Parabolic SAR indicator

[marketsvoice]

What’s the Parabolic SAR indicator?

The word SAR stands for “Stop And Reverse” and this name clearly indicates the functionality of the indicator.

The Parabolic SAR indicator follows the trend and stops when the trend near to reverse.

The above sentence telling us all about the Parabolic SAR indicator:

1- The trend must be exist first before relying on the Parabolic SAR; which means the Parabolic SAR works perfectly in the trending markets and times while it works very bad when the market start to move sideways.

2- The Parabolic SAR indicator has no answer for the questions “When to enter the market?” and “Is the market trending or not?” but it has a very good answer to one of the most important questions “When to exit the trade?”.

 

 

 

Formula: The Parabolic SAR indicator in MetaTrader takes two of the parameters that used in its calculation (Figure 2):

 

 

Step: This is the acceleration factor used in calculating the Parabolic SAR, The higher the Step value is set, the more sensitive the indicator will be to price changes. Wilder recommends setting the Step parameter to .02.

Maximum: This is the value of reverse when the Parabolic SAR reach it. Wilder recommends setting the Maximum to parameter to.20.

The calculation of indicator then uses one of two formulas depending on is it long or short position:

Long:

SAR(i) = SAR(i-1)+Step*(HIGHEST(i-1)-SAR(i-1))

Short:

SAR(i) = SAR(i-1)+Step*(LOWEST(i-1)-SAR(i-1))

How to use the Parabolic SAR indicator? The main usage of the Parabolic SAR indicator is as a trailing-stop technique which means the Parabolic SAR will tell you the best time to exit your trade by giving you the best value to trail your stop losses.

At the beginning of the trend the Parabolic SAR dotes are far from the price hence there’s a room for your trailing stop to be wider. As the trend goes weaker the Parabolic SAR dotes come near to the price and you’ll have a tighter trailing stop.

When the Parabolic SAR dotes goes below the price you use its value to trail stop your long position.

When the Parabolic SAR dotes goes above the price you use its value to trail stop your short position.

[standart]

thanks for write useful information about this indicator. I also ever try this indicator but found many of false signal if use it in small time frame. I get information to avoid false signal, should use it in daily time frame. I want to test it actually but unfortunately I am not too interested again use this indicator.

[adnan007]

This indicator surely is useful and easy to understand for newbies but the problem with it is its inconsistency. They do not give accurate signals as they just show the trend direction. However, using Parabolic SAR with other technical indicators do increase the accuracy level of this indicator.

[sujesh]

Parabolic SAR can really give change

in trends of market and this should

be helpful for stop loss and placing

buy / sell or square off orders.indeed there is no exact rule about entry point but I ever use this indicator and directly entry when first dot appear but its not advisable because many of them is false signal.it is true you must have used it in combination with another indicator to make it useful or effective.

[ethilihop]

It appears to be a problem with the NTDF line of code. I thought perhaps it was a "divide by zero" error, but modifying the code for that doesnt resolve this issue. Ive also not been able to find any other code or description of this indicator online that better describes the formula breakdown. Unfortunately, at this time I do not have a solution to this other than to advise that you not use it on the 1-minute or lower chart intervals; it doesnt appear to be an issue on higher chart intervals, however.

 

Regards,

Chris

[LITNECYIRRERN]

I think, that you are not right. Write to me in PM, we will communicate.

[rexway]

Parabolic sar produce best result for me sometimes but with a combination of one indicator call money flow index,some time the mfi will first alert you abaut a reversal befor parabolic sar,all graet info you wrot here thank you

[adnan007]

Parabolc SAR is one of the most easiest technical indicators for the newbie traders to understand. All a trader needs to watch out for is the indicators dots. If its on the upper side on the candles, it means we are looking for a sell in the next few time frames which on the downside it results in buying conditions of the market.

[ganthiraj]

Please i dont know if a kind-hearted forum member can help me program an EA that will place trades using parabolic SAR and RSI 9 only.

with inbuilt but changeable trailing stop option

The EA will enter trades when a new parabolic signal is formed and RSI 9 corresponds with the signal

The EA will place stoploss where a parabolic breach will occur

which means stoploss will be placed where it cannot be hit unless parabolic is breached and it will automatically close trades when RSI 9 moves in opposite direction

 

Or through A better exit strategy you may suggest

 

Thanks

[ATSATS]

parabolic sar is the most excellent indicator for forex trading. if you want to use this then i think .05 and maximum .2 is the best to trade. but all time it could not be proper signal. but it will help you to analyse the sell/buy decision.

[ATSATS]

i have noticed many indicator and also noticed that these are made based on parabolic sar. actually parabolic sar give 50-50 chnace to get profit by trading with this indicator. but actually analysis is the best to trade. in my first time i always depend on it but now its disappointed me.

[willy]

i do not know why i hate this indicator may be because it wants strong trend and delay of signals and when give you signal the price make reversal and lose your pips

[surya77]

Parabolic SAR tips.

 

1.Point Parabolic SAR as a stop loss level.

2.Running price (price goes) back touch WMA 14 in loss position.

3.Level high / low of the candlestick upon the cross WMA formed.