Indicator Parabolic Sar
Results 1 to 10 of 34

Thread: Indicator Parabolic Sar

Threaded View

Previous Post Previous Post   Next Post Next Post
  1. #1
    Registered user
    Join Date
    Mar 2013
    Posts
    3,925

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

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •