Indicator Parabolic Sar
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Thread: Indicator Parabolic Sar

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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 04:07 PM.

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    Trader Hukam's Avatar
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    Nice to hear about the functions or features of parabolic sar indicator, You have described it very well mate, I have a question for you. How can I handle the sideways market condition if I am using parabolic sar on my chart. How it deal in sideways market? Hope you will don't mind that mate, and will give the answer of my question, Its a new indicator for me that's why I am very interesting in it.

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    Quote Originally Posted by Hukam View Post
    Nice to hear about the functions or features of parabolic sar indicator, You have described it very well mate, I have a question for you. How can I handle the sideways market condition if I am using parabolic sar on my chart. How it deal in sideways market? Hope you will don't mind that mate, and will give the answer of my question, Its a new indicator for me that's why I am very interesting in it.
    Yes friend, thanks for reading my thread. You are welcome to ask any question as the forum itself is meant for communication and sharing information. Parabolic Sar works best in trending market and can give false signals in sideways market. Market will either trend or remain sideways. I think for sideways market the better indicators to use are The Relative Strength Index (RSI) and Stochastics. Parabolic Sar is good to trade trends or hunt reversals.

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    Quote Originally Posted by PROPENSITY100 View Post
    Yes friend, thanks for reading my thread. You are welcome to ask any question as the forum itself is meant for communication and sharing information. Parabolic Sar works best in trending market and can give false signals in sideways market. Market will either trend or remain sideways. I think for sideways market the better indicators to use are The Relative Strength Index (RSI) and Stochastics. Parabolic Sar is good to trade trends or hunt reversals.
    Thanks for clarifying mate, I think that's correct RSI, Stochastic, and CCI these are better to utilize sideways market patterns to make profit. Indicator parabolic sar is looking best for long term trending market, I want to use this in Daily chart time, I will try to do some testing with Parabolic sar very soon, Have a good time mate.

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    Trader nsawork's Avatar
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    Quote Originally Posted by PROPENSITY100 View Post
    Yes friend, thanks for reading my thread. You are welcome to ask any question as the forum itself is meant for communication and sharing information. Parabolic Sar works best in trending market and can give false signals in sideways market. Market will either trend or remain sideways. I think for sideways market the better indicators to use are The Relative Strength Index (RSI) and Stochastics. Parabolic Sar is good to trade trends or hunt reversals.
    Yes this is a fact that when the Trends are more clear then we get to know about them if we are using the Parabolic Sar and they give us signals only when we are in the constant trends which is why it is important for us to use this with some practice.

    And as we know that the best trading signal is one which can actually give us more pips

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    This is a good thread friend. I think you have been able to make money from this indicator. I often trade with Audusd is the indicator can be used with this pair. If yes may I know the success rate. I think you have also used this indicator in combination. So please tell me what combination you prefer.

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    Quote Originally Posted by nsawork View Post
    Yes this is a fact that when the Trends are more clear then we get to know about them if we are using the Parabolic Sar and they give us signals only when we are in the constant trends which is why it is important for us to use this with some practice.

    And as we know that the best trading signal is one which can actually give us more pips
    Yes friend using an indicator always needs some practice. We have to know when the indicator works better and when it can given false signals. This way we can filter most of the unwanted signals and chose the signals which are stronger and potentially more likely to be correct.

    Quote Originally Posted by Abhishekwala View Post
    This is a good thread friend. I think you have been able to make money from this indicator. I often trade with Audusd is the indicator can be used with this pair. If yes may I know the success rate. I think you have also used this indicator in combination. So please tell me what combination you prefer.
    Parabolic SAR wprks better with EURUSD and Gbpusd but can be used with Audusd which you can test on demo. As per combination its your choice. I have worked combining Parabolic SAR with RSI and also EMA. You can even combine it with Stochastics which I think you are already using and it also helps pinpoint reversals.

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    I am very happy that this time we have a unique contest, and there is a lot to learn from differ types of threads in this contest. This is also a good thread, I don't have any knowledge of parabolic sir, but I am sure that this type of explanation would not give me any problem to learn about the use of this indicator. Brother can you tell me which currency pair will be better for the use of Parabolic Sar?

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    Quote Originally Posted by Earnperfect View Post
    I am very happy that this time we have a unique contest, and there is a lot to learn from differ types of threads in this contest. This is also a good thread, I don't have any knowledge of parabolic sir, but I am sure that this type of explanation would not give me any problem to learn about the use of this indicator.
    Yes friend this contest rewards us with not just good prizes but also rewards us with so much useful information about indicators. We as traders know how useful these threads about different indicators are for earning in our trading. This contest will bring all useful information about all commonly used indicators at one place.

    Quote Originally Posted by Earnperfect View Post
    Brother can you tell me which currency pair will be better for the use of Parabolic Sar?
    Brother 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.

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  10. #10
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    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?

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