Fine tuning a PSAR
LEHayes:
... it seems to be late in the trade causing many missed trades and trading in an almost flat condition..
I really need a firm understanding on how PSARs are evaluated for true conditions.
As I have said before - this is simply the wrong way to use PSAR
Its origins are in stock trading, to move stop losses
IMHO its no good as a trade signal in Forex as it lags on entry & exits and gets hopelessly whipsawed in ranging or flat markets
It may be of some limited use in a strong and extended trend - but when did we see the last one of those?
FWIW
-BB-
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I find myself in the need of understanding PSARs better. In a particular strategy I am using I have tried to code opening of trades based on use of PSARs. In one version, if I want to place a buy, I check the PSAR to see if it is above or below the current price. based on anothers suggestion, I place a buy or sell based on whether the the previous PSAR marks are scaling up or scaling down ( psar[3] > psar[2] > psar[1], or reverse).
Please advise me on the best way to utilize the PSARs, also is there fine tuning that needs to be done based on timeframe of the charts? I have always accepted the default values of the generic PSAR that comes with MT4. Based on a suggestion from another person, I am currently using the second method above, but when the PSARs are in the right direction identifying the correct trade position, it seems to be late in the trade causing many missed trades and trading in an almost flat condition. If I reverse the second suggestion, it works, but it allows for false indicators.
I really need a firm understanding on how PSARs are evaluated for true conditions.
BTW: When I use the first method, waiting for PSARs to change position above or below the current price, I end up with either late signals or false signals that frequently agree with the correct trade direction.