[dpaterso]

Good Morning Everyone!

byculla:

Thanks for all the advice, input, and encouragement - really much appreciated.

I must state once again that I stopped trading forex paris about two or so months ago - there was just not enough 'action' (for want of a better adjective) for me AND the fact that because of all the money that I had lost since starting out about six or seven months ago - I had started thinking that there was no way to make money out of trading forex pairs and started looking for alternatives to trade - and I found those wonderful things called Indices - and that is what I now (mainly) trade i.e. Dow, DAX, S&P, Nasdaq, etc. etc. (you get the picture). Now and then I would log into the trading platforms of the brokers where I could ONLY trade forex pairs and sort of just (almost at random) opened a position on a pair (loosely based on Parabolic SAR) and then forgot about it. I had never really had any 'real' money in these accounts and both of them were pretty much wiped out at one point. One day - for no apparent reason - I just decided to sort of 'go for broke' on these accounts and started opening positions on each and every single pair where there was a valid Parabolic SAR entry signal (up to the maximum that my margin would allow at the time) and - 'hey presto' - the balance of these accounts (one of them mainly because there were more tradeable pairs) - started to climb. I then decided to take a more serious look at forex again. I had already bought and read J. Welles Wilder's Book 'New Concepts In Technical Trading Systems' a while before that (I just thought that with it being a sort of 'classic' it was one of those books that you should own) but never really seriously gave it anything more than a cursory read. After having another serious look at certain chapters in the book (mainly Parabolic SAR) I decided to give forex another 'bash' as it were BUT with the proviso that whatever 'system' or indicator I used for forex trading it should not detract from my other trading activities. Parabolic SAR just made 'logical' sense to me and after looking at historical charts it just appeared that the simplest of all of the indicators (by 'simplest' I mean the 'simplest' to implement and use - the calculations of Parabolic SAR are quite complex) always turned a profit IN THE LONG RUN (on the Daily timeframes and longer).

Why am I telling you this long story?

I know that there are many ways to improve the profitability of trades based on Parabolic SAR i.e. checking for trends, drawing support and resistance lines, combining it with other indicators, drawing pivot levels, etc. etc. etc. While the use of all of these additional concepts or methods most certainly will maximise your profits that is not what I am looking to do in trading forex pairs. What I am looking to do is to trade forex pairs with 'very low maintenance' and not get caught up in things that confuse me or will take up too much of my time and most importantly not have me rely on my 'gut feel'. Parabolic SAR applied or used EXACTLY as it was designed by J. Welles Wilder appears to be what I was looking for. It tells me when to open a position, where to set my stop loss, when to take profit, and when to stop and reverse and takes me between half an hour and an hour each day to open new positions, stop and reverse on others, and move stop losses - that's it. Low maintenance! And best of all - on the two or three occasions that I have used it AND FOLLOWED IT TO THE LETTER it has turned some nice profits especially when compared to the huge losses that I made in the beginning.

Now - after that HUGE preamble - let me answer your questions:

Are you keeping a record of your trades?

No - or rather - not a record of the outcome of a trade and the reason for that outcome. That would not be 'pure' Parabolic SAR and again - more maintenance. The only 'financial' record I have started keeping is my capital balance at the beginning of the week / month and my capital balance at the end of the week / month. That's all that matters to me with this 'experiment' i.e. as long as the ending balance is greater than the beginning balance - I'm a 'happy camper'.

What is your win / loss ratio.?

No idea. See above answer.

How many concecutive winners / loosers ?

Again - no idea. See above answer. On the other hand I can tell you that so far on the occasions when I have used this indicator I have always had 99% winners / 1% losers (so far).

Do you use money management ?

What's that? (Only kidding). My stop losses (again) are based solely on 'pure' Parabolic SAR.

What % of your capital do you risk per trade ?

At my 'main' 'forex only' broker I am not limiting trades based on a % of my capital. I have (now) made sure that I have more than enough capital to be able to open a single position with a lot size of 100000 (the cost of which can vary between $300 and $1000 depending on the pair) on as many as forty four pairs at any one time should there be a valid Parabolic SAR entry signal with the proviso that at no point my free margin percentage drops below 30% (not allowed by this broker). If this happens - I close out the most highly profitable position(s) to free up margin (back up to 30%) and allow room for all the other open positions to mature.

What % of your capital do you risk per trade ?

See above answer. Based on that answer I could very well at some point have up to 70% of my capital risked overall. I'm not sure what the % risk of capital per trade would be as with this broker is varies according to the margin cost of the pair.

What is the expectancy of the system ?

