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Thread: Indicator Parabolic Sar

  1. #1
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    Indicator Parabolic Sar

    Thanks to Roboforex company, Roboforex forum, Admin and Moderators: I would like to begin my thread with a big thanks to the Roboforex company for creating the Roboforex forum which is beneficial to all traders and newbies in numerous ways. Also I am greatfull to the Roboforex management, Forum admin and Moderators not just because I have been given another opportunity to participate in a contest and win a prize but also because this contest will give rise to so much useful information about all commonly used indicators at one place.

    The Indicator Parabolic SAR : As always I would not go in detail about the history about this indicator or how it is calculated. It just makes things complicated. My intention is always to keep things simple and be realistic about the practical application of an indicator. I like this indicator because it is simple in terms of both understanding and application. The parabolic sar can be used by traders who want to take benefit of trend or hunt reversals. The SAR stands for stop and reversal. Parabolic SAR is used well in conjunction with a trading system and can help to determine the entry price, stop loss, profit target and exit price. Parabolic SAR appears as a series of dot either above or below the price of a currency pair or commodity as shown in figure,


    Application of Parabolic SAR in trading The basic concept of the Parabolic SAR is rather simple. When the dots appear above the price bars then that means the price may now move downwards. Similarly when the dots appear below the price bars then the possible price movement is upwards.


    Parabolic SAR can be used to determine the entry price as well as the exit price for a trade

    1. Entry price for a trade : When the Parabolic SAR points appears below the current price of a currency pair then we can open a buy trade. Similarly when the Sar dots are placed above the current price of a currency pair we can open a sell trade.

    2. Exit price for a trade : Suppose we are holding a buy trade then when the dots move from below the price bars to above the price bars then we should close the trade as the uptrend might be over and the market is preparing for a downward move. Similarly when we are holding a sell trade we can close it when the dots starts coming below the current price at that means the prices may start moving up.


    Setting of the indicator Parabolic Sar
    : It is better to have the default parameters while using this indicator. You can chose the style that you may think pleasant.


    My opinion and views about Parabolic SAR Parabolic SAR gave right signals for Eurusd move on Friday ( 15th May, 2015) On Friday I was expecting the price of Eurusd to move some pips past 1.1400 but would not stay there for long. So when the prices moved over 1.1415 and the SAR points begin to rise over the current price I quickly made a sell at 1.1416. That was a good sell as the prices then started falling. However I could not wait patiently for the next signal and closed the trade when I was a profit of 25 pips at 1.1490 level. The price then fell as low as 1.1320. However I was in profits so went to relax. But again the SAR points gave good signal to make a buy at 1.1325 level when the dots came below the current price. Please look at the chart below. The current Eurusd price is at 1.1449.


    Conclusions
    : As we all know that no indicator is perfect in giving signals. And so it is very possible that Parabolic SAR can also give false or wrong signals. But I think more number of times it gives good signals. As always we can be prepared for the negative. Also conbination of Parabolic SAR with other indicators preferably indicators designed to determine the strength of a trend like the ADX- Average Directional Index.

    This indicator can be used with charts of any time frame But I would prefer it on charts with lower time frames than 1 Day. Parabolic SAR has given best performance with the currency pair Eurusd. It has also given good performance with Gbpusd, usdjpy and Gbpjpy. However Parabolic SAR can be used as a strategy well with any currency pair when combined with other relevant indicators.


    Precaution against market discounting an indicator or even a combination of indicators
    Sometimes the market may be in a mood to move in the same direction as indicated by our indicators. While sometimes the market may be in no mood to value the indicator. But when our strategy and indicator dont work it is at that time our skills to keep our loss small is checked. Professional traders do not easily become victim of big losses.We should always plan our safety.

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    Last edited by PROPENSITY100; 05-20-2015 at 03:07 PM.

  2. #11
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    Quote Originally Posted by forexlearner View Post
    Hello thread creator, yes this is a great contest and I have joined a few old contests but this is little but unique as compare to them. I want to ask something from you about the use of this indicator, its a trend following indicator right? So can I use moving average along with this indicator on my chart to get more accurate signals in my trading. What do you think about the combination of ema 50 and parabolic sar in h4 time frame?
    Moving average is an indicator that can almost be used with any other indicator to have a good combination and trade setup. Parabolic Sar can be used in any charts of timeframes preferably lower than daily charts. It depends on the traders own choice and approach then. I would think Parabolic Sar, EMA100 and Rsi can be used in combination to have good trading approach and entry and exit prices.

