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Posted: Fri 15:09, 08 Nov 2013 Post subject: As it is a trend-following method |
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Trading Forex With Parabolic Sar Indicator
The Parabolic SAR (Stop-And-Reverse) is a well-known technical indicator that can be founded in almost any trading platform nowadays,[url=http://www.anepf.fr]doudoune moncler pas cher[/url]. In this article we will describe various methods of using it for maximum profits,[url=http://www.thehygienerevolution.com/hollister.php]hollister france[/url].
The Parabolic SAR is a unique trading indicator. Its uniqueness lies in the fact that it is one of the few indicators that directly take into account the time factor. Most indicators focus their calculations on price and ignore time and volume,[url=http://www.batfriendtrust.it]hogan outlet[/url], the Parabolic SAR takes time into the equation,[url=http://www.mxitcms.com/hollister/]hollister milano[/url], attempting to reach more concrete signals. Another advantage of the Parabolic SAR is that it is highly objective,[url=http://www.plain-peek.de]barbour jacken[/url], with very slim margin for personal interpretation. Its signals are clear and easy to understand.
The main methods of incorporating the Parabolic SAR into your trading are the following:
Method #1: Simple Buy and Sell mechanism
The Parabolic can signal long and short trades. When its value is below price a long trade is signaled,[url=http://www.rtnagel.com/airjordan.php]air jordan pas cher[/url], and when its value is above - a short trade is issued. This is a standard trend-following system,[url=http://www.rtnagel.com/louboutin.php]louboutin pas cher[/url], yet it is also lagging and usually produce weak signals. Trader may try to adjust the settings to better fit the currency he or she trades,[url=http://www.dearilievi.it]moncler outlet[/url], to improve the performance.
As it is a trend-following method, it fails miserable at range-bound markets, and therefore it should be confirmed with a range filter (like Linear Regression Slope) to ensure that trend is strong. One may also try to confirm it with breakouts of ranges and pullbacks,[url=http://www.davidhabchy.com]barbour outlet[/url], to increase the win rate and maximize the performance.
Method #2: Trailing Stop Loss
This is the powerful method of using the Parabolic - as trailing stop loss. The entries that this indicator produces are generally weak, but the exits are very good and allow you to ride trends for a long time before reversing. This is why this indicator is very useful as a trailing stop mechanism. The value of the Parabolic is used as a trailing stop for a open trade,[url=http://www.anepf.fr]doudoune moncler[/url], to protect profits. It also accounts for the volatility of the currency,[url=http://www.arthilscher.de]hollister[/url], making it suitable for a vast range of currencies with different volatility and trading volume.
Many commercial trading systems incorporate the Parabolic in their trade exits as it is very reliable and self-adjusts to changing markets. It is a more profitable method than the simple buy sell method,[url=http://www.rtnagel.com/louboutin.php]www.rtnagel.com/louboutin.php[/url], in which the Parabolic performs poorly.
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