Saturday, October 13, 2018

How to Use Parabolic SAR Indicators for Scalping Combination Setting Strategies

Parabolic SAR Strategy for Forex Trading Scalping and Combination Settings with other Indicators
Looking for a strategy for setting and combining parabolic indicators for scalping trading or long-term trading. You have visited the right page. How to read the parabolic sar indicator accurately.

In 1978 In his book "New Concepts in Technical Trading", J Welles Wilder introduced Parabolic SAR (usually abbreviated as just using SAR).

Together with RSI as one of the main indicators in trading. The SAR itself is short for Stop And Reverse which is more or less interpreted as an indicator of the Stop Loss point in trading.

In its development in the future, Parabolic SAR is one of the effective indicators in determining the trendy market conditions (trending market) along with facilities called Trailing Distance which are widely provided on various forex trading platforms.

Tutorial on How to Use Parabolic SAR Indicators

Parabolic SAR uses exactly the same as the Moving Average or other trend indicators. It's just that Wilder created this indicator to eliminate the shortage of MA, which is the nature of the curve that often results in miss interpretations.

With SAR in the form of points, up or down trends become more certain and no longer cause misinterpretation.

On SAR, when the price is in an uptrend, the SAR point is below the price movement.

When the SAR point is above the candlestick bar indicates that the price is in a downtrend.When the SAR point is below the candlestick bar indicates that the price is in an uptrend.the advantage of Parabolic SAR is its appearance in the form of a point so that it makes it easier for someone to read the state of the market. Traders simply see where the SAR point is below or above the bar to find out the current trend.Moreover, the farther the distance between the SAR point with the highest or lowest price of the bar, it indicates the stronger the up / down trend that occurs.After you know how to read Parabolic SAR, I think it is now easier to use it to buy or sell.It should be conveyed here, that it is strongly recommended to use SAR along with other indicators (I personally suggest adding it to an oscillator indicator such as Stochastic or RSI).This is due to the same as with other indicator trends, often this type of indicator is slow in accommodating price changes. Likewise with SAR. That is why it is advisable to add an oscillator that tends to be faster so that the two can balance each other

1. In the area that I circle is a confirmation point for both indicators to show the same direction. Stochastic gives a signal that the price is in an uptrend and the SAR point is also below which means that the price is moving up. Buy actions can be carried out under these circumstances.2. The second circle on the right is the confirmation point both indicators show the same direction. Stochastic gives a signal that the price is in a downtrend and the SAR point is also above which means that the price is moving down. Sell ​​action can be done in this situation.Simple isn't it? You can combine SAR with other indicators such as with MACD or with RSI depending on which indicators are best and match your daily trading style.Please remember here that every trader has their own favorite indicators.How to Use Parabolic SAR for Forex Stop Loss Trading Strategies
Well, we are included in the discussion about the use of SAR that is quite unique here. Even only SAR that has the ability like this is the use of SAR as a determinant of the Stop Loss point.Remember that SAR is short for Stop and Reverse which means more or less stop and then reverse direction.SAR points not only can be used as a determinant of up trend or down trend.Likewise the distance between the SAR point with the lowest or highest price of the existing bar can not only be used as a strong determinant of the weak trend that occurs (see picture above)More than that, if you are a trader with Stop Loss (it is highly recommended to trade using Stop), then the good news is that SAR points can be used because of your Stop Loss point.Some beginner traders mostly hate this one facility, Stop Loss.The reason is because if they install Stop Loss, often their position touches the Stop point which means they are a loss.Finally, they prefer to let prices interact casually while waiting for "night to end" and "morning to shine" aka the price reverses direction so that their negative position changes positively.The bad news for those of you who trade in this way is that there will come a time when maybe the night will never end and the morning will not come aka the margin call occurs.This is not just one or two times I see, but most of those who trade without stop loss always end up in the same gap.Remember bro ... Stop Loss is not to make you lose. He is there to limit your losses and distance yourself from a nightmare called margin call.Of course you do not want to trade not only one or two times and then break down just because of one wrong position. There is no one trader who is never wrong in determining a position.Even the master trader often falls due to a position error. It doesn't matter how many times you are wrong in determining the important position is that in aggregate you still profit!Now let's go back to the discussion of our SAR and Stop Loss. It's gone far too far ...Pay attention to the picture below:Now the picture above shows that when the SAR point moves from above to the bottom, then it is an indication that the downtrend has been completed and resumed with an uptrend.Under these conditions, it's time to take action. But as we understand together, however, we cannot ensure 100% that prices will continue to rise.Thus we need to use the Stop Loss (SL) limit in opening a position. The lowest SAR point we can use as a benchmark.You can also use this SAR facility by combining it with the trailing distance facility on the platform. Unlike Stop Loss which is static and cannot shift automatically, trailing is a Stop Loss that is dynamic or can move following price movements.

Weaknesses of Parabolic SAR Indicators
We have studied various aspects of this indicator. SAR is very effective to be used in various trending market conditions. But there are times when SAR becomes ineffective and cannot be used as a main indicator.

When is that?Exactly when the market is moving in a sideways situation or there is no trend in price movements. Sideways conditions are indicated by the close distance between the SAR points and the highest / lowest price available.The worse sideways conditions are indicated by the shifting of the SAR points above and below the bar so that it is difficult for us to open a position. That's why from the beginning I suggested using SAR along with other indicators as a cover for SAR shortages.Pay attention to the following picture:

This sideways situation usually occurs when the market is closed or market participants are waiting for important news that will soon appear.Opening positions is recommended not to be done during sideways. Unless you are willing to wait long enough and mentally strong enough to see the floating position for so long


Post Top Ad

Your Ad Spot