Parabolic SAR System with Futures

[suri112000]

Parabolic SAR is a simple indicator and is available with many trading softwares. The system is explained in three to four phases. They are :-

1. Entry Rules
2. Exit Rules
3. Re-entry Rules
4. Money Management and Instruments to be traded.

Until, one gets clarify on all the four without any ambiguity donot jump to implement it.

Firstly,

Rules for entry.

TIMEFRAME : 1 HOUR CHARTS (It is very tough to trade, below 1 hour charts under this system)

1. When Parabolic SAR is formed below price, look for long entries. and viceversa for shorts.
2. Once first condition is met, for longs, look for a bar which has lower high than previous bar. Let it be called trigger bar. Entry will be on break of high of this bar.
3. If the trade is not triggered on the very next bar, and this new bar makes a new low high, then treat this bar as trigger bar and cancel earlier orders.
4. Chase the price on new lower high bars, until the trade is triggered.
5. Once in trade, put the initial Stop Loss at the Parabolic SAR formed below the entry bar.

Some charts with examples for clarity.

 

[amsin21]

Using PSAR alone as a strategy can be dangerous. PSAR works only in trending markets, and flips/whipsaws are frequent in ranging or sideways markets. You should consider trend confirmation from other indicators like ADX, OBV etc.

 

[suri112000]

Using PSAR alone as a strategy can be dangerous. PSAR works only in trending markets, and flips/whipsaws are frequent in ranging or sideways markets. You should consider trend confirmation from other indicators like ADX, OBV etc.

Let me complete posting complete system before replying your post. Let me know if you have even a single loosing month using this system.

 

[amsin21]

Let me complete posting complete system before replying your post. Let me know if you have even a single loosing month using this system.

Yes, using PSAR alone has given headaches in the past. I too use PSAR even now, but always wait for the other confirmations to align.

All the best.

 

[Trader987]

Post the complete system please....

 

[suri112000]

Once we entered the trade, there must obviously be an exit too. Exit rules are tricky escpecially when the price gaps up against PSAR and when price hits PSAR in the first hour of trading time. Once we enter the trade, it is common that we will have to adjust our stop as per the newly formed PSAR. Brace up guys here are the exit rules. Donot make any mistake in understanding them because if you donot it may prove costly.

Exit rules

1. Exit the trade, when PSAR hits. (Not applicable during first hour of trading).
2. When price hits PSAR during the first hour of trading, please DO NOT exit but wait until completion of the bar. If on completion of the first hour bar, PSAR changes direction, exit the trade on completion of first hour bar.
3. When the price gaps up against PSAR wait until the completion of first one hour bar and exit at the close of first one hour bar.
4. Exit the trade, if PSAR does not get hit, but the PSAR changes its direction.

So, there are only four situations when you should exit the trade.

Now, open for discussion or doubts clarification.

Here is the exit fulfilling the rule number one.

Here is the exit fulfilling the rule number two and three.

Here is the exit fulfilling the rule number four.

 

[suri112000]

Once we exit the trade, we should re-enter, isnot it?

Re-entry Rules

1. For buys, reenter on lower high bar as trigger. (Donot re enter in the first hour bar of the day even it fulfills lower high condition).

2. All other conditions are same as intial entry.


In the next post, I will discuss about money management and selection of futures, how many lots to be played, how many trades at a time etc.

Please be patient brothers.

 

[suri112000]

1 from each group

Banks
Axisbank
HDFC Bank
ICICI Bank
SBIN
Indusind bank
Kotak Bank

Pharma

Sunpharms
Lupin
Cipla

Tech

Infy
HCLTech
Wipro
TechM

Auto

TataMotors
M&M
Maruti


Index

Nifty Futures

Please come to consensus before we test the strategy forward for a month.

There will be a total of 5 futures in the list including Nifty futures which all we will forward trading.

My choice is :-

AxisBank - 1 lot (Lot size : 500, Margin : 47,000)
HCLTech - 1 lot (Lot size : 125, Margin : 41,000)
Tata Motors - 1 lot (Lot size : 500, Margin : 48,000)
SunPharma - 1 lot (Lot size : 250, Margin : 37,000)
Nifty - 3 lots (Lot size : 25 (Three lots : 75), Margin : 23,000x 3 = 69000)

Capital Outlay in the trading Account : Rs.6,00,000/-

 

[mechtrader]

Gr8 going Mr.Suri with a good approach.:thumb::thumb:
Subscribed.

Thanks,
MT

 

[akumar.27raj]

Thanks for this thread sure sir I will early follow this strategy
Thanks sir