Parabolic SAR - that's all!

Trading Systems Free Forex Trading Systems
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[B]*** IMPORTANT NOTE ***[/B]

[B]When I started this thread I was pretty new at trading (which may be obvious from my very first post below). The reason I’m telling you this is because things did NOT work out as well as my first post (below) may lead you to believe. All I’m saying is: don’t take my first post (below) and think that you (I) have discovered the ‘holy grail’. Far from it.[/B]

[B]It’s amazing!!! Since I added the above comment I see that this thread has become ‘unfashionable’!!! Why??? Because all of a sudden the ‘quick road to riches myth’ has been dispelled YET AGAIN!!![/B]

[B]Trust me on this one: there is far more important information contained in this thread that relates to the psychology of trading and just what this business CAN do to you if you don’t ‘do it right’ than a ‘quick road to riches’ indicator!!![/B]

[B]*** END ***[/B]

Hi folks, I am just so excited I could ‘sh1t’!

I have made more money in the last two days than I have in six months of messing around (well almost but you’ll get the picture) - and here’s how:

Parabolic SAR + Daily / Weekly / Monthly Charts!

I just have to share my thoughts with all:

Why is it that we all feel the need to ‘mess’ with the indicators and try and find that ‘edge’ when there are already tried and tested and proven methods of making money!

Anyway - for those of you who don’t know - The ‘SAR’ part in ‘Parabolic SAR’ actually stands for ‘Stop and Reverse’ - and not ‘Support and Resistance’!

It was formulated by J. Welles Wilder a lifetime ago and his method of trading was basically ‘always in the market’. In other words - you go long or short the moment the first Parabolic SAR dot appears and exit and reverse your position when the next Parabolic SAR dot appears in the opposite direction.

This indicator was also designed to ‘aggresively’ lock in profits. In other words - once you have entered a position - your stop loss gets moved to the value of the current Parabolic SAR dot and you do this every day.

There are only two rules to follow:

Only work on Daily / Weekly / Monthly charts

AND

Do not mess with the positions i.e. force yourself to stay away from them and do not exit them when you ‘think’ you should - trust the indicator. This unfortuanately requires discipline and patience!

This is not something that I did not already know - I just did not have the patience to see the trades through with this indicator - and it has cost me dearly. Now I’m just interested in making money - not being the new ‘whiz trader’ on the block!

Basically - what I did two days ago - was open positions on each and every single currency pair that my one broker has on offer - as long as the first Parabolic SAR dot had just appeared on the daily chart. At this point I am showing a net profit of $2182 for a total layout (margin requirement) of about $1500 - and that is after two days. And that is after having two positions stopped out already. One thing to be careful of is trading pairs that have high spreads like my beloved ???/ZAR - it has to move too much to realise a profit (unless you work on the Weekly or Monthly timeframes - then you’ll be OK).

Now I know that there are folks that will say that this indicator gets you into trades late and profits are also taken far too late (by it’s nature the price has to reverse for a dot to appear in the opposite direction). As unfortuanate as this may be - at least there IS profit 99% of the time! I’d rather make less money on 99 trades in a given month than do 6 or 7 ‘monster’ trades during that same month but lose on the other 94 trades. Get the picture?

In order to maximise profits you could add to positions the moment the first Parabolic SAR dot appears on the Weekly and the Monthly charts (assuming that you are already trading the Daily’s).

This ‘system’ is, of course, the same as James’ ‘45 Pips Per Day - EUR/USD’. The only difference is that you do not need MACD and you do not trade on any timeframe smaller than the Daily’s. Trading on the Daily / Weekly / Monthly timeframes makes you ‘almost’ immune to news data and the associated ‘spikes’ which, unfortuanately, the 30 minute timeframe is susceptible to. This indicator also does not seem to care about ranges or trends - it just ‘plods’ along. Now what more could you want?

Actually - I did this after a thought came into my mind the other day (I have them from time to time): all of the indicators were designed to work on the Daily timeframe - not 4 hours / 1 minute etc. etc. I mean - when you calculate pivot points for example you calculate them based on the previous days data - not the previous hours or minutes data - but the previous days data!

Regards,

Dale.

P.S. The only thing better than this is the Profitunity (Chaos) Trading System by Bill Williams and his daughter. Unfortuantely though - this system requires much more ‘maintenance’ and although generates better profits by getting you into the trade much earlier - there is not ALWAYS a trade - and I am one of those people who HAS to be in the market - so there is my problem. So - if you are anything like me - here is the solution!

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Sounds Great, Do you have any charts you can send supporting this…it’s hard to learn without visualizing ??

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Coming up!!!

Now - on the daily chart - my first instinct is to close the position and take profit NOW - going against everything I said in my opener! My logic of course being that NOTHING that drops this far this fast is going to continue going down! I don’t know! I mean - at this point - this one lot that cost $1000 - is currently in a profit of $2470 (different broker and it’s the only position I have here)! It’s tempting! On the other hand - I’m now sure that on the Weekly Chart the first Parabolic SAR dot is going to appear at the top - hopefully meaning that there is a long term down trend about to start.

AUDUSD is probably a bad example though - because its movement is largely dependant on the Gold price - so - if you can predict the Gold price - you know how to handle the rest of this trade going forward (my guess is that Gold is going to continue falling purely based on the fact that when China raised its interest rates last time Gold started its downward tumble - and they raised interest rates again last Friday. I don’t know why the so called ‘Gold Gurus’ miss this every single time - you cannot believe how much literature I receive telling people - once again - that Gold is NOW THIS TIME DEFINITELY going to $700 - that’s what they said last time - except - this time - I’m clever enough to watch the charts and not listen to the ‘experts’). Of course - on the other hand - the way stocks are moving - who knows!

At the risk of contradicting myself I have also thought about using Bill Williams’ Accelerator Oscillator to know when to get out of the position. This normally changes color before the whole of the reversal required for Parabolic SAR to indicate such reversal has completed i.e. early warning. I suppose - if you’re wrong - you could alway re-enter the position with a very small stop.

Regards,

Dale.



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That would be my question. If someone is trading the 4 major pairs (EUR/USD, USD/CHF, GBP/USD, USD/JPY) on the daily, what kind of funds would they need to have in their brokerage account in order to totally play this out?

Let me think about this. I enjoy reading everyone’s experiences and ideas :slight_smile:

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My first thought is that as long as you are in profit there is no wrong time to get out. If your fundamentals are screaming at you why not get out? :wink: If you’ve got a good profit and you want to go ahead and take it so that your account is a little more liquid why not get out? :slight_smile:

Just thinking :o

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OK dpaterso…help me out here, still a newbie,

so The parabolic sar really only works in TRENDY market…ala
GBP/USD…from my research using in a choppy martket is too jumpy.

Closer the dots, when is a good time to get in?

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OK - well - here are my answers to everybodys posts so far (and I just want you all to know that it is absolutely killing me to not close out this particular position)!!!

Anyway:

That would be my question. If someone is trading the 4 major pairs (EUR/USD, USD/CHF, GBP/USD, USD/JPY) on the daily, what kind of funds would they need to have in their brokerage account in order to totally play this out?

Put it this way - I don’t normally trade forex pairs anymore - only the Indices. Having said that - I got bored two days ago and had a look at my ‘purely’ forex accounts that I have at two other brokers - and just decided to try this and let it run and see how it plays out - mainly because it is theoretically low maintenance i.e. once a day - have look - move your stops - that’s it. At this particular broker I only had just over $1000 left so I was taking a FAT chance by opening one full position - but - it has paid off - this time anyway! At the other broker (which has far more pairs available) I had about $3000 so I opened positions on each and every single pair that had a new Parabolic SAR dot appearing on the Daily Chart. The lots cost anywhere between $50 and about $160 and I ended up with fifteen lots open. Right now as I type this message the cumulative profit of all of those lots is sitting at $2510. Obviously at this broker the lot sizes are smaller i.e. lot size is 10000 but it is a highly leveraged account. So - I don’t know if that answers your question - my total layout was about $2000 if I take an average. Remember that in most cases when you are first opening your position your stop loss is reasonably small so even maxing out your account like I did should be OK although probably not advisable. Also - at this broker - you can buy smaller lots of 1000 so then you would obviously only need about $300 to be in the position that I’m now.

My first thought is that as long as you are in profit there is no wrong time to get out. If your fundamentals are screaming at you why not get out? :wink: If you’ve got a good profit and you want to go ahead and take it so that your account is a little more liquid why not get out? :slight_smile:

That’s the problem - there is not a single good reason to close this trade - other than fear. Bill Williams’ AO and AC are both still red and going down - and even ADX by Wilder himself is telling me to only open the position right now (see attached chart). I hope I’m right!

so The parabolic sar really only works in TRENDY market…ala
GBP/USD…from my research using in a choppy martket is too jumpy.

Closer the dots, when is a good time to get in?