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  3. #12
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    Quote Originally Posted by PROPENSITY100 View Post
    Moving average is an indicator that can almost be used with any other indicator to have a good combination and trade setup. Parabolic Sar can be used in any charts of timeframes preferably lower than daily charts. It depends on the traders own choice and approach then. I would think Parabolic Sar, EMA100 and Rsi can be used in combination to have good trading approach and entry and exit prices.
    Yes brother moving average is the one indicator I have used sometimes In my trading. Actually this contest is very helpful for a person like me who have little knowledge about indicators. So I get to learn all the indicators at one place. Though I have not yet read all the threads here, these threads about indicators have motivated me a lot to learn.

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  4. #13
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    Quote Originally Posted by forexfighter007 View Post
    Yes brother moving average is the one indicator I have used sometimes In my trading. Actually this contest is very helpful for a person like me who have little knowledge about indicators. So I get to learn all the indicators at one place. Though I have not yet read all the threads here, these threads about indicators have motivated me a lot to learn.
    Yes friend this contest hold good information even for experienced traders. That is what I mentioned in my thread itself. Many members of the forum have taken part in the contest with useful and practical knowledge about indicators. It has been presented in an interesting manner that can captivate the attention fo any person who is willing to learn about indicators.

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  5. #14
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    Quote Originally Posted by PROPENSITY100 View Post
    Yes friend this contest hold good information even for experienced traders. That is what I mentioned in my thread itself. Many members of the forum have taken part in the contest with useful and practical knowledge about indicators. It has been presented in an interesting manner that can captivate the attention fo any person who is willing to learn about indicators.
    Oh yes this contest was little bit unique and most of all contest participants learned a lot about the use of differ variety of indicator's. All we know that practical learning about any indicator is very important and most of all forum participants give their best to explain the features of their indicator's. Robo forex a good source of forex education and I am looking forward for many more new contest's.

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  6. #15
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    Quote Originally Posted by PROPENSITY100 View Post
    Moving average is an indicator that can almost be used with any other indicator to have a good combination and trade setup. Parabolic Sar can be used in any charts of timeframes preferably lower than daily charts. It depends on the traders own choice and approach then. I would think Parabolic Sar, EMA100 and Rsi can be used in combination to have good trading approach and entry and exit prices.
    You suppose to combine and modify those indicator into one signal. And you make Expert Advisot based on your trading histoty. So we trade based on signal EA you have made, and it prevent trader to do aggressive trading based on no trading setup dear mate.

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  7. #16
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    Parabolic SAR is really a good indicator through which you can make good amount of money and mainly it is a trend following indicator and if you can follow it nicely you can make good money. But the problem is many of the traders can follow the trend properly.

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  8. #17
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    Parabolic sar is one of the leading indicators being used in technical analysis but I do not use it in isolation, I combine it with few other indicators and candlestick pattern . On my chart, I use it to confirm the signal seen from the analysis of the market done by me and this I have found to be very more reliable on 4H time frame.

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  9. #18
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    Quote Originally Posted by layigold View Post
    Parabolic sar is one of the leading indicators being used in technical analysis but I do not use it in isolation, I combine it with few other indicators and candlestick pattern . On my chart, I use it to confirm the signal seen from the analysis of the market done by me and this I have found to be very more reliable on 4H time frame.
    Long term time frames are reliable for long term signals you can't use short term time frames fore the long term signals and regarding Parabolic sar I would say that its a good indicator which can give you signals in both markets short term as well as in long term market. I am making money from short term time frames and I am sure that parabolic sar will work fine in short term too for me same like moving average, macd etc.

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  10. #19
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    this is one of the best indicator for determination of the direction of the market and can be used effectively as a good confirmation with the other indicators, the trader can use it and he will get good results and will be able to make good money with the market ,but this indicator is not good in side way market and so it is preferable to ignore its signal in side way market.

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  11. #20
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    Parabolic SAR is usually very well cupped if you look at it in a much more proffected and well informed side look for something that makes it right for traders to understand the market in a cupped way, like market might swing from these position and an average if you look at it, so movements are not as hight though really visible

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