Parabolic SAR and MACD Forex Swing Trading Strategy

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Parabolic SAR and MACD Forex Swing Trading Strategy

This swing trading strategy uses two indicators, and these are the parabolic SAR and the MACD. This strategy is comprehensive and great for new traders. This is applicable to any currency pairs.

Trading Rules:

  1. MACD line must cross over.
  2. Parabolic SAR must switch position on the chart.
  3. Place a buy stop or sell stop order above the high or low of the candlestick at the point where both the MACD and parabolic SAR confirm trade entry signal.
  4. Place stop loss 5- 30 pips below the low or above the high of that candlestick, but this depends on the timeframe. Large stop loss may be a bit larger.
  5. To exit the position or take profit, the opposite trade entry signal must appear.

ADVANTAGES:

  • Very simple and easy to spot trade setups.
  • Can gain huge profit.

DISADVANTAGES:

  • Frequent stop out can happen during ranging or consolidation market.
  • The MACD & Parabolic SAR are both lagging indicators, it means that the market has already made a big move before the signal appears.
  • If you place your stop losses quite close, you may get stopped out frequently.

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