SAR Method on 4hr Charts

Very informative account statement - Immensely appreciated mikeh!

* I assume that you solely using the plain-vanilla method as explained in the videos? i.e, no indicators on the chart as it was the case down the thread. Right?


The only point that confuses me is HOW TO INITIATE a trade? Yes, Buff explained it but actually found it unclear still, or maybe seeking an easier way.

Any idea?

Thanks Walad,

Yes, the easiest way to get in initially is to straddle the last swing high and low with buy and sell stop orders and wait for one of them to trigger. Then proceed as normal with the working lines. Once you are in a trade you need to set the STOP and REVERSE order anyway.

Yes the trades I've take have been per the rules as in the videos. My exits in two cases, albeit, the largest take profits, were discretionary. Playing by the rules takes patience and nerve. Some say it's never bad to take profit. This method, by it's design for the most part, allows pretty good breathing room for profit to occur but the trailing stop gets you into some profit usually pretty early. I like it.

Current AUDJPY trade. 84 pips are locked in.

I'm following up your work Mikeh.

1) I want your clarification on the conservative way of moving the SL in order to lock in profits. Have you reached a concrete systematic way? Elucidate please.

2) If I am away from my screen for more than 8 hours, do you recommend that I switch to the Daily? or I still can do it on the 4H? Do you think that the Daily works too?

Walad,

Moving the SAR can be done on a mechanical basis by following the rules. After all four working lines are in place, price has to exit from within the lines and then go back in. The resulting swing point is your next stop and reverse level. I hope that makes sense. Moving the SAR differently can really be the only discretionary part of the system. But I would stick to mechanical rule following in this case because as a trend following system you just never know when the rules get you in to a huge trend. Moving the SAR early or on a discretionary basis would only get you into more whipsaws I would expect.

I am frequently away from the computer for 8 hours or more, for example when I sleep. I have found no problem keeping up with this on the 4 hr even then. I'm pretty sure this would work on the Daily TF but the stops would be pretty large. Even so, if you are used to the Daily then I cannot see why not. This is really a neat little way of combining support and resistance, breakouts, and a trend following.

Very clear. But noticed that if I stick to the rules, lots of losses are incurred before seeing profits. I reached losses of -600 pips while trying some example on GBPJPY -- a disappointing try.

Have you back tested the GBPJPY with this? I didn't get great results with GBPJPY. The swing points can be huge. Very volatile pair.

Hey, mikeh3855,
Thanks for your efforts to keep this system alive. Please update us on how you progress with your 10% risk on G/U and A/J. Its very interesting to know the results. This is strictly trend following system and it hates ranging market, so the question is how to ride a trending wave. Good luck with your endeavors. I myself only demoing it with controversial results...

Maybe one can avoid whipsaws a little by setting re-entry x pips above or below last stop.
That way you miss a piece of the new trend, but its a small offer if one is avoiding getting whipsawed during ranging markets

One of the videos Jim provided shows a realatively choppy market being bactested through. Post #8. He made out pretty good.

Thanks for the encouragement. Keep demoing! Try backtestting.

Mike

Yeah but how far do you go? The Stop and Reverse order is already assumed to be either a support or resistance level. I normally just eyeball it and put the buy stop a little higher than the swing point or vice versa for a sell. Give a few more pips for a buy for spread. In the end you have to get in. If you are mistaken and it reverses on you then you will get in on your Reverse order. I understand what you are saying but I can just never figure out how much room to give. I consider support and resistance more of a zone I think.

Mike

Hey, mikeh,
Yeah, audjpy looking good now, seems to be another swing.
Now, at the end of the month, after 1 month demo testing I can report that the best results I got with AUD and NZD pairs, EURNZD and GPBNZD brought me 480 and 750 pips for October respectively. I was impressed. They are very volatile pairs, but stops are also huge with them. Then AUDJPY and NZDJPY brought me 250 and 300 pips respectively. Other pair less. Most major pairs are in minus. I will start with a small lot on a real account on those aud/nzd pairs in November and will keep lining up other pairs on demo, maybe some good trends will be caught next month.
Cheers.

Serg, good luck. I added GBPCAD this week to GBPUSD and AUDJPY. Trying to stay uncorrelated due to the high risk I am trading on this. Great job last month. Those are some high pip counts. I can't deal with some of the stop loss sizes on some of those pairs. Well if you adjust your lot sizes I guess it is the same. Thanks for the update.

Mike

Ok Sorry. I broke the rules. I had 15% of my account sitting there so.... its Friday. I took it and will start on Monday with new straddles to start all over again. You know they say, rinse and repeat.

Hi Mike

Have you opened any new positions this week?

Please post them whenever you do.

Sure. Here's one that just triggered. I can see how after a while one may not need these yellow lines. They are a nice training tool to see the higher highs, etc. I got whipsawed on the AUDJPY this week and I am in a sell right now at 92.566.

This method will have you buying into a top and vice versa occasionally. Back tests say occasionally. Hopefully occasionally doesn't turn into more often than not.

Hey, mikeh
I also keep an eye on GBPCAD and waiting for a good chance to enter.

This week is very harsh for SAR method. Too many whipsaws, up and down moves. It happens on forex and one should be aware. Just remember that we can be rewarded with catching huge nice trends afterwards, but now be careful.

Back home in Oz for a week or so which has given me a chance to read up on this thread. It is amazing how much you miss a good internet connection when stuck out in the middle of nowhere.

Good to see some of you are having some success with this method, and making it your own. The common issues seem to be how to initiate a trade and also when to take profit.

Getting in is easy, as Mike covered in post #102 above. Just go back in the chart a little way and look for an obvious trend where you place your lines on the chart and walk through the system moving the lines it until you get to the current candle, and then take it from there. Or you can just look for an obvious high or low and set orders to buy or sell on those. It doesn't have to be exact initially, but once your are in, it is plain sailing from there. Don't get too stressed about first entry.

Now taking profits is a grey area. Some have already commented on being whipsawed in ranging markets. There is no easy way around this as there is always that trade off. If you took a set profit of +100, then the market may move +1000, which would bring a tear to your eye. But then the market may move in ranges of +105 and you have no profit target, and end up with a heap of trades that were profitable but reversed into losses along the way. It is frustrating. There is no easy way around this and it is up to the individual what they want to do. There are plenty of options and the trick is to find one that you are comfortable with. It may be trading one or two pairs aggressively and other pairs conservatively. You may decide to trade the same pair several ways with your position size divided up accordingly. Have a break even target eg at +100 a hard stop goes at your point of entry, even though your SAR may be on the wrong side of it still, so if it does reverse, you will be taken out at B/E and the new reverse trade activated as per the rules. You may also want to consider a trailling stop and again maintain your original SAR position. There is also the option of having a target and closing out half your position at that target and letting the remaining half run it's course. Plenty of options available. Just depends on your time, patience, discipline and courage. You have to be comfortable with it.

Thanks again guys for showing an interest in this method, and hopefully it has given some of you a plan to drag some pips from the giant Forex monster. I'll be around for another week or so before I fly out back to work, and in the meantime I have quite a few Forex related emails to answer. Cheers.

Thanks Jim,

I'm currently getting chopped up in this market, waiting for a nice run. The last couple of weeks were good with some smaller runs but generally pips were given back before the SAR.

Mike