Parabolic SAR Strategy Olymp Trade

Peringkat broker opsi biner:

Parabolic SAR Strategy – Olymp trade

Despite the difficult name, the indicator Parabolic SAR is an analog of the Moving Average. It is used to calculate the average value of the price in the past but it can also help to predict the future course of events. It is represented with a dotted line (blue dots). When this dotted line is located below the price chart, it means that the market is an uptrend now (the price goes up). And when it is located above the chart, the market is a downtrend (the price goes down). Knowing this, you can use the indicator Parabolic SAR in your trading.

Features of the strategy:
  • Easy to use
  • Only one standard indicator is needed
  • The signals are given by the indicator itself
  • The system is very simple and easy to understand
  • Trading does not require much preparation
  • Any currency pair and time-frame can be used.
Receiving signals

Parabolic SAR shows the entry points perfectly.

If the price chart crosses the dotted line (for example, from top to bottom), Parabolic is reversed and then is being shown from the opposite side (below the chart). So, the reversal of the indicator is a signal that either trend is ending or that it’s going to reverse (for example, if it was ascending, it is going to descend).

Use the following time periods:

Candle time frame – 5 minutes = trading time – 5 minutes

Candle time frame – 15 minutes = trading time – 15 minutess

Trading “UP”

You should trade UP when the dot ABOVE the candlestick is replaced by the dot UNDER the candlestick and the indicator starts being shown under the chart.

The first dot after the change of the trend should be taken into account.

The second dot should be viewed as the signal to trade UP with the selected financial instrument.

Peringkat broker opsi biner:
Trading “DOWN”

You should trade DOWN when the dot UNDER the candlestick is replaced by the dot ABOVE the candlestick and the indicator starts being shown above the chart.

The first dot after the change of trend should be taken into account.

The second dot should be viewed as the signal to trade DOWN with the selected financial instrument.

OLYMP TRADE Recommendations

1. Always use the same time period.

2. Invest less than 5% of your account balance per one trade.

3. Try to use fixed amounts in trading.

It will not be long before you learn how to use the chart and notice good opportunities for trading. Good luck!

DISCLAIMER: Futures, stocks and options trading involves substantial risk of loss and is not suitable for every investor. The valuation of futures, stocks and options may fluctuate, and, as a result, clients may lose more than their original investment. The impact of seasonal and geopolitical events is already factored into market prices. The highly leveraged nature of futures trading means that small market movements will have a great impact on your trading account and this can work against you, leading to large losses or can work for you, leading to large gains.

If the market moves against you, you may sustain a total loss greater than the amount you deposited into your account. You are responsible for all the risks and financial resources you use and for the chosen trading system. You should not engage in trading unless you fully understand the nature of the transactions you are entering into and the extent of your exposure to loss. If you do not fully understand these risks you must seek independent advice from your financial advisor.

Parabolic SAR Moving Average Trading Strategy

In this article, you are going to read about a trading strategy that teaches you how to use a parabolic SAR indicator (Stop And Reversal) trading tool, along with two moving average trading strategies to catch new trends on the reversal. This moving average and Parabolic SAR trading strategy will show you how to use the parabolic SAR indicator effectively and how you can add this trading system into your daily trading techniques.

The Parabolic SAR (PSAR) is an indicator favored by technical traders that captures reversal signals. The Parabolic SAR (Stop and Reverse) was developed by J. Wells Wilder. Wilder was a mechanical engineer best known for his technical analysis developments. He has also developed the DMI (Directional Movement Index), the RSI (Relative Strength Index), and other indicators dear to technical analysts today.

Hopefully, by the end of the article, you will have the right parabolic trend formula, learn what a crossover is, find out buy signals, the best moving average crossover for swing trading, best moving average crossover for day trading, and the best moving average crossover for scalpers. Also, read the hidden secrets of moving average.

The strategy is a dynamic trading tool that is used by many professional traders of every market (Forex, Stocks, Options, Futures). It is best used when the market is trending. If the market is choppy, the market is moving sideways, this tool does not particularly work at its best. Take a look at the Rabbit Trail Strategy if you are interested in trading sideways markets.

This was developed by Welles Wilder when he introduced this into his book in 1978 that was titled, “New Concepts in Technical Trading Systems.”

What this tool basically does is helps traders determine when the current trend will end, or when it is about to end. The way it shows you this is by placing dots that show up above or below the price candle. They appear above or below the current candle for a specific reason. If the dot is above the candle it will be a SELL signal or downtrend.

However, if the dot is below the candle this can be a signal to BUY or an uptrend. When the change occurs (the dot goes from below to above the next candle) this indicates a potential price reversal may be happening.

Some may think why not just trade the dots. When it reverses, just make an entry at that price. Technically you can trade like this and may win some, but this is a very risky way to trade this indicator. You need other tools to validate this potential trend.

As you can see above, if you simply just trade the dots this will frequently happen.

Which is why we use this indicator and two moving averages to determine an entry point. The moving average trading strategy will help verify that a reversal is in fact occurring. Here is another strategy called The PPG Forex Trading Strategy.

The combination of these indicators will give you accurate trend reversal setups.

This strategy can be used on any time frame on your chart. So day traders, swing traders, and scalpers are all welcome to use this type of strategy.

Here are the indicators you need to apply on your chart to use this trading strategy:

  1. Parabolic Sar strategy: Default Settings
  2. 40 Length Moving Average= Green color in our example
  3. 20 Length Moving Average= Red color in our example

What does the Parabolic SAR calculate?

The parabolic SAR is used to track price changes and trend reversals over time. In order to calculate today’s Parabolic SAR, you will need to know the most extreme price (EP), the acceleration factor (AF), as well as the most recent PSAR. You will also need to determine whether there is currently an uptrend or a downtrend.

In simple terms, if the pair is trading under the PSAR you should sell. If the pair is trading above the PSAR you should buy. There are many ways to trade this indicator. You can trade it with additional indicators or on multiple/different time frames. Nathan Tucci wrote an article in May 2020 that illustrates how the PSAR can be incorporated into a trading strategy. See that article by clicking here and his Forex Trading System article by clicking here. You can also simply trade the Parabolic SAR for longer terms, trending pairs. For example, let me show you this EUR/USD daily chart:

The “extreme price” will either be the highest high or the lowest low that has occurred within the relevant period. Every time a new EP is established, the trend will be updated. The acceleration factor (which begins at 0.02) will increase by 0.02 for each of the first ten times that the EP has been updated (creating a functional AF “ceiling” of 0.20).

The Parabolic SAR (PSAR) calculation is:

  • PSAR= Prior PSAR + Prior AF (Prior EP – Prior PSAR); for uptrends
  • PSAR= Prior PSAR –Prior AF (Prior PSAR – Prior EP) for downtrends

The difference between the uptrend and downtrend formula is whether the second part of the formula is added or subtracted. It’s important to note, without properly identifying the direction of the current trend, your PSAR calculations will be moving in the wrong direction.

Parabolic SAR Forex Rules for Short Trades

Rule #1- Apply Parabolic SAR system and Moving Average indicators to chart

You can choose different colors for the moving averages. The 20 period moving average is Red and the 40-period moving average is Green in this example.

Rule #2- The Parabolic SAR Indicator must change to be above price candle.

Notice how the dots were below the price. The parabolic stop and reversal (SAR) formula showed us that the price stalled out for a few hours and then the dot appeared above the candle.

This is a sign that a reversal may be forming.

Like what you are reading so far?

Why Not Grab the Free Parabolic SAR full Report 100% free! Click here to Get the strategy guide PDF report now

Rule #3- Another element that must occur is the moving averages must cross over.

In a short trade, the 20 period moving average will cross and go below the 40 periods moving average.

So now the 20 period moving average is below the 40 period moving average. However, something occurred that is notable. The dot then appeared below the price candle.

Since the moving averages are telling us that a downtrend is most likely going to occur, we will wait until the dot appears again above price candle to validate this reversal and enter a trade.

Rule #4- Parabolic SAR dot must be above price candle AND moving averages cross to where 20 period MA is below 40 period MA.

Note** One of these elements may occur before the other. The reversal dot can appear before the MA lines cross. Or the Moving averages can cross before the reversal candle. As long as there are both elements, the entry criteria are met.

Rule #5- Enter The Next Price Candle…

Enter (SELL) the very next price candle after the dot appears above the candle. You can see on our chart where we entered the trade. Waiting for one candle after makes sense because this proves to us that this reversal is strong. The moving averages are supporting the downtrend + the dot is signifying a downtrend.

Rule #6- Stop loss / Take Profit

The stop loss you will place 30-50 pips away from your entry. Always look for prior resistance or support to determine a stop loss. In our example, a stop loss was placed 40 pips from entry.

Your exit criteria are when the 20 and 40-period lines cross over again. OR when the dot reverses appears at the bottom of the candle.

This trade would have been a +203 pip profit using the MA cross exit approach. Not too bad.

Some will get out of the trade when the dot appears below the price candle. If that was the case, in this example, you would have got +32 pips instead. Still not bad, but +203 pips sounds a lot better.

So basically you can use either exit strategy. This trade the downtrend was very strong so we stayed in until the MA lines cross. Determine where you are in a trade. If you are up +100 pips and the dot changes to reversal consider getting out then and taking your profit.

