Trading Edge Scout with PSAR

How to execute the trading ideas with a trading strategy

The trading ideas provided in the Edge Scout Futures Newsletter are not dependent on any one particular trading strategy.  The trader is free to use any trading strategy they choose to execute the trading ideas from the Edge Scout.  However, for the sake of simplicity and ease-of-use, we provide instructions on how to trade the Edge Scout using the Parabolic Stop and Reverse system, referred to hereon as PSAR.

Here are the instructions for trading the Edge Scout with PSAR. 

 

Shown below is a copy of the Edge Scout Futures Trading newsletter that is published each evening and sent to subscribers by email.

 

Each row of the table will be a recommendation. The first column has the futures market name. The second column has the contract month. The third column is the trading direction and will have a value of Long or Short. A Long means that only long trades will be made during the trading session. A Short means only short trades will be made during the trading session.

The PSAR strategy will need some parameters with default values. The first parameter is the trade direction; 1 for Long and 2 for Short.

 

A second parameter is the number of minutes prior to the end of the session for canceling any open entry orders. The default is 25 minutes. Trades should not be entered after the cancel time. The cancel time is the end of session less the number of minutes for the cancel parameter.

If there is no open position, then any new entry orders are canceled for the remainder of the session.

 

A third parameter is the number of minutes prior to the end of session for exiting trades. The default is 3 minutes.

If a position is still open at the exit time the trade is exited with a market order. No trades are to be held after the end of the exit time. The exit time is the end of session less the number of minutes prior to the end of session.

 

A fourth parameter is the release time. The release time is the time the strategy begins trading.

If the recommendation is to trade “Long” and the price is above the 30-minute PSAR, then buy at the market at the release time. The default is 6:00 AM CT. If the price is below the PSAR at the release time, then do not enter yet. You can place a buy stop order at the next tick higher than the 30-minute PSAR price of the most recently completed bar (this will need to be updated every thirty minutes until the entry occurs or the cancel time.)

 

If the recommendation is to trade “Short” and the price is below the 30-minute PSAR then sell at the market at the release time. If the price is above the PSAR at the release time, then do not enter yet. You can place a sell stop order at the next tick below the 30 minute PSAR price on the most recently completed bar (this will need to be updated every thirty minutes until the entry occurs or the cancel time.)

 

Often a trade will be stopped out (at the next tick higher than the PSAR price on the most recently completed bar for short trades and at the next tick lower than the PSAR price on the most recently completed bar for long trades) and re-entry occur later in the session. When the PSAR changes direction the new stop loss will need to be for the incomplete bar.

 

If a trade is long and stopped out because the PSAR changed in direction to down (price above PSAR), then a stop entry order is placed to re-enter at the next higher tick above the new PSAR price. There is no limit to the number of re-entries and exits during the day. If in the rare case that the PSAR changes direction and the trade is not stopped out, exit the trade at the open of the next bar with a market order.

 

If a trade is short and stopped out because the PSAR changed in direction (price below PSAR), then a stop entry order is placed to re-enter at the next lower tick below the new PSAR price. There is no limit to the number of re-entries and exits during the day. If in the rare case that the PSAR changes direction and the trade is not stopped out, exit the trade at the open of the next bar with a market order.

 

The fifth parameter is the PSAR parameter. The default is 30 minutes.

The purpose of the cancel time for entry orders is to prevent entries that are too near

To the end of session time.

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Risk Disclosure:

Futures and forex trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones’ financial security or life style. Only risk capital should be used for trading and onlythose with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.

Hypothetical Performance Disclosure:

Hypothetical performance results have many inherent limitations, some of which are described below. no representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. for example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all which can adversely affect trading results.