BSAR - The Problems

1. The Biased Stop and Reverse (BSAR) and The Parabolic Stop and Reverse (PSAR) have one problem common amongst them
2. They do not tell us when to enter the trade (and when not)
3. This is the chief reason, why so many know about it but are unable to profit from it
4. The Problems are not insurmountable - but it requires deeper analysis of the situations where buy and sell signals are generated; some pertinent questions that have been asked time and again are:
• the volatility factor - could volatility help us determine the entry and exit points?
• the signal confirmation - is there a way we could confirm our buy and sell signals and still avoid collinearity?
• The problem of correct time frame - what time period is optimum to calculate BSAR or PSAR ?
• The problem of position sizing and targets - how many contracts should be traded at different stages of the holding period?
• The Determination of Minimum Capital Requirements - Is there an optimum amount of Capital?
• The problem of plenty - What underlying asset should be selected to trade, for trading both the asset itself and it's derivatives?
• The problem of hedging the open positions- how could the trading capital be protected from sudden large unfavorable moves?
• How much could I lose if market goes against me - what could be the Maximum Adverse Excursion? And what could be the Maximum Favorable Excursion? How much should be provided for drawdown
• The Problem of Consistency - could one make a living out of trading BSAR, or could I receive a regular income in all types of market conditions, trading with BSAR system?