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Well, In this article. I am going to share one of the most famous strategies i.e Parabolic SAR strategy.
What is Parabolic SAR?
Parabolic SAR is one of the most famous indicators. this indicator was devised by J. Welles Wilder to find the potential reversals in the market.
It is the trend following indicator that may also be used in forex to set stop loss or find the possible exit and entry points.
SAR (n+1) = SAR n + ∞ ( EP – SAR n)
Here, SARn represents the currents period SAR Values.
SAR (n+1) is the next period SAR Values.
EP (the Extreme point) is the record kept during each trend that represents the highest value reached by the price during the current uptrend or lowest value during a downtrend.
∞ = value represents the acceleration factor.
Parabolic SAR Setting
Here, to illustrate Parabolic SAR I am going to use Binomo.
If you don’t have a Binomo account. Click Here.
Once you click the link above you will land on the Binomo Homepage.
Now, enter your email address, password and click enter.
Once you have signed up. you will land on the Binomo dashboard.
Now, click on the chart button and select Japanese Candlestick from the menu.
Now, Your dashboard will look something like given below.
Now, click on the indicator button and select Parabolic SAR from the menu. and select the color you desire.
That’s it!!! the basic setup is over now. and your dashboard will look like something given below.
Parabolic SAR Strategy
Parabolic SAR strategy is damn very easy.
The golden rule Parabolic SAR strategy says:
If the market is in a bullish trend then the Parabolic SAR dots will stay below the candlestick plus if there long-distance between Parabolic SAR and Candlestick it denotes a strong bullish trend.
Similarly, If the market is in a bearish trend then the Parabolic SAR dots will stay above the candlestick plus if there is long-distance between Parabolic SAR and Candlestick it denotes a strong bearish trend.
Parabolic SAR alone is a very good indicator, However, if you want to reap real results you should trade with Parabolic SAR and Support and Resistance.
In the chart above we can clearly see, that Parabolic SAR is above the Candlestick plus the candle has broked the support level so, here can go for a SELL trade.
In the chart above we can clearly see at point (a) that the Parabolic SAR is above the Candlestick plus the candle has broked the support level plus there is a big gap between Parabolic SAR and Candlestick so, here can go for a SELL trade.
At point (b), we can see the Parabolic SAR is below the candlestick, However, there is Parabolic SAR is very near to candlestick there we shouldn’t make any trade here.
So, this is the end of his article.
This article was all about What is Parabolic SAR?,Parabolic SAR Strategy, Parabolic SAR Setting