Last: 
Being able to analyze the state of market trends is a very useful skill in forex trading. As a trader, you will benefit from the trend by using precise indicators, one of which is the parabolic SAR indicator. Before knowing the parabolic SAR indicator, you can consult with GIC by filling out the Trader Assessment so that you better understand how this indicator works or other trading terms that you don't understand.
Actually, what is the parabolic SAR indicator?
Parabolic SAR is an indicator made from the dots (dots) of price at the top or bottom. This technical indicator made by J Welles Wilder has a SAR point that will appear at the bottom of the price, when it rises and will be at the top of the price, when it falls. Parabolic SAR is used to see when a trend is ending and to know when the price of an asset will reverse. This indicator is commonly used when the market is in a trending state. The word SAR stands for stop and reverse.
This term is also the basic function of the parabolic SAR indicator as a stop or stop marker and a reversal or reversal of the trend direction. You don't need to create this indicator manually, as parabolic SAR is usually built-in on online trading platforms, including MetaTrader 4 and MetaTrader 5. In its appearance in MetaTrader, this indicator appears as dots on the top or bottom of a candlestick. The way to use this indicator is that if the dots of the indicator are below the chart, then this indicates a buy signal.
Conversely, if the dots are above the chart, then this indicates a sell signal. Forex parabolic SAR itself is effective if used in a firm, clear, and definite uptrend and downtrend, so that it can provide clearer and more accurate signals. Meanwhile, in a sideways trend, this indicator is less useful. Sideways is a market condition when it is flat, where there is doubt in the market.
Bullish (rising prices) and bearish (falling prices) are both strong causing sideways conditions. This is because the parabolic SAR is an indicator that measures trends, so it is more suitable for use in upward and downward trends. With this parabolic SAR indicator, you will be facilitated in understanding the trends that are happening. If you have understood the big picture of this indicator itself, you can teach your friend while inviting your friend to trade with GIC and earn additional income apart from trading itself.
Also read :
This term is also the basic function of the parabolic SAR indicator as a stop or stop marker and a reversal or reversal of the trend direction. You don't need to create this indicator manually, as parabolic SAR is usually built-in on online trading platforms, including MetaTrader 4 and MetaTrader 5. In its appearance in MetaTrader, this indicator appears as dots on the top or bottom of a candlestick. The way to use this indicator is that if the dots of the indicator are below the chart, then this indicates a buy signal.
Conversely, if the dots are above the chart, then this indicates a sell signal. Forex parabolic SAR itself is effective if used in a firm, clear, and definite uptrend and downtrend, so that it can provide clearer and more accurate signals. Meanwhile, in a sideways trend, this indicator is less useful. Sideways is a market condition when it is flat, where there is doubt in the market.
Bullish (rising prices) and bearish (falling prices) are both strong causing sideways conditions. This is because the parabolic SAR is an indicator that measures trends, so it is more suitable for use in upward and downward trends. With this parabolic SAR indicator, you will be facilitated in understanding the trends that are happening. If you have understood the big picture of this indicator itself, you can teach your friend while inviting your friend to trade with GIC and earn additional income apart from trading itself.
Also read :
|
3 Best Forex Indicators Often Used by Beginner Traders |
Parabolic SAR formula for forex trading
Simply put, the parabolic SAR indicator makes use of the high and low levels in the market to determine the trend in the market, and then see if new dots have formed. This indicator will show the stop and reverse levels on the chart. Well, this level is obtained based on the results of the calculation from the following parabolic SAR formula.
- Latest SAR Point = Current SAR + AF x (Current EP - Current SAR)
The parabolic SAR formula is defined as follows:
-
AF (acceleration factor) is a variable value that increases the set increment for each period of the most recent high for a long position or the latest low for a sell position reached in a trade. Wilder proposed a value of 0.02 for the initial AF value, which would then gradually increase by 0.02 until it reached a maximum value of 0.20.EP (extreme point) is the highest or lowest price that during the duration of the current trend (high for uptrend and low for downtrend).
The curve of this indicator aims to provide guidance for the direction of the current market trend. Wilder argues that a trending market will have a high probability of staying within the confines of the curve on the chart. Therefore, if the price fails to do this and instead breaks through the curve, the trend may not be able to hold up. That is, at that point in time you should close the position and reverse the placement of your trading position.
