parabolic sar

#1
Pls. explain anybody about parabolic sar indicator. entry points with it, i am trading
crude oil , ng , copper, I always confused to the entry point with this indicator. software ( meta trader-4) .

Is it necessary any other indicator with it.
 
#2
Hi,

Normally psar is used for stop loss calculation. But still lot of traders are using this indicator for entry. Because it is one of best trend reversal indicator. I used this indicator during my initial stages of trading.

This has to be fine tuned for better result and you need another indicator for confirmation. The input values for psar are (0.018, 0.1). Same time i used RSI 14 period for the confirmation. The rule here is simple. Enter long when psar fresh dots starts below and confirm rsi is above 50. Short entry is just opposite. The exit point is so difficult here. Because you will be in loss if you wait till the next reversal. So exit should be on target based or over sold/over bought basis.

Do not take the above settings as it is, you do some paper trades and find the results. It was working nice for me.

All the best. Happy trading
 
#3
I believe parabolic sar is a trend following indicator. Use it with ema, snr n any oscillator ur familliar with. Better to use it on H1 and above coz u might get false signal if u use it on lower time frame
 

umeshmandal

Well-Known Member
#4
Parabolic SAR is one of my most favorite trading indicators. Though it shows signal in a little bit later but never shows wrong direction. I understand this indicator so easily and it makes my trading simple
Hi JG, Can you kindly elaborate your 'statement' : I understand this indicator so easily and it makes my trading simple
 
#5
Research on optimizing PARASAR

Its almost a week, I was doing a research on Parabolic Stop And Reverse (PARSAR) indicator; the objective of my research was to identify what parameter (step and maximum) will suit for Nifty and on what timeframe (likely M1, M5,M15,M30,H1 and D1).

Before going to the result of my research just an Intro about PARSAR.
Parabolic SAR was developed by J. Welles Wilder Jr. The indicator's name derives from the shape it takes on the chart. When SAR first gives a buy or sell signal, its slope is relatively flat. PARSAR take the shape of a parabola, at times rising at virtually a 90% angle.

PARSAR provide useful entry and exit points

Long when PARSAR below the price and Short when PARSAR is above the price. The PARSAR will move along the price when price and PARSAR meets its wise to exit your direction of trade.


Important Note:
Many people blindly jump into trade when PARSAR change the direction, which is completely a wrong idea. If you want to long from short the PARSAR dot should not form below red candle, means if the current candle is red and PARSAR dot is below the candle we need to wait for the next candle. If next candle is also red we need to wait still the PARSAR dot from under green candle, to get a very effective good profitable trade. On the other hand its same for short too, PARSAR should form above red candle then only confirmed short signal.



Optimizing PARSAR for NIFTY on different time frame:

By default PARSAR setting are step as 0.02 and Maximum as 0.2, I want to change this default setting to explore more profitable trade.

Now lets move to my analysis, i have changed my setting as below,

Aqua color dot PARSAR settings Step=0.1 and Maximum = 0.3


Blue color (my favorite color, since my 2year old son keep saying it as bu-ka-color)Step=0.03 and Maximum = 0.5

Yellow color: Default PARSAR setting: step=0.02 and Maximum as 0.2


Below is one minute(M1) chart of Nifty:

M1 hold good for scalp trading which give quick and small profit, to do this a trade need to be very discipline, assertive and aggressive.
As we see over this chart compared to Blue and yellow color, Aqua dots are very close and tight to price, in between it gave a wrong signal for the trader as I shown in red rectangle and those green rectangles are good profitable trade.

Result: on M1 – blue PARSAR setting is very effective



Below is 5 minutes chart:

5 minute was preferred by most of the traders, since its gives more profit compared to M1 and also gives very short term trend direction

Result : Aqua color PARSAR is effective, it gave many good early signal, but at the same time some places it trapped my trade, so here too I prefer Blue PARSAR.



Below is 15 minutes chart:

There is not much difference between compared to M5 as aqua react to price action very fast, some places it gave wrong signal

Result: Blue PARSAR setting is very effective when compared to Aqua and Yellow



Below is 30 minutes chart

Result: Bit confused, either we follow Aqua or Blue PARSAR, since Aqua is very close to price any fall or raise will exit the trade very safely



Below is Hourly chart

I prefer hourly trade since I am bit lazy crock I least bother about small swings

Result: Aqua is the best



Below is Daily chart

Result: based on Aqua and blue its not advisable to trade on daily charts. We get easily trapped if we carry our position for couple of days, so on daily chart Yellow setting is the best.



In simple



Thanks to this article : Mr.Umamaheshwar (niftyreport)
 

Similar threads