Parabolic SAR - that's all!

[pro87]

i think that using only parabolic SAR will give you pips but ... not much but when you us it with other indicators will give you better entry and better exit ... and you will make more pips i use parabolic SAR only like support to my entry when dot appear i`m sure that my entry is good that`s all but using only parabolic SAR i don`t think so it gives result when market has one direction but when is sideway .. i don`t think so that`s my opinion use more than one indicator in your trading or go to youtube.com search "forex trading" and see how pro traders trading and see that they use more than one indicator for their trading and you may find something for your trading there

[dpaterso]

Hi.

Now please don't think I'm being nasty by posting this message - I am not - I just want to clarify the reason for starting this thread in the first place.

Also - before posting - please read the ENTIRE thread first - otherwise you'll be missing the point of the thread.

Like I said - please don't think I'm being 'offish' here - it is really not my intention.

think that using only parabolic SAR will give you pips but ... not much but when you us it with other indicators will give you better entry and better exit

That is the whole point of the thread. We know (I know) that this indicator probably gets you into the trade later than any of the other indicators - no question about that - and - yes - it can (should) be used with another indicator (as a matter of fact J. Welles Wilder HIMSELF - who formulated this indicator - suggests using it with another one of his indicators in his book 'New Concepts In Technical Trading Systems').

Having said that - with the two 'forex only' accounts that I have at my 'other' or 'forex only' brokers - I just wanted to see what happens when you use this indicator on its own - because historically - take any chart - especially (but not necessarily limited to) the daily and weekly and monthly charts - it would appear that plenty of PIP's could be made using ONLY this indicator. The point is this: it is 'low' maintenance and it is exact. In other words - it leaves nothing to the 'imagination' or your own 'judgement' (which in my experience - until you have developed a 'feel' for things - normally results in a loss) - it tells you EXACTLY when to get in and EXACTLY when to get out i.e. stop and reverse.

Again - we are looking for small sustainted profits over the longer term - with low maintenance and I believe that it is possible with this indicator. Put it this way - after all the losses I've made over the past couple of months (real money) - my mindset has changed. I'd rather be 'sure' of making - let's say for example 10 PIP's - over a period with little or no risk - than trying to squeeze 100 PIP's out of the same move over the same period - and run the risk of ending up losing 30 PIP's for example - get the picture?

Anyway - this morning (my now daily 'ritual') - I moved my stop losses (or rather stop and reverse orders) - and already two or three of them have one dot to go before profits start getting locked in and a few more are close - and found two new positions to open - and four new ones on their way in the next couple of days.

I know I said I would not be updating my results on a daily basis here but just for the record the one account now has 31 positions / 31 pairs open and the profit as I type this message is $4232.13.

If the truth be told - so far - I'm making (well almost) the same amount of money using this method - than I am on stocks - with a hell of a lot less stress, anxiety, and time expense. I'll tell you this - if this works out by the end of the month - then there would be no reason to continue using those 'sniper' or 'expert' or 'optimised' systems on stocks either. If this method (indicator) proves itself - you could make the same amount of money by using more capital but making less PIP's. That's good enough for me.

While I realise that all of the above may be taking the 'fun' out of trading - don't forget why you are trading. You're trading to make money and those figures that move up and down are real $$$ not just figures on a computer screen somewhere in the electronic yonder. When I first decided to do this for a living I got caught up and 'captivated' with the idea of trading and the 'novelty' of the business - and - while I now REALLY do still enjoy it - and love learning new things about how the markets work and about economics and world events and how each country is affected by such events - it has been a very expensive 'joy ride'. Now - first and foremost - I'm the breadwinner - and making money must be the first priority.

Anyway - it's early days yet - so I might be eating my words - let's wait and see.

Edit:

Just for interest sake - I have attached a daily chart of the Dow Jones Industrial Average Index. I have overlayed PSAR on this chart in addition to the indicators necessary for the 'system' that I normally use to trade this Index. Take a good look at PSAR and the other indicators. I'll tell you that most of the nice long 'trends' I missed because there were no valid signals from my 'system' but there sure are a hell of a lot of entry and exits and profits indicated by PSAR. Who knows - maybe it's time for an IMMEDIATE change!!!

Regards,

Dale.

[dpaterso]

OK - at the risk of complicating what is supposed to be a simple system - for those of you who want to try and 'squeeze' the maximum out of this indicator - I am now going to detail another indicator which J. Welles Wilder 'recommends' as an indicator to compliment Parabolic SAR. It is the Average Directional Movement Indicator or ADX (also developed by him).

I have attached a current daily chart of GBP/JPY for illustration purposes.

Basically when +DI (blue line) crosses above -DI (red line) a long position is taken and when -DI (red line) crosses above +DI (blue line) the position is reversed i.e. a short position is taken.

The above is if this indicator is being used on its own.

How it 'compliments' Parabolic SAR (my understanding anyway) is as follows:

When the the ADX line (green line) goes below both of the DI lines then it is time to stop trading or, at least, stop trading a trend following system which, yes, Parabolic SAR is designed for (this is pretty much a quote from the book). In other words - when this happens - take profits - and get out.

And here is a direct quote from the book:

Notice that this indicator can only occur at favourable points in the direction of the major trend. When this occurs it is seldom a bad time to take some profits. If you want to stay with the major trend you will usually get a better buy point than the point at which you took profits. There is nothing wrong with exiting the system trade when this occurs and reenetring in the direction of the next crossing of the DI lines or reentering if the ADX line again turns up.

There are many more uses for and interpretations of this indicator in the book which I don't think would be right to quote here - you know - copyright and all - and fairness of course.

Again - while this may 'sharpen' the signals given by Parabolic SAR - or tell you when it is a good time to be using Parabolic SAR or not - you are now adding another indicator to the system which has to be monitored and, again, the direction and interpretation of the ADX line can be subjective in my opinion i.e. you don't know where its going so when do you decide it's time to get out - do you wait until the first downturn to get out - and then - invariably it will turn up again a little while later - do you wait until it is below both DI lines and when it starts turning up you open a position - and once you've opened the position it then turns down again? What?

Parabolic SAR in my opinon leaves nothing to chance. You open a position - if you're right and the price keeps going your way - great. If you're wrong - and the price reverses - you stop and reverse - and I can assure you even if this pattern repeats itself more than once or twice and you take a loss every time - it will eventually break out into a trend - and more than cover those losses. My opinion - working for me at the moment anyway.
Regards,

Dale.

[turnip15]

Is this the system JAMES posted some time ago ?

[dazzlar]

Keep up the good work 'dpaterso', great info and very well articulated.
I look forward to your threads.
I am using the system, not to well at the moment, I hasten to say, but I have a good feeling about this.
Thank you.

[turnip15]

Originally Posted by turnip15

Is this the system JAMES posted some time ago ?

Here it is:

45 Pips Per Day System Eur/usd

[dpaterso]

Hi,

dazzler:

Thanks for the input - why do you say it's not going too well at the moment? Can I help?

From what I can see the only reason that my profits are so big is because of the sum of all the current profits and losses of the (now) 31 open positions / pairs. If I examine the positions individually - yes - quite a few of them were over the $200 profit mark when I last checked - and some more were over the $100 mark when I last checked - but many of them are far under that - and - like I said - most of the high profit positions are on the JPY - so - the high profit figure is not a testament to the 'magic' of this indicator i.e. because of the carry trade story - it's deceiving.

Having said that - maybe that's the key i.e. open as many positions as you possibly can i.e. one position for each pair that your broker offers. In other words - you're not making the MAXIMUM PIP's - but you're making up for this in volume. I mean - I made a hell of a lot on AUD/USD the other day on my other platform - but that again was just a 'one off' i.e. nothing drops that far that fast (usually) and stays there and had it reversed on me I would have (at best case) broken even because I only had enough capital at the time to have one or two positions open (at that broker it's $1000 for one full lot).

Edit:

I just checked now - and the positions are showing a nett profit of $2842.37 which is much lower than it was this morning. Now this is something I have noticed since starting this last week - after the NYSE opens and the USA is awake - the profit seems to go down - and when I wake up in the morning - at what is the equivalent of 00h00 NY time - this profit has soared again. What I have noticed is that as I open an additional position or two every day (if there is a valid PSAR signal) - and - as the days go by - this 'bottom' seems to be getting higher and higher on a daily basis. In other words - when I first started this last week - I have watched the profit dwindle to as low as $500 or so but with every day that passes - it does not go that far down. In other words it would appear that the lows are getting higher every day if you know what I mean.


turnip15:

Is this the system JAMES posted some time ago ?