I’m not so sure about it only working in trending markets - you may not make as much in a choppy or sideways market but I’m pretty sure you will make something as long as you are trading pairs with a low spread. It will definitely kill you if you try and trade pairs with high spreads in a choppy or sideways market - again - like my beloved USD/ZAR, GBP/ZAR, and EUR/ZAR - but if your are lucky and catch a trend on these pairs - you’ve got it made!

As far as the dots go - well - I just opened these positions the moment the first dot appeared. Wilder - in his book ‘New Concepts In Technical Trading Systems’ - actually says that you could wait for two or three dots to appear as confirmation before entering BUT then you really are getting in to the trade very late.

Put it this way - take any Daily / Weekly / Monthly Chart and overlay Parabolic SAR - I just don’t see how you can go wrong - but - I’m sure - time will tell!!!

By the way - Bill Williams’ AO (Awesome Oscillator) also works very well for me. Simple - when a green bar appears - go long (or stop and reverse) - when a red bar appears - go short (again stop and reverse) - that’s it. This indicator actually gets you into a trade very early as a matter of fact and I use this trading the Indices. But that’s another discussion altogether. The main reason I’m experimenting with Parabolic SAR is that my other broker does not have Bill Williams’ Indicators built into the trading platform and I just have not had the inclination to program it in myself (yet).

I have read much criticism about all of these indicators but I’ll tell you that I only recently realised that the problem is that we do not stick to them i.e. we do one or two trades using them - and when the first loss happens - we abandon them and try to look for something else. The key to these indicators is to stick with them no matter what AND - more importantly - only trade on the Daily / Weekly / Monthly Charts. Again - your are pretty much immune to those ‘pesky’ news releases. All of my positions managed to withstand the US reports yesterday and today (major releases). Normally - I’m so used to getting stopped out because of these news releases - because I have been messing around with small timeframes - a total waste of time.

Put it this way - at least - lately - I’ve started to enjoy life again. I’m basically working an hour or two a day now - checking for new dots or red or green lines - moving stops - and that’s it. The biggest mistake I have made in the last six months is thinking and feeling that if I’m not sitting in front of this stuff all day and making trades I’m not working - and this has cost me dearly in $ terms. I cannot tell a lie though - I CONSTANTLY check on my positions - I can’t help myself - and - I know from experience - that this is my downfall!!!

Regards,

Dale.


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Help - I just checked again - and AUD/USD is dropping further - and it’s killing me not to close the position!!!

Put it this way - I can’t see that the Parabolic SAR is going to have enough time to draw dots all the way down until it gets to a reasonable level to protect the profit if you’re stopped out - the move down is just too ‘violent’.

What is a person to do!!!

Regards,

Dale.

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Gotcha!

No - I have not closed the position - but I looked again - it’s driving me nuts! Never before have I so anxiously awaited market closing time! TGIF!

Actually - if you want to have a good laugh - for those of you that have been around here a while and started off asking questions on BabyPips.com - go and have a look at your first couple of postings! I just did (to keep me away from my AUD/USD position) - and some of my own questions really made me laugh. I amazed how far I’ve come (you’d be surprised how much knowledge almost $25 000 worth of losses in six month buys you - and that’s REAL money not DEMO)! Actually - I’m amazed I’m still here at all!!!

Actually - it made me think of a cartoon / drawing that I saw years ago:

It was a picture of a frog about to be eaten by a Pelican. The frog is already in the Pelican’s mouth but his arms are around the throat of the Pelican and the caption is ‘Never Give Up’! If anybody else has seen this drawing please let me know and if it is on the Internet give me the link - it would make an ideal avatar for me.

While I’m passing the time and entertaining everyone let me also post a quote that I saw somewhere else which is also very apt and very amusing:

‘When you find yourself at the bottom of a very large hole - the first thing to do is stop digging’.

I love that one (it has actually negated some of my losses would you believe).

Regards,

Dale.

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Alright alright - I closed the position. You can all call me a ‘chicken’ if you want.

There was, however, method in my madness:

I had a look at the four hour chart i.e. one timeframe down and I noticed that Wilders’ ADX is starting to move up, and Bill Williams’ AC has two green bars showing already - and that almost always guarantees a trend reversal coming (at least on the Indices). I even added Stochs to be sure and they are also turning up.

Maybe this in itself is a good way of doing things i.e. work on the Daily / Weekly / Monthly charts but once you have opened a position monitor the four hour charts (or one timeframe lower than the one that you are working on) - that way you could get a warning that there is a reversal coming.

Anyway - I’m out (although I’ll leave this same position open at my other broker and see what happens with it. Those are smaller and cheaper lots so if I lose a couple of $$$ it won’t be anywhere near what I have just made).

