as Delta’s Parabolic SAR (‘SAR’) is concerned - yes - there is definitely a problem with it - and I have contacted them - and they have forwarded my queries to their IT department - and I hope to get an answer some time soon. What I HAVE noticed though - is that the problem ONLY manifests itself when you reach a Parabolic SAR stop and reverse point BUT NOT while you’re following an already established trend. We will sort the problem out I’m sure but for the purposes of this ‘new’ ‘system’ it really does not matter as you would never be performing a stop and reverse based on Parabolic SAR.
As previously stated - the only time where you will have losses with this ‘new’ ‘system’ is when the pair is range bound i.e. the price is ‘hanging around’ the 50 EMA for a couple of days - closing one day above the 50 EMA and then closing the next day below the 50 EMA and so on and so forth and that’s why I suggested (maybe) using that Break Out Point Calculator that I posted earlier for pairs like this i.e. once the pair has ‘broken out’ it will definitely be far away enough from the 50 EMA to have started trending.
Look - I’m NOT saying that Parabolic SAR can’t do the job - it works AMAZINGLY well - ON IT’S OWN - on Soybeans for example - and on the Indices - but - again - like I said before - it’s NOT producing results - good enough for me - on forex pairs.
I don’t know if this is ‘beginners luck’ this morning by the way - but I now have only two positions showing a profit - and - you guessed it - they’re AUD/CAD and USD/JPY. AUD/CAD is currently over $500 and USD/JPY is on about $68.
I also had a look at the 25/50 EMA system of elang last night (believe it or not AFTER I came up with this 50 EMA thing) and me thinks that although the ‘systems’ are very similar - we have one added ‘mechanical’ ‘bonus’ - and that’s the fact that we have Parabolic SAR to lock in profits i.e. ‘nothing left to the imagination’.
Trading using EMA’s or SMA’s is nothing new by the way. ‘Analysts’ always refer to the 50 SMA and 200 SMA when ‘analysing’ charts (OK - yes - they also refer to RSI and Stochastics so feel free to use them if it’ll make you feel better).
Someone (I forget who) posted a very interesting post on this site - the post was about the different ‘degrees’ or ‘levels’ that you reach as a trader - and of all the things that I remember from that post - one thing ‘stuck out’ - and it went something along the lines of ‘when you have exhausted all other methods and indicators and you find that you only need one indicator and one SMA or EMA to trade and make profits then you’ve finally arrived’ (I’m not quoting - that’s how I remember it). If anybody can find that post feel free to post the link here.
Also - as previously stated - I agree that fundamental analysis is important - I just do not have ‘it’ when it comes to understanding fundamentals and the effect that they have on the markets. Look at what happened on Friday. The ‘euphoria’ and then the ‘slump’. Somebody like ‘Tess’ obviously understands these things (see her fantastic and concise explanation as to WHY the NFP did not have the desired results we all thought that it would have a couple of posts back). Somebody like her obviously ‘has what it takes’ to be able to ‘make a call’ based on fundamentals - I unfortuanately - do not have (or have not as yet developed) this skill - so - I need a trading system that is ‘purely technical’ and the times when the fundamentals kick in will just have to be a ‘potential hazard’.
I feel at this point that I’ve been wrong about ‘pure’ Parabolic SAR and let me add that it’s not the usual ‘syndrome’ of not ‘doggedly’ sticking with a system and then ‘bailing’ the first time it makes a loss. I’ve spent MANY MANY hours trying to make our ‘old’ system work and when it has not worked I’ve spent EVEN MORE hours trying to figure out why and this change of direction is the result of those hours.
Anyway - I’m going to be looking at 4 hour, 2 hour, and 1 hour charts today and will trade this ‘new’ system and see what happens.
I’m man enough to admit when I’m wrong - and I’m certainly not going to ‘doggedly’ stick with a system that is going to help me wipe my account out OR leave me sitting ‘high and dry’ at month end without enough cash to pay my creditors. If this does not work - I’ll try something else - but I do believe that THESE ‘new rules’ have merit.
Again - don’t take my word for it - look at the charts.
Regards,
Dale.
I tend to not give up on old ideas so easily too. I try to hang on to them as long as I can. :rolleyes:
