Hello,
OK: first and foremost Parabolic SAR is a trend following indicator. If ADX/ADXR is greater than 20 to 25 then the instrument has directional movement and COULD be deemed as trending. Therefore your assumption is pretty much correct i.e. you enter when you get the first Parabolic SAR signal (dot) AND ADX/ADXR is greater than 20 to 25 AND ABOVE +DI and -DI. As you SHOULD already know Wilder says that you can use ADX as a filter i.e. if +DI has crossed above -DI then only take long trades and if +DI has crossed below -DI then only take short trades. Wilder ALSO says that the moment that ADX drops below +DI AND -DI then it's time to stop trading a trend following system. What I conclude from this is the following: EVEN IF you're in a 'valid' Parabolic Time/Price System Trade the time to exit is when ADX/ADXR drops below 20 and / or ADX drops below +DI AND -DI EVEN IF your Parabolic Time/Price System trade APPEARS to have 'more to go' and this I think is where a lot of people make a mistake (myself included especially last year) i.e. even although with the Parabolic Time/Price System you're supposed to 'stay in' until you get a signal to stop and reverse there is little point in doing this if ADX/ADXR drops below 20 and / or ADX drops below BOTH +DI and -DI because the moment the instrument starts trading in a range i.e. ADX/ADXR is below 20 and / or ADX has dropped below +DI AND -DI then the trade is not going to go anywhere and, what's more, there is an even greater likelihood that the previous trend is going to reverse and this is where a lot of money is lost with the Parabolic Time/Price System. Also: I would not use a crossing of +DI and -DI to exit a Parabolic Time/Price System trade IF I WAS ALREADY IN a trade. The reason I say this is because you're now talking about the DMI System and if you read nicely Wilder actually says to NOT stop and reverse EVEN IF the indexes stay contrary to your position (the 'extreme point rule'). In other words: I'd be more likely to exit a Parabolic Time/Price System trade if the price penetrates the 'extreme point' than I would be to exit a Parabolic Time/Price System trade because +DI and -DI have crossed again.
Look: every day more and more I'm finding that a certain amount of 'judgement' IS in fact required as to when to TP (with ALL of these systems). As I've mentioned before: 'the profits are in the exits'. I mean think about it: if your margin cost for a position is $100 and the position is now showing a $500 profit then that's 'extreme' and the chances are that it's NOT going to get any better!!! TP and move on to another (good) trade. I've found that since I been trading these systems I'm finding is 'easier' to TP. Now as strange as that may sound I've figured this: BECAUSE you have LOADS of entry signals you're not quite as inclined to 'hold on' to a trade 'until death' because you know that you have LOADS of other entries / trades available to you. While this is NOT following the system 'to the letter' I know (at least not when it comes to taking profit) it IS nevertheless profitable (whether or not MORE so if you followed each trade through I know not. Just always bear in mind that sometimes there IS a loss on a stop and reverse). As I have ALSO said before (seems like our 'nobody reads the entire thread' 'phenomenon' is 'creeping back in' the longer the thread gets AGAIN): you WILL find conflicting information in 'the book' e.g. the Parabolic Time/Price System is an 'always in' system i.e. 'stay in no matter what until you get a signal to stop and reverse' AND it's a trend following system BUT in the section on ADX you're told to STOP trading a trend following system when ADX drops below BOTH +DI and -DI. See what I mean??? A little bit of thought IS (unfortuantely) required!!!
As far as additional filters are concerned MACD 'appears' to be 'favourite' with this system (if you want to know more about filters that have been tried with this system then please refer to this thread:
Parabolic SAR - that's all!).
Please note: to anyone following this thread and is not working from / with 'the book': this is NOT going to become a discussion on Parabolic SAR. Please refer to the thread noted above. To be honest: I doubt very much that there is ANYTHING ELSE that could be discussed about Parabolic SAR or the Parabolic Time/Price System that has NOT already been discussed in the thread noted above. If you come up with 'something new' then feel free to post but DO NOT post UNTIL you've read the thread noted above because I KNOW what's in that thread and if you post something on this thread asking a question that I KNOW has already been asked AND ANSWERED on the thread noted above I WILL track your IP address and hunt you down and subject you to the most EXCRUTIATING PAIN JUST before I kill you!!!
(And NO: I'm NOT in a good mood today!!! I'm tired and AUD/NZD is feeding me 'bucket loads' of 'patience and restraint')!!!
$#%@!!!!!!!!!!!!!!!!!
Linear Mode