What I will probably do now is wait and see what happens on the Weekly next week. If the first dot appears when the chart opens on Sunday I will go short again and then monitor the same indicators on the Daily Chart and see what happens.

Now don’t get me wrong - I know this all sounds like I am going against everything I was trying to preach at the beginning of this thread. I’m not. It is just that this trade was a ‘special’ case because of the ‘ferocity’ of the fall. If it were not so ‘violent’ and ‘huge’ I would have stayed in this trade until I was stopped out by a Parabolic SAR dot. Shot dot!

Regards,

Dale.


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On the other hand: have a look at the Weekly - looks good for a re-entry wouldn’t you say?

Regards,

Dale.


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I have a question to which I do not have the answer:

I should be feeling very satisfied with myself. That is the most that I have ever made on a single lot over a period of twenty four hours in six months. So why do I have this sort of ‘empty’ feeling?

I would imagine that this ‘empty’ feeling would turn to satisfaction and ‘smugness’ if the price reverses though. Can’t help it though.

Comments anyone?

Regards,

Dale.

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G’day dpaterso, nice thoughts goin on here. I also made a killing last night (I’m in Brisbane, so the major sessions are very much at night for me) looking at PSAR only. I actually exited out a little before you did for two good resons:

  1. When you have such a sharp spike like most of the pair last night, normal market conditions would see the price double back on itself to align with a ‘sustainable’ trend. But that wasn’t the closer for me.

  2. What convinced me was that it was Friday. I certainly wouldn’t leave a position like that open over the weekend because the price might reverse quite some way before you even get a chance to do anything about it. When I get tired on a Friday (or on a Friday arvo for all you lucky folks) it’s probably best to just close positions and re-evaluate next week. Take your well deserved profits and look to a new chance for profits on Monday.

As an extra note, I think that this system is great at getting us into strong trends moderately early. I think we need to use discretion to get out though. And please don’t get upset over what you could have gained after you closed the position. It’s better to miss profits than to lose capital.

-Benjimang

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Damn it all! I swore to myself that I would stop adding systems to my demo account, but Dale you have left me no choice;) Now I will be back to trading 7 systems at once.

Once question though: when trading 1 day charts, what initial stop loss do you reccomend?

I noticed in your AUD/USD example that sometimes 1 or 2 dots appear and then the trend reverses suddenly and the dots go the other way.

So setting to big a stop loss is not agood idea, but too small and you may never get into a trend.

On many of my demo systems I use 25 pip SL for trades that last 1-2 days, but for a longer trend I am leaning towards 50 pips SL. What are you useing?

Also, you mention reset your Stop loss each day. What do you mean by that?

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Good Morning All!

Benjimang:

Thanks for that input and the encouragement. I must admit - I do feel a bit better this morning and I’m sorry to be taking advantage of your currency - I hate when that happens. I’m in South Africa and it drives me nuts when prople ‘screw’ with my beloved Rand. Having said that - I have become so used to thinking only in US Dollar terms - that I keep forgetting that every USD I make I have to multiply by a factor of seven when I bring it home - so currently my profits on forex at these two brokers totals around R35 000 ZAR - which is not bad for two days work!!! Put it this way - in two days - I made enough to pay one of my cars and my house. That’s good! On the other hand - I just know that if this move South continues - I be swearing big time!!!

