Forex

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What is Parabolic SAR Indicator ?

Parabolic SAR (Parabolic stop and reverse) is a technical indicator developed by the greatest J. Welles Wilder to determine the direction of the assets or commodities moving as well as providing the entry and exit points.

On the chart, this indicator appears as a series of dots placed either above or below the price bars.

The series of dots below the price is said to be bullish.

Similarly, The series of dots above the price is said to be bearish.

The Parabolic SAR mainly works in the trending market.

Wilder recommends that the traders should first establish the direction of the trend using Parabolic SAR and then use an alternative indicator to measure the strength of the trend.

How to read Parabolic SAR?

The first thing you need to do is log in to your Binomo account.

Now, click on the Indicator button and select Parabolic SAR from the menu.

That’s it!! The basic setup is over.

How to use Parabolic SAR effectively?

Trading with Parabolic SAR is very easy. you just need to remember the golden rule of Parabolic SAR.

The golden rule of Parabolic SAR says:

If the Parabolic dots are below the candles that means the market is in a bullish trend. so, here we should go for a buy trade.

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Similarly, If the Parabolic dots are above the candles that means the market is in a bearish trend. so, here we should go for a sell trade.

Let’s check few examples.

Given above is a 1 hour chart and we can clearly see that firstly, the market is in a strong uptrend plus the Parabolic SAR dots are below the candle.

So, here we can go for a Buy trade.

Similarly, Given above is a 1 – hour chart and we can clearly see that firstly, the market is in a strong downtrend plus the Parabolic SAR dots are above the candle.

So, here we can go for a Sell trade.

Parabolic SAR Strategy: How reliable is Parabolic SAR?

Parabolic SAR is a highly reliable indicator.

However, If you want to reap the real results from Parabolic SAR, you should use support and resistance as your trade confirmation.

 

Now, what you just need to remember is that If you see the Parabolic SAR dots below the candlesticks plus the candle is near the over support level then we should go for a buy trade.

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Similarly, If you see the Parabolic SAR dots above the candlesticks plus the candles are near the resistance level then we should go for a sell trade.

Let’s check a few examples.

Given above is a 1- hour chart and we can clearly see that the Parabolic dots are forming above the candlesticks plus the candles are near the resistance level.

So, here we can take a sell trade.

Winding Up:

Parabolic SAR is a technical indicator developed by J. Welles. Wilder to determine the direction of assets or commodities moving as well as providing the entry and exit points.

On this chart, this indicator appears as a series of dots placed either above or below the price bars.

Trading and reading with Parabolic SAR are very easy. You just need to remember the golden rule.

If the Parabolic dots are below the candles that means the market is in a bullish trend. so, here we should go for a buy trade.

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Similarly, If the Parabolic dots are above the candles that means the market is in a bearish trend. so, here we should go for a sell trade.

So, trading with Parabolic SAR is so easy. However, If you want to reap the real results you should use support & resistance to confirm your trade.