Parabolic SAR Trading Strategy

 

The parabolic SAR, or parabolic stop and reverse, is a popular indicator that is mainly used by traders to determine the future short-term momentum of a given asset. The indicator was developed by.

Strategy Set-Up Any currency pair and timeframe should work. As mentioned at the start of the article, a dot plotted above price means a bearish environment, and represents a bearish signal.

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0 MACD And Parabolic SAR Forex Strategy. The MACD and Parabolic SAR forex strategy is a versatile trend-following strategy designed to keep you trading at the right direction of the overall buy/sell trend.

The indicator was developed by the famous technician J. The calculation of this indicator is rather complex and goes beyond the scope of how it is practically used in trading.

The parabolic SAR indicator is graphically shown on the chart of an asset as a series of dots placed either above or below the price depending on the asset's momentum.

A small dot is placed below the price when the trend of the asset is upward, while a dot is placed above the price when the trend is downward. As you can see from the chart below, transaction signals are generated when the position of the dots reverses direction and is placed on the opposite side of the price. So, many traders will choose to place their trailing stop loss orders at the SAR value, because a move beyond this will signal a reversal , causing the trader to anticipate a move in the opposite direction.

The parabolic SAR performs best in markets with a steady trend. Entry Conditions Enter Long position when the current price touches the indicator from below and it changes its direction. Example As you can see on the example chart above, there are five entry and exit points: The first one is bearish and goes to a take-profit. The second one is long and is also closed by TP.

The next one is bearish again and reaches TP rather fast. Bullish trade that reaches its target in just two candles. Another short trade, slowly proceeding down to its take-profit level. The higher the max step the closer the trailing stop will be to the price. Thus, if you have missed out on an entry, it might be better to avoid late entries at all and rather wait for an opportunity to re-enter the trade with a help of, for example, Stochastic indicator.

Parabolic SAR is only a mathematical interpretation of the price. Even though it helps to identify initial place for a Stop, it may not be the final or best one sometimes. Thank's for all After 15 sites the best formula and example of SAR. Your website is one of the best sites for Forex Trading knowledge. Thanking you, for sharing all this information and making it clear. I love your website! One issue to clear up: The parabolic Sar explanation is very clear Don't stop talk about indicators You helps us a lot.

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