It does amaze me, however, how once again the charts and the indicators were right and the TV ‘experts’ caught quite a few people off guard I would imagine. You won’t believe the amount of times the ‘experts’ on Bloomberg and CNBC and CNN have sat there and said that the AUD will ‘soon’ be at parity with the USD and there was no question about it. While this may happen in the (very) long run - I don’t knwo - if there is one piece of advice I can once again stress to the new traders (I hate the word ‘newbie’ or ‘noob’ - trust your graphs and indicators! As Bill Williams (my favourite) aludes to in his book: by reading this far you probably know more than the experts on TV and that they get paid for the number of words spoken! It always amazes me that when there is a huge movement like the downward move in the Indices LAST Friday they were talking about the sub prime crises and saying that it’s THE correction that everybody has been waiting for and the financial world as we know it is about to come to an end. Then on Monday morning this last week there was a rally on stocks and then they were saying how everybody is overlooking the sub prime crisis and is not worrying about it and it should not be a problem and life is good. I mean it’s almost surreal for crying out loud! Put it this way: six months ago I would have bought AUD with everything I had - now I know better - finally!!! The same thing with Gold - AGAIN!!! Last week - there was NO QUESTION that Gold was NOW THIS TIME DEFINITELY going to beyond $700 - the drop in stocks - the rise in Oil - NO QUESTION. Well - here is my newsflash - China increased interest rates LAST Friday - and guess what - Gold AGAIN started moving back down - just like it did the last time the experts said it was going to $700 an ounce! At that same time - China raised interest rates - and Gold started moving back down from $683. One expert even had the cheek to say that it was going to go $700 by that weekend and this was a Thursday. Of course - what did I do - instead of using my even limited knowledge of the indicators and charts at the time - all of which were telling me that Gold was going South instead of North - I bought Gold with everything I had - and - because the ‘experts’ were so sure - when it started going down - I held on and held on and held on thinking that it was going to suddenly turn around because ‘how can these experts be wrong - it’s their business - they should know’. Anyway - the long and short of it (nice play on words on my part don’t you think) is that when I eventually decided to close out my ‘expert’ positions - I had lost somewhere in the region of $6000!!! Like I said - it’s amazing how much knowledge huge losses can buy!!! On the other hand - yes - stocks started tumbling on Thursday and maybe THE 10% correction has started - but I’m real glad I did not go short LAST Friday because of what I saw on TV - I would have been stopped out - many many times between Monday and Thursday this week. See what I mean.

I see your thoughts about getting out when you did. If the truth be told I even started putting Fibo levels on the chart and noticed that it bounced off the 38% line about three times yesterday before going through it but it eventually did (although I think it went back after I closed out my positions - I have not looked this morning). I battle to use Fibo levels because I never really quite know where to place the start and end points which, I believe, is a common criticism of Fibo. One thing I have learned and don’t have a problem drawing and using is pivot levels - they definitely do have more meaning for me and for the most part an instrument will trade to some or the other pivot point. Put it this way - when a price goes through R2 or S2 - then you must know that if you are on the wrong side of the trade - the game is almost over!!! Having said all of this - I’m again complicating matters when it comes to Parabolic SAR - which is why I started this thread in the first place i.e. to keep it simple and not ‘mess’ with the indicators!!!

adamgalas:

I noticed in your AUD/USD example that sometimes 1 or 2 dots appear and then the trend reverses suddenly and the dots go the other way.

You are right - that does happen - but that is where you stop and reverse i.e. take the loss and open a position in the opposite direction. It is the ‘nature of the beast’ as it were. The trick is to just accept this and ‘doggedly’ stick with the indicator - don’t give up on it - that is why it works in the long run.

The indicator was designed to be used like this (I am going to use a short - or sell - position for this example):

The moment the first Parabolic SAR dot appears at the top of the new daily bar or candlestick (and I literally mean ‘the moment’ i.e. you have to be sitting at the ready when the chart ticks over) you open your position with a market order. Your stop loss is set to the current value of Parabolic SAR (or at the physical level where this first dot has just appeared). So in other words on those same AUD/USD charts you would have opened a position at 0.8793 and your stop loss would be at 0.8868 - which is not too large at all. Now let’s move on to the next day. The next day your new dot would have appeared and assuming the price was going in your favour i.e. in this case it would have to be going down - you would move your stop to the value of the new dot and so on and so forth. This AUD/USD is a very bad example though - again - because of the ‘severity’ of the move. The reason I say this is because you will notice that on the second day the value of Parabolic SAR has not changed at all i.e. it still has a value 0.8868 so you would just leave your stop loss where it was. However - I know that on Monday morning when the new daily bar appears a new dot will appear that will have moved quite considerably down and I will then change my stop loss to whatever the value of that dot is. I have attached an image of the daily USD/CHF which shows the position much clearer. You would have opened a short position at around 1.2337 (looking at this chart though I would imagine that the first dot appeared sometime during the day. Remember that the first dot in the opposite direction only appears when the current price has pierced the previous Parabolic SAR) and your opening stop loss would have been 1.2468 (which in this case is quite large I agree). But look what happened from there. Anyway - every day from then on you just move your stop loss to the current value of PSAR (I’m getting tired of typing ‘Parabolic’ - I almost ALWAYS spell it wrong the first time I type it).

For a clearer explanation I have drawn some lines on the chart.

On the first day you would have opened your position the moment the first dot appeared at the top i.e. you would have opened your position around the price denoted by the green line. You would immediately then have set your stop loss at the price of the current PSAR as denoted by the red line at the top. Then every day from there on you would change your stop loss to be the value of the new days PSAR dot denoted by the yellow lines (I just did the first few). Now if you keep going look what happens toward the end. The PSAR starts accelerating i.e. the distance between the dots starts to increase exponentially thus ‘aggressively’ protecting your profit (quoted from the book). I have marked these places with the purple lines for clarity. Put it this way: you may have opened at 1.2333 and even if you followed the indicator ‘doggedly’ and waited to get stopped out you would have been stopped out at about 1.2069 which is 264 PIPS over a period of about 28 days. In this case of course there was a better manual exit because if you look at the bottom of the chart you will see that a new PSAR dot had already appeared a few days earlier so you would then have just taken profit and opened a new long position i.e. stop and reverse. This would probably have gotten you out at around 1.2012 - which is then about 321 PIPs. Get the picture.

Now - I know that if you look at the chart - it is obvious that you are getting in late i.e. you probably missed about half of that very nice long bar going down and you probably also lost out at the end when the price started moving up again. The point is - don’t be greedy (although that’s very rich coming from me). Look at what you made on this trade. The point is - do you want to get in as early as possible and get out as late as possible and maximize your profits and give yourself a pat on the back because you’re the new ‘whiz’ kid trader with an edge AND run the risk of being wrong and losing OR do you want to slowly make pretty ‘sure’ money? I’ve passed the stage of trying to prove something - I now just want the money. I am confident that in the long run just following this indicator will nett you profits in spite of what they call ‘whipsaws’ and losses. That’s good enough for me. Put it this way - at my other broker - where I still have those fifteen positions open - every single one of them is ‘in the green’ and I’ve never seen this before. Actually - on this point - I think that having as many open positions (on different pairs) as you can afford is a good thing. Why do I say this? Well - the chances of every single trade going against you is pretty slim in my opinion. You have effectively created a ‘hedge’. In other words - even if a couple of them turn and you get stopped out - the nett difference should be a profit at the end of any given period. Remember that you may have things like USD/CAD and AUD/USD and USD/NOK etc. etc. and there is very little chance of fifteen or twenty pairs going against you ALL at the same time. Think about it.

One last thought. In order to be ‘ultra’ sure you could look at what the longer term trend is then then only take positions in that direction on the shorter timeframes. In other words: take USD/CHF. Look at the direction that PSAR is going on the weekly and / or monthly charts and then, working on the daily, only takes positions (based of course on PSAR) in the SAME direction. This would add to your sense of security BUT then you are not longer using a stop and reverse system and it may take you a lot longer to turn more profits. On the other hand - those would probably be pretty ‘sure’ profits! Actually - this is probably going to be my strategy on AUD/USD for the next couple of weeks i.e. if the weekly starts moving down I will only take short positions based on the PSAR on the daily. Like I said - AUD/USD at the moment is a ‘special’ case and until it settles down one way or the other - I’d rather be ‘sure’.

Lastly - have a look at this information:

Parabolic SAR – Technical Analysis Education

It is the best explanation of PSAR that I have seen (other than the one in the original book).

Actually - in closing - I must tell you that the book is quite an education on its own. The book was written at around the time that PC’s first came out. The book is filled with hand drawn charts which is how things were at the time. In those days charts were drawn by hand on graph paper and calculators were used to work out values for the indicators. Can you imagine? On the other hand - it just goes to show how long this indicator has been around.

Regards,

Dale.

Edit:

P.S. Take a look at this thread also - I see a trade coming - either with Parabolic SAR or the subject of the thread:

http://forums.babypips.com/free-forex-trading-systems/5008-awesome-oscillator-thats-all.html#post16567


16

“Bored with FX,had a couple of small accounts still open so used all avaliable margin to open as many accounts as possible just using PSAR to enter,now up a few grand but later made enough to buy a car but lost 25k in the last 6 months”.You should write an e-book and sell it for $97 or $117 or $127 you certainly have the gift of the gab.
P.S are you related to Bill Williams in any way?

17

Hey Mustang - thanks for that input.

Funny thing - that is EXACTLY what my thoughts were last week - bored with trading forex pairs i.e. not enough ‘excitement’ for want of a better description - had a couple of $$$ lying around in two other accounts that did not really amount to much - so just opened all the Daily charts - checked for PSAR dots - and opened as many positions as possible (different pairs) (although leaving enough margin to get stopped out without having wipe out the whole account) - and - ‘whammo’ - these profits just appeared!!!

I’m glad to hear that you did make some $$$ but I’m curious - did you lose the 25k while sticking to PSAR - or did you get ‘complacent’ and stop maintaining the system on a daily basis? Sorry - please know - I hope that statement or question does not come across as me being derogatory - the purpose of the statement or question is to find out if PSAR was the sole cause of the eventual loss or not - because - if it was - then this is something to be aware of - and maybe I’m giving bad advice.

