Parabolic SAR Indicator Forex Swing Trading Strategy

October 10, 2016

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Parabolic SAR Indicator Forex Swing Trading Strategy

This is a swing strategy that uses a parabolic SAR indicator. This method is easy to use and it can also help you identify the trend. Use this method on a 4-hour or daily timeframe.

You will know if it is an uptrend when the parabolic SAR will form below the candlesticks and it is a downtrend when the parabolic SAR will form above the candlesticks. The Parabolic SAR Indicator Is also good at making it clear to you the market swings.

HOW TO TRADE THE PARABOLIC SAR:

Buy Entry:

The parabolic SAR dot must form below the candlesticks.
Place a buy stop order above the high of the candlestick where the parabolic SAR indicator is formed.
Place stop loss 5-10 pips below the low of that candlestick.
Exit your trade when the parabolic SAR indicator gives a sell signal. (when a dot forms above a candlestick)

Sell Entry:

The parabolic SAR dot must form above the above the candlestick.
Place your sell stop order 3-5 pips below the low of that candlestick.
Place your stop loss 5-10 pips above the high of that candlestick.
Exit your trade when the parabolic SAR indicator gives a buy signal. (when a dot forms below a candlestick)

Disadvantages:

It gives late signals, it means, the price had already made a big move before it gives the signal.
The stop loss can be not in the ideal location because the indicator responds late.
Not good in a ranging or sideway market.