I do firmly believe that if Parabolic SAR is used or applied EXACTLY as it was designed or formulated by J. Welles Wilder it will IN THE LONG TERM turn huge profits which I am unable at this stage to quantify. This view is based on my checking of historical data with Parabolic SAR applied. There WILL be huge drawdowns but in the end the profit appears to far exceed the losses OVER A LONG PERIOD OF TIME. Once again - I believe the 'profitable rules' to follow when using this indicator are as follows:

Open single positions on as many pairs (instruments) as you have available to you (the more the 'merrier') to trade
Ensure that you have LOADS of margin to be able to absorb the inevitable drawdowns
Follow the theory of Parabolic SAR TO THE ABSOLUTE LETTER

The reason for trading as many pairs (instruments) at a time is because, let's face it, in a ranging market this indicator will kill you BUT the chances of having anything up to fourty four pairs stuck in a range for any extended period of time (I would think) are pretty slim AND then there is of course the inevitability that even pairs trading in a range WILL eventually break out and start ranging (that's why loads of margin are important).

Have you tried defining the trend of the time frame you trade and then trading only with the trend and what was the result on profitability ?
When you encounter losses have you been able to identify the reasons why ?
Try using range bars and run SARS against this. Properly defined it will even out market noise and give you much tighter stop losses and SARS.

Again - see above answers.

" I have a feeling that there are some MAJOR reversals coming soon " can your preconceived feeling. Let the market do whatever it does you should just react. Your feelings will get you broke.

You are certainly not wrong there I can tell you. That is one of the benefits of using this indicator i.e. although I have a 'feeling' that some of those AUD and JPY movements last week are going to reverse soon (this 'feeling' based on the fact that I can see that Parabolic SAR is starting to accelerate now on those AUD and JPY related pairs) I will not enter any position until the indicator gives me a signal. Too true - a few months ago - I would just have opened a position because I 'felt' that a reversal was coming. These 'feelings' that I have from time to time have cost me many thousands of USD and made my brokers very happy!!! Up until two months ago or so brokers would kill to have a client with 'feelings' like me!!!

While my answers to you may appear 'flippant' I can assure you that they are not meant to be. The idea of this thread or 'experiment' is to prove the use of 'pure' Parabolic SAR. I'm not interested in making the 'trade of the day' (like I may be inclined to attempt with the Indices which normally results in disaster) - I'm just interested in having my 'forex only' accounts slowly 'ticking over' in the background making profits and, if this 'experiment' works - then there would be no reason for me not to trade my beloved Indices with Parabolic SAR as well (which I have not been doing by the way for the simple reason that I do not trust the representation or implementation of Parabolic SAR at the broker that I use to trade the Indices i.e. their representation of Parabolic SAR gives far too many false signals which ironically is what put me off this indicator when I first started out trading six or seven months ago. It turns out now, in my opinion, that there is definitely something wrong with the (default) way that their charting system calculates or represents Parabolic SAR and I have now managed to alter that representation to 'match' the representation of Parabolic SAR at my 'forex only' brokers. I need to monitor my changes before I start using it with confidence though - too much money on the table over there).

Once again - I need to make this point:

I believe that although 'pure' Parabolic SAR will not maximise profits in the short term it will certainly produce profits over the long term AS LONG AS YOU STICK TO IT AND WITH IT. If you're looking to 'master the trade' then this thread is probably not for you. If you've tried everything else and it has not worked and the novelty of being a trader has worn off and you are now just interested in making a good living - then this thread - and Parabolic SAR - is (could be) for you.

And that my friends - is my 'trillion dollars worth' on input!!!

Comments always greatly appreciated and welcome!!!

And - BY THE WAY - what do I have to do to get a rating??? I've been trying (posting, typing, slogging, drivel) for seven months now!!!

Only kidding - BUT - if you decide to risk your REAL money and follow Parabolic SAR - and you do indeed MAKE money - GIVE THIS THREAD A STAR FOR CRYING OUT LOUD!!! IT'S NOT FAIR YOU KNOW!!!

On the other hand - like I have previously requested - if you have used Parabolic SAR and LOST money - then please post the REASONS and the CIRCUMSTANCES for those losses. For example: losing money because you ran out of margin does NOT disprove Parabolic SAR; losing money because you did not STICK TO AND WITH Parabolic SAR as it was designed does NOT disprove Parabolic SAR. See what I'm trying to get at?

Now can I please get back to the Dow (it's going my way again today - yippee. Isn't the Fed great)???

Good trading!!!

Regards,

Dale.