As far as Bill Williams is concerned - no I’m not related to him or his family in any way (although I wish I was - I’d borrow some money from him / them). It is just that I have bought all of his books and those books have helped me turn sustained losses over a six month period into sustained profits (although I do still have a very long way to go to make up what I’ve lost). Needless to say I only bought the books about six weeks ago out of sheer desperation. His advice and encouragement has also helped me to be able to live with those losses and I guess has helped me as a person as well. Put it this way - I - like most people that will start trading forex tomorrow and the next day and the next - went into trading six months ago because I had a bit of cash (it certainly was not spare cash) - and thought that it was easy and quick money. I also thought that I could buck the system - scalp $$$ on a daily basis sort of ‘movie style’ - and I would never have to worry about money again. I was (still am) a very impatient person i.e. when I opened positions - I expected to see a $500 profit within the hour for an initial layout of $50 and the moment a loss appeared - I’d close the position - thus eating away at my margin. I’ve lost count of the number of accounts that I’ve wiped out. Anyway - the point is - thanks to Bill Williams and his insights (not to mention his indicators) I now for the first time don’t feel ‘dirty’ and like a ‘gambler’ because of the money that I have lost - and after six months - I’m still here - finally turning things around. One thing that REALLY impressed me was that I had some questions about the system and contacted his organisation. Within a day or two I got a reply from his daughter (co-author) of the last book - and this has happened on one or two other occasions since then - and that to me is wonderful - I mean - these people REALLY don’t have to be bothered with the likes of me or anyone else - they have made their millions over and over again - and they are still there trying to help out wherever they can - and their systems work. That’s good enough for me. Put it this way - I’m pretty sure that selling books they’ve written is not their main source of income. Hell - they were on holiday with their children when she replied to me. Also - like I said - I’m an ‘old fashioned’ kind of guy - and I just figure that if people like Bill Williams or J. Welles Wilder were able to develop these indicators - and they are still applicable and in use today - then why try and devise or develop your own ‘signature’ indicator or system? I mean - no offense to either of them - but these are old guys that have been around for while - so I figure that they should ‘know their oats’ as it were.

One other book I did buy was ‘Mastering The Trade’ by John F. Carter. The sections on the actual psychology of trading are absolutely out of this world and the explanations as to who makes money in the market, who loses money, and why this happens are ‘brutally’ honest (to the point where I was embarrased while reading the words on the pages - it was like he knew who I was). He details various methods of trading in his book and the main reason I have not been able to try or use any of them is because he relies a lot on data that I do not have at my disposal like the TRIX, TRAN, NYSE Tick Charts, etc. etc. and I need to build up a bit of capital again and be sure that I am making a sustained living out of trading before I can commit myself to some or the other data provider for this information (this type of information does not come cheap).

And while I’m on the subject - this website has also helped me ‘stay in for the long haul’ as it were. There are many great people on this site - and - although in the beginning - I pretty much ignored a lot of what I was told by certain ‘mentors’ on this website and it cost me big time - I thank them from the bottom of my heart for always answering my sometimes ‘dumb’ or ‘repetitive’ questions - and - as long as I am able to offer insight of any kind that may be of value - it is because of them that I am happy to give back to the site.

Another ‘quote’ or ‘anecdote’ comes to mind at this point: When you are 16 or 17 years of age - you cannot undertand how ‘dumb’ your parents are. By the time you reach 21 though - you are surprised at just how much THEY have been able to learn in such a short space of time! Get the picture?