Note** Scalpers should not be using a 30 to 50 pip stop with this strategy. Consider your rules and adjust accordingly. A 5-10 pip stop may be more appropriate on that low of a time frame. If you like this strategy and have a stop you think works best, leave us a comment below and tell us what you think!

Rules for Long Entry.

Rule #1- Apply indicators to chart

Rule #2- Dot must change to be below price candle. This is a sign that a reversal may be happening.

Rule #3– Another element that must occur is the moving averages must cross over.

In a long trade, the 40 period moving average will cross and go below the 20 period moving average.

Rule #4- Dot must be below price candle AND moving averages cross to where 20 period MA is above 40 period MA.

Note** One of these elements may occur before the other. The reversal dot can appear before the MA lines cross. Or the Moving averages can cross before the reversal candle. As long as we have both elements the entry criteria is met.

Rule #5- Enter Next Price Candle. Enter the very next price candle after the dot appears below candle + MA lines cross and 20 period MA is above 40 period.

Rule #6- Stop loss / Take Profit

The stop loss you will place 30-50 pips away from your entry. Always look for prior resistance or support to determine a stop loss.

Your exit criteria in the example below were when the dot appeared above the candle.

This would have been a nice +74 pip profit trade using this strategy.

Conclusion

As stated the Moving Average Trading Strategy can be used on any time frame. However, you should always check different time frames and look at what the market is currently doing. No strategy can give you a 100% win ratio so always be placing your stops at the appropriate areas. I would recommend practicing making both short and long trades with this moving average trading strategy.

Thank you for reading!

Please leave a comment below if you have any questions about Parabolic SAR Moving Average Strategy!

Also, please give this strategy a 5 star if you enjoyed it!

(38 votes, average: 4.05 out of 5)
Loading.

Like this Strategy? Grab the Free PDF Strategy Report that includes other helpful information like more details, more chart images, and many other examples of this strategy in action!

Tap on the E-Book Cover Below to get your copy of this Free strategy today.

Please Share this Parabolic SAR Trading Strategy Below and keep it for your own personal use! Thanks Traders!

Parabolic SAR indicator

Technical indicators have become indispensable assistants for work on the financial markets when Internet trading appeared. These instruments allow traders to automatically calculate complex formulas that form the basis for analysing charts, and visually indicate the most likely outcome of further events.

However, most of these advisers are often late. So, it turns out that the trader enters the market not at the beginning of the movement, but already at its end. This sometimes leads to losing trades.

But Wilder developed the ATR and ADX instruments, as well as the Parabolic SAR, to keep such a destructive factor to a minimum.

Thanks to the parameter (acceleration), this indicator eliminates the delay and allows the trader to react in time to the incoming signal. User needs to select Parabolic SAR from the list of standard instruments and set on chart with asset to use in the terminal Olymp Trade.

Form and settings of indicator

Parabolic refers to trend indicators, so it is located near the price chart. Visually, it forms a line with dots below or above the price chart.

  • If the indicator is located above the candles, it is considered that there is a downward trend in the market.
  • If the points are under them, then the trend is up.

It is also important to take into account the fact that the instrument is absolutely ineffective during flat and can give a lot of false signals.

The only parameter in Olymp Trade terminal for the indicator is acceleration step. To edit the settings, trader needs to click on corresponding icon, as in figure below.

However, most traders, based on their own experience, don’t recommend changing this setting (0.02). Otherwise, the instrument can significantly distort the overall picture and give a lot of false signals.

Timeframes from H1 to D1 are considered to be suitable for working with Parabolic SAR. The instrument works more efficiently at these intervals, as market noise is eliminated.

How to trade with Parabolic on electronic contracts?

One of basic signals that emanate from adviser is direction of general trend. As mentioned earlier, it is believed that the trend is upward, if the candles are above the points, and downward, if below them.

However, many traders use Parabolic and to enter the trade directly. The principle is as follows:

  • Call-option needs to be bought when candle has broken the indicator upward direction, and the next point has formed below it.
  • Put-option needs to be bought when the candle has broken the indicator in downward, and the next point of instrument is formed above price.

Expiration time should not exceed the formation time of 2 candles.

Summary

Parabolic indicator is very easy to use in trading electronic contracts and therefore it is popular with novice traders and is used in many strategies.

Peringkat broker opsi biner:
Tempat berinvestasi
Tinggalkan Balasan

;-) :| :x :twisted: :smile: :shock: :sad: :roll: :razz: :oops: :o :mrgreen: :lol: :idea: :grin: :evil: :cry: :cool: :arrow: :???: :?: :!: