You know, the Parabolic SAR is definitely a tool I rely on in my trading toolkit, but I wouldn’t use it all by itself. It’s all about having a well-rounded approach, folks. The Parabolic SAR, which stands for Stop and Reverse, helps me assess the short-term momentum of my assets effectively. For those looking to explore advanced trading strategies with PocketOption broker platform, it's crucial to combine different tools and insights for a balanced strategy.
If I rely solely on this indicator, I might end up feeling anxious about my trades. It really shines in stable trending markets. I usually team it up with other oscillators and indicators to make sure I have all the info I need. One of my favorite strategies is combining the SAR with ADX filtering right in the Pocket Option terminal.
But be careful in those sideways markets, my friends! The Parabolic SAR can give me wild signals back and forth. Wilder was spot on by suggesting that I include the Average Directional Index (ADX) momentum indicator with the Parabolic SAR to get a clear sense of trend strength. I also keep an eye out for candlestick patterns and moving averages. If the price dips below a key moving average, that’s my signal to consider selling, reinforcing what the SAR indicates.
How do I set up the Parabolic SAR in the Pocket Option terminal?
First things first, I need to add indicators to my terminal and select a volatile asset for quick action. I want those currency pairs that show a full candlestick chart.
Here’s how I set things up:
- I go with LTCBTC – it’s a solid asset;
- Set the timeframe to 15 seconds and choose the candlestick chart;
- Add the ADX indicator along with the Parabolic SAR;
- Set the Parabolic SAR period to 0.01.
The ADX indicator provides insights on trend strength and volatility, broken down into the following indices:
- Positive;
- Negative;
- Non-directional.
I keep an eye on the red and green lines while the yellow line shows growth against a backdrop of decline.
How do I read signals?
The Parabolic SAR appears on my asset chart as a series of dots, either above or below the price based on momentum. When the trend is up, a dot sits below the price, and when it’s down, a dot sits above. The real action happens when those dots switch places on the chart.
Combining the Parabolic SAR with the ADX indicator can really highlight those reversals. Many traders, including myself, place trailing stop-loss orders at the SAR value. If the price breaks through this level, it signals that a reversal might be coming, alerting me to consider a shift. During a strong trend, the Parabolic SAR usually stays far enough from the price to avoid getting stopped out during temporary dips, letting me ride those longer trends for some good profits.
For an uptrend signal, I look for a break in the SAR pattern: the dots will drop while the ADX goes up, and the green line will cross above the red.
Conclusion
The Parabolic SAR is great for identifying support and resistance levels. It’s designed to give me a visual indication of where to set my trading position. The indicator becomes sensitive to price changes, so when the price starts to move, it adjusts accordingly. Unlike some other indicators, this one focuses more on stops than trading reversals. While some traders might look to it for both entries and exits, I mainly use it to plan my stop-loss strategy. If you're looking for a clear visual tool for managing your stops, the Parabolic SAR strategy is a solid first step.