The market has humbled me and made me see and realise things about myself as a person - and I know that if I can manage to stay in here - I will make a good living - and feel more satisfied about making that money - than I have ever felt about the money that I have made in previous endeavours. People think because you don’t have to ‘get up’ in the morning - be at an office at a certain time - and answer to a ‘boss’ or your own clients - that you are not working and don’t have a real job (John F. Carter actually delves into this subject at length and how trading as an occupation can take its toll on a family or a relationship). Let me tell you - even with my losses (although maybe that’s why) - I feel like I’ve done an honest day’s work when the NYSE closes. Having said that though - another thing that Bill Williams has taught me - is that trading should NOT be a stressful and a costly personal endeavour - he actually encourages you to enjoy life - and let the trades take care of themselves (or at least that is my interpretation). Put it this way - the best trades I have made have been the ones where I have checked out the indicators - opened a position - set a stop loss (although it took me a very long time to use stop losses because I just could not ‘stomach’ taking a loss and would invariably hold on to a position until the account was ‘dead’ because I was ‘so sure’ that the losing position would ‘eventually’ turn to a profit) - and gone and done something else for the day. The worst trades I have done have been the ones where I have sat staring at the screen for hours and hours on end and tried to squeeze very last PIP out of the deal. The strange thing for me is (being brutally open here) is that the better I get - the more resentment I get from my immediate family and friends i.e. because I have changed from trying to ‘scalp’ every last $ out of a trade on a minute by minute basis to trading the daily charts - it appears to them that I am not working and not being responsible because I have time to do other things like practice my music etc. etc. and this ‘grinds’ them (I’ve just turned 42 this year so you must know how ‘degrading’ this is and the amount of self doubt it can instil in a person). I know that once I am in a position to start settling ‘big’ debts then it will be another story entirely but for now is something I have to live with. The reason I am getting so personal here is because I know that there are other people who are not quite as open as I am and certainly would not make a public statement like that on something like the Internet and are carrying the burden themselves. All I can say is - if this is what you have decided to do for a living - hang in there - rely on yourself and don’t expect a ‘pat on the back’ from those around you just yet - don’t get smart and think you know better than those that have been doing this all their life - you don’t. Don’t ‘force’ a trade i.e. see a trade when there really was not one - to quote from one of my books (roughly) - not being in a trade or taking a position is actually taking a position in itself.

Wow - would you believe that I started this thread to detail a ‘simple’ yet reliable and effective way of making some $$$!

Regards,

Dale.

19

Hi Dale,

I was wondering if you are still trading using this parabolic SAR method? Regarding becoming a full time trader i was wondering how you came to that decision? Well one day i would like to become a full time trader as well but right now im just a 23 yr old engineer but i am earning a decent living for myself…i must say your last post was very influential…Hopefully you’ll become a great trader one day :wink:

Regards

Gagan

20

Hi gagan,

Yup - at the moment - things are going well (but I’m going to post another post after this one detailing where we are at the moment). Don’t get me wrong - I am only using Parabolic SAR on my two forex accounts - I usually use all the stuff by Bill Williams for Indices and Commodities trading - but I had a couple of $$$ lying around in two (forex only) accounts that I had pretty much given up on / lost interest in but I must say - now - this is working great (at least it has for the past three days or so now anyway - but I have a couple of thoughts that I will post after this post).

As far as ‘why’ I decided to do this: Well - I have been self employed for just over fifteen years now - Computerised Fleet Management Systems, Computer Support, Software Design, etc. etc. Frankly - I just got tired of it - and - my main gripe with running that business - is that I just got sick and tired of having to beg and plead and bargain JUST to get paid what was due to us for work already done. You know - I’m the kind of guy - if you do something for me - or I buy something from you - and I get what’s promised - I pay - no questions. It would seem that I am a ‘dying breed’ as it were. I suppose I also got tired of travelling etc. etc. and I sort of ‘dabbled’ with demo account trading last year and the year before that (actually made a fortune of the demo accounts - and there’s a lesson: don’t for one minute think that demo trading and live trading are the same thing. They’re not I can assure you and I have the overdraft to prove it) (Now don’t you all start sharpening your arrows - it’s just my opinion)!!!

Anyway - aside from the stress and the losses - at least one thing is for sure: if you’ve made a profit - you call the broker - ask for your money - and that’s it - no questions asked.

Now that I am only trading the longer timeframes and not trying to get rich quick - I’m starting to turn a consistent profit (hell - I might even be able to pay ALL of my bills at the end of next month - I hope my creditors are reading this) - and I have time to do other things in the day (although if the truth be told I ‘find’ things to do to keep me away from my open positions. Friday is a good day for me because I can ‘justify’ watching the trades the whole day because it is the end of the week and I want to know how I’ve done)!!!

Anyway - hope this helps - and thank you for the good wishes.

Regards,

Dale.

21

Hi Dale,

So when you say long times frames…what exactly is “long” for you is it daily weekly and monthly?

You know i had opened a live mini account a couple or weeks ago and funded it with $300. Till last week i got my equity up to $374 but then last week the NZD/USD pair raped me big time :frowning: …and i got margined out (even after knowing and reading books which keep on saying “USE MONEY MANAGEMENT USE STOP LOSSES”)

So i am wondering when should i fund my account by another 300 or 500 bucks…but then i got thinking is it worth funding it by that much…maybe only people that can afford to play with $5000 for more should enter this game called forex…

Your or anyones comments would be much appreciated.

Regards

Gagan