Simple right? You can also teach this formula to others and get additional funds to trade by joining the Affiliate IB program and teaching the knowledge you have so that you get additional income from GIC.
Then, how to set parabolic SAR accurately?
For beginner traders, setting up the PSAR indicator may seem complicated, but don't worry, you can follow the following method.1. Open your MetaTrader platform
You don't need to create this indicator manually, as parabolic SAR is usually built-in on online trading platforms, including MetaTrader 4 and MetaTrader 5.2. Parabolic indicator SAR setting
[caption id="attachment_4019" align="aligncenter" width="351"]
Navigator Menu[/caption] First go to the 'Charts/Charts Menu' on your trading platform, then select the 'Trend' subfolder in the 'Indicators' list within the 'Navigator' platform and double-click on the 'Parabolic SAR'.
3. SAR parabolic indicator settings
[caption id="attachment_4022" align="aligncenter" width="1024"]
Setting the Parabolic SAR Indicator[/caption] After the display as above, you will see two columns, namely 'Step' and 'Maximum'. 'Step' is a measure of the acceleration factor, the standard value set is 0.02. The acceleration factor starts with this value and then will gradually increase by 0.02 until it reaches a maximum value of 0.20.
The smaller the value of the acceleration factor, the further the AF will move against the price. Conversely, the higher the acceleration factor, the closer the AF will move towards the price. Therefore, the chances of a price reversal will be greater, the higher your acceleration factor is. Forex traders are advised not to have an AF too high, because if it is too high you will experience price reversals too often, and then cannot accurately determine the trend.
However, this largely depends on your trading goals. To check how far you are in setting this indicator or in trading, you can do a Preliminary Test from GIC so that you know the skills you have.
How to determine trend direction with parabolic SAR?
[caption id="attachment_4023" align="aligncenter" width="957"]
Parabolic SAR Display[/caption] As already explained, the PSAR indicator appears on the top or bottom of the candlestick. The dots that appear at the bottom of the candlestick indicate that the market trend is in a bullish state. Meanwhile, if SAR dots appear at the top of the candlestick, it means that the market trend is in a bearish state. Then, how to enter the market with parabolic SAR? There are several parameters that traders should pay attention to before entering into a trading position using parabolic SAR.
According to J Welles Wilder, before determining a position, first pay attention to the trend in the large timeframe. For example, if you want to trade the EUR/USD pair on the H1 timeframe, then first open the D1 timeframe. If the D1 timeframe shows that the position of the SAR point is below the price (meaning that EUR/USD is in an uptrend), then in trading on H1, it is only allowed to open a long buy position or entry when the SAR point is below the candlestick. This also applies in short positions sell. Traders enter short positions sell if the trend on the larger timeframe is also downtrending.
In addition, J Welles Wilder also gave other tips in the entry position. To reduce misposition, wait until three SAR points appear first. In addition to entry, the PSAR indicator can be used as an exit or stop position. Its use is also very simple, if there is a candlestick passing the SAR point that is opposite to the trend, then the position that is currently open must be closed. If used as a stop loss level when opening a position, then place it at the last SAR point after the appearance of three points.
According to J Welles Wilder, before determining a position, first pay attention to the trend in the large timeframe. For example, if you want to trade the EUR/USD pair on the H1 timeframe, then first open the D1 timeframe. If the D1 timeframe shows that the position of the SAR point is below the price (meaning that EUR/USD is in an uptrend), then in trading on H1, it is only allowed to open a long buy position or entry when the SAR point is below the candlestick. This also applies in short positions sell. Traders enter short positions sell if the trend on the larger timeframe is also downtrending.
In addition, J Welles Wilder also gave other tips in the entry position. To reduce misposition, wait until three SAR points appear first. In addition to entry, the PSAR indicator can be used as an exit or stop position. Its use is also very simple, if there is a candlestick passing the SAR point that is opposite to the trend, then the position that is currently open must be closed. If used as a stop loss level when opening a position, then place it at the last SAR point after the appearance of three points.
Still having trouble understanding the basic techniques of forex trading?
Don't worry, if you find it difficult to understand the learning material or techniques in trading, it is not because the forex market cannot be understood. You just need more experience to trade and learn in the advanced classes from the Journal. Then you can join GIC by downloading the application of GIC Mobile on the Play Store or App Store. If you are satisfied with the service from GIC, it doesn't hurt to include it in our internal survey so that we can continue to improve the quality
