Parabolic SAR - that's all!

[Ingot54]

Hi Guys

The chart below is based just on MACD and PSAR DAILY.

The current candle has not been completed and it is possible it could turn red before the day is closed out. That means the Blue Dot under the current green candle could flip to the top of the candle.

How would you manage this?

Would you wait until the current candle closes before entry?

The PSAR is setting up, and the MACD is proving we are in an uptrend.
Stochastic is above 80.

Bocajunior - I think there ARE "exceptional circumstances" where it is wise to take profits. You have identified one of them in my view. But we have to be careful this does not undermine the entire system.

It is always on the agenda that positions will reverse rapidly. I guess this is another area we can work on - building-in trading strategy to match the method. Things like locking in profits, trailing stops and so on. Keep this in the back of your mind ... I think we are getting very close to helping Dale nail the method right down.

Next will be a trade management strategy customised to match a Position Trading method like this.

[dpaterso]

Good morning everyone,

Yup - I'm still here - I just had to go to one or two meetings yesterday and the day before (I'm trying to sell the 'remnants' of my previous business in the hopes of being able to give my accounts a SUBSTANTIAL boost so that I can increase my lot sizes to those only seen on TV or 'dreamed about' but I'm not too sure where this deal is going though - but - here's to hoping - I just hope these people are not wasting my time).

Now - I REALLY hope that the above deal DOES go through - BECAUSE - with these 'new rules' in place - I cannot find ONE SINGLE VALID TRADE - so I'm REALLY hoping that IF AND WHEN I DO EVENTUALLY FIND A VALID TRADE - I can open an absolutely HUGE position and make up for all the trades that I'm NOT doing!!! OK - I know I'm making 'light' of this BUT it could very well become a problem because - no trades for the month - no income - bills to pay - therefore 'dig in' to your capital - and when you look again - no capital - no trading - no income - just 'sh1t'!!! Get the picture!!!

Ingot54: thanks for that 'superb' post on MACD - and Akram - your input was great too.

I'll tell you why I've been 'put off' MACD as it were: my biggest problem is the crossing i.e. what defines a MACD cross??? Is it when the lines have JUST touched and they 'look' like they are going to continue to cross??? Or what??? And if you wait for a 'confirmed' cross - what is a 'confirmed' cross??? How much of a 'confirmed cross' does there have to be showing before the cross is 'confirmed'??? The point I'm trying to make is that in MY experience anyway too many times have I seen MACD 'cross' and not a day (or period) later it's crossed back again and that's been after a 'confirmed' cross not to mention the number of times the lines have 'touched' and 'look' like they're going to 'cross' and then almost immediately start moving apart again!!! I'll have another look at it (MACD) and 'play around' with those settings that Ingot54 gave us - maybe that will make all the difference.

Oh - Akram - thanks for posting those files for MT4. Just for 'interest sake' MT4 also has a 'standard' indicator called 'OsMA'. It IS MACD (without the lines) i.e. when the oscillator crosses the zero line it's happening at the same 'time' or 'place' as when a 'normal' MACD indicator's lines are crossing i.e. when the OsMA oscillator 'crosses' over the zero line from 'bottom up' it's the same as the 'normal' MACD lines crossing over each other in an upward direction below the zero line and when the OsMA oscillator 'crosses' over the zero line from 'top down' it's the same as the 'normal' MACD lines crossing over each other in a downward direction above the zero line. Make sense? Check it out. The reason I mention this is that I know that there are others (like me) that don't really like using 'custom' MT4 indicators i.e. indicators 'written' by others who may or may not know what they are doing. On the other hand - having said that - like I said in a previous post - even some of the 'standard' indicators (like the 'proper' calculation of the TR, ATR, RSI, etc. etc. seem to leave much to be desired). Anyway - as far as MACD / OsMA is concerned - I 'prefer' OsMA - because it goes a long way to taking any 'doubt' away that I may have as to what constitutes an actual MACD 'cross' if that makes sense i.e. if an OsMA line is formed above or below the zero line AFTER THE CLOSE OF THE CANDLESTICK OR BAR then MACD has DEFINITELY crossed (although - again - it's no guarantee that it's not going back again the next day)!!!

One other thing that I've never really got right in my mind is that by using MACD as a confirmation of a Parabolic SAR signal - are you not really 'trading' MACD and not Parabolic SAR? I mean - that's actually a 'strategy' in itself is it not? Again - like any other indicator - if you really 'get into' the 'inner workings' of the indicator you'll find that MACD generates MANY more signals than we are led to believe i.e. there are things like 'MACD twin peaks' for example.

Don't get me wrong here by the way - MACD works for a lot of people - and - I want to try changing those default parameters as per Ingot54's post - and let's see what happens - because - I can tell you now - with all the 'new rules' that I posted - I'm not trading forex pairs because there are just no 'valid' entries based on those 'new' rules.

On the other hand (I'm really starting to sound like those idiots on TV i.e. they never take a 'stand' i.e. if THIS goes up then that's why BUT if THIS goes down then that's why and THIS could also go sideways IF ... They make me sick) my 'wishlist' (Akram) is showing about 15 or 16 trades coming on as many pairs (and I have excluded potential 'commdoll' trades because I don't see a Parabolic SAR reversal signal yet on Gold and Oil). On ALL of these 15 or 16 trades 'coming' both RSI and Stochastics are at their absolute limits and there SHOULD be a Parabolic SAR entry signal coming in a day or two. Like I said before - I am SURE hoping that these turn some profit before the end of the month. I'm also hoping that because I have been so 'patient' and 'constrained' and 'disciplined (Ingot54)' that it's going to pay off and that whatever positions I DO open this time round ALL turn to profit AND STAY THERE i.e. I don't see those AWFUL red figures ANYWHERE on my open positions list after waiting this long to trade a pair - unlike before where I've had a mixture or red and green and 'hoped' that the green would offset the red and then some!!!

Again - ON THE OTHER HAND - going through my 'wishlist' every day - it has ONCE AGAIN become VERY apparent - that had I NOT 'bailed out early' - most of those positions have still continued in the same direction and have not yet been stopped out so I've missed some HUGE profits by taking profit early and it's caused an even bigger problem in the sense that you now have to wait 'forever and a day' to get back in again. Which - again - makes me wonder - if my 'shotgun' approach is INDEED a 'workable solution'!!!

If the above post is confusing you - rest assured - it's confusing me too!!!

My only 'saving grace' at the moment is Gold and the Indices!!!

Regards,

Dale.

[dpaterso]

Hey Ingot54:

Sorry - I must have been typing my last post while you were posting!!!

I just had a look at your chart.

(By the way - I could not have been more wrong about the Fed's interest rate statement if I tried. Fortuanately I 'stayed out' of everthing - well forex anyway - because I would have been very wrong).

As far as your chart is concerned - I'm posting MY thoughts - for your comment. The idea here is to try and 'prove' or 'disprove' our 'new rules' so please don't think I'm telling you that you are wrong and that what I think is right (God knows I'd be a 'multi-million dollar millionaire by now if that were the case).

I would not take that trade for two reasons:

1 - Stochastics is at (or over) a limit

2 - It's a 'commdoll' i.e. I don't think that Gold has much further to go before it reverses (or at very least 'corrects') and what's going to happen then is that this particular pair is going to reverse as well BEFORE you've been given enough time for Parabolic SAR to 'run its course' so - in my opinion - if you're going to rely on Parabolic SAR to 'lock in your profits' I don't think it's got enough time left to get that far if Gold is anything to go by.

Interestingly enough - I have noticed - that Stochastics is not 'too bad' an indicator i.e. it seems to react much faster than RSI, ADX (ADXR), MACD or anything else (including Parabolic SAR). Just an 'observation'. Put it this way - at the risk of 'shooting myself in the foot' - I have even started to 'consider' the possibilty (and that's all I've done so far is 'consider' the possibility) of opening a position based on Stochastics and (possibly) RSI and then using Parabolic SAR to 'track' the position thereafter.

Anyway - I'm going to attach one or two charts from my 'wishlist' - so you can see MY thinking as far as Parabolic SAR, RSI, Stochastics, and MACD ALL ON THE SAME CHART are concerned.

Please - some input!!!

Regards,

Dale.

[dpaterso]

And HERE is the reason I'm not 'crazy' about MT4's Parabolic SAR 'buy' signal at the moment.

Comments welcome!!!

Regards,

Dale.

[dpaterso]

And HERE is why MACD gives ME the absolute 'sh1ts'!!!

On the other hand - look where Stochastics was when Parabolic SAR was giving an entry (or stop and reverse) signal!!!

ON THE OTHER HAND - there was also a 'magnificent' trade when Stochastics and RSI were wrong and MACD was 'on the money'!!!

MAN - I CAN'T TAKE THIS!!!

Regards,

Dale.

[dpaterso]

OK - well - don't laugh - but I just discovered something 'stupid'!!!

Take a look at the two attached charts.

Basically it solves my 'problem' as to what constitutes a MACD cross and what does not!!!

On the MACD 'normal' chart it 'looks' like MACD has either not crossed or is 'undecided'. On the 'expanded' chart there can be not doubt about whether or not MACD has crossed or not!!!

Basically - it's EXACTLY the same chart - I just 'stretched' the MACD display - and look at the difference in 'meaning'!!!

My point - as per Ingot54 - MACD NOW looks viable to ME.

Something 'silly' but should be taken into account (these are Delta charts by the way).

That's what I meant by 'preferring' the OsMA indicator on MT4 i.e. nothing 'left to the imagination' but when you're looking at the MACD EMA's - and you have this situation - well - you can see my where my 'confusion' comes into play!!!

Now this of course begs another question: should you / we not be looking at the VALUE of MACD and not the the 'graphical representation' of MACD??? In other words - once again - the 'graphical representation' is 'subject to interpretation ' whereas 'the numbers don't lie'!!! I'm just not sure what 'numbers' we could / should be looking at!!!

Regards,

Dale.

[Hypechic]

I need to ask one question. For all those trading with PSAR, how do you set your stop losses or do you even set them? I'm asking because for the three positions that I have open
AUD/USD Long
EUR/GBP Long
GBP/USD Short

The AUD/USD has seen up to $35.00 profit although right now it's at $32.20. The EUR/GBP is up to $12.00 and the GBP/USD keeps fluctuating between green & red. However, I do not have any stop losses on these positions and I'm wondering if this is a good idea.. And I took them based only on PSAR.

P.S. I am demo trading 10 cent pips.

[Bocajunior]

Originally Posted by Hypechic

I need to ask one question. For all those trading with PSAR, how do you set your stop losses or do you even set them? I'm asking because for the three positions that I have open
AUD/USD Long
EUR/GBP Long
GBP/USD Short

The AUD/USD has seen up to $35.00 profit although right now it's at $32.20. The EUR/GBP is up to $12.00 and the GBP/USD keeps fluctuating between green & red. However, I do not have any stop losses on these positions and I'm wondering if this is a good idea.. And I took them based only on PSAR.

P.S. I am demo trading 10 cent pips.

Hypechic,

The stop loss is set at the current postition of the SAR dot. So if your trade is going in the right direction, you will gradually lock in profits. The stop loss needs to be adjusted every day and moved to the latest dot position.

Cheers
Boca

[Bocajunior]

Ignot54,

I was just looking at your AUD/USD chart that you posted. When comparing it with my Oanda chart, and a chart from MT4 North Finance, the MACD is very different even though the settings are the same.

Is this because of the different time zones for opening and closing candles I wonder? I wouldn't of thought it would of made such a difference myslef.

[yiannism]

Helo folks,
The combination between Macd and SAR it's very good. I prefer to use Macd as a filter of the signals which generated by SAR. If MACD is above its signal line i ignor the sell signals of SAR, if the MACD is bellow its signal line I ignor the buy signals of SAR