I don't know - you tell me! Only kidding.

No - this is not the same 'system' - actually this is not a system at all - it's just an experiment to see . . . (actually - I think I detailed this already - many many times in the thread)!

No - this is not the same 'system' as James posted before - James' 'system' uses the same indicator i.e. Parabolic SAR WITH MACD to confirm entry and on the 30 minute charts only. James' 'system' does not rely purely on the indicator itself and does not use the indicator as it was originally designed i.e. James' system does not 'stop and reverse' and does not use the current Parabolic SAR value to set the 'stop and reverse' or, in his case, 'stop loss'.

If anybody has anything NEW to add to this thread - post away - but I'm not going to keep explaining this indicator every second message. Sorry - no offense - but this thread is getting REALLY long - and I just seem to be repeating myself all the time.

Anyway - for those who are following this 'experiment' - how are you doing - live or demo - no matter?

Regards,

Dale.

[willsucceed]

Originally Posted by dpaterso

Hi.

Now please don't think I'm being nasty by posting this message - I am not - I just want to clarify the reason for starting this thread in the first place.

Also - before posting - please read the ENTIRE thread first - otherwise you'll be missing the point of the thread.

Like I said - please don't think I'm being 'offish' here - it is really not my intention.



That is the whole point of the thread. We know (I know) that this indicator probably gets you into the trade later than any of the other indicators - no question about that - and - yes - it can (should) be used with another indicator (as a matter of fact J. Welles Wilder HIMSELF - who formulated this indicator - suggests using it with another one of his indicators in his book 'New Concepts In Technical Trading Systems').

Having said that - with the two 'forex only' accounts that I have at my 'other' or 'forex only' brokers - I just wanted to see what happens when you use this indicator on its own - because historically - take any chart - especially (but not necessarily limited to) the daily and weekly and monthly charts - it would appear that plenty of PIP's could be made using ONLY this indicator. The point is this: it is 'low' maintenance and it is exact. In other words - it leaves nothing to the 'imagination' or your own 'judgement' (which in my experience - until you have developed a 'feel' for things - normally results in a loss) - it tells you EXACTLY when to get in and EXACTLY when to get out i.e. stop and reverse.

Again - we are looking for small sustainted profits over the longer term - with low maintenance and I believe that it is possible with this indicator. Put it this way - after all the losses I've made over the past couple of months (real money) - my mindset has changed. I'd rather be 'sure' of making - let's say for example 10 PIP's - over a period with little or no risk - than trying to squeeze 100 PIP's out of the same move over the same period - and run the risk of ending up losing 30 PIP's for example - get the picture?

Anyway - this morning (my now daily 'ritual') - I moved my stop losses (or rather stop and reverse orders) - and already two or three of them have one dot to go before profits start getting locked in and a few more are close - and found two new positions to open - and four new ones on their way in the next couple of days.

I know I said I would not be updating my results on a daily basis here but just for the record the one account now has 31 positions / 31 pairs open and the profit as I type this message is $4232.13.

If the truth be told - so far - I'm making (well almost) the same amount of money using this method - than I am on stocks - with a hell of a lot less stress, anxiety, and time expense. I'll tell you this - if this works out by the end of the month - then there would be no reason to continue using those 'sniper' or 'expert' or 'optimised' systems on stocks either. If this method (indicator) proves itself - you could make the same amount of money by using more capital but making less PIP's. That's good enough for me.

While I realise that all of the above may be taking the 'fun' out of trading - don't forget why you are trading. You're trading to make money and those figures that move up and down are real $$$ not just figures on a computer screen somewhere in the electronic yonder. When I first decided to do this for a living I got caught up and 'captivated' with the idea of trading and the 'novelty' of the business - and - while I now REALLY do still enjoy it - and love learning new things about how the markets work and about economics and world events and how each country is affected by such events - it has been a very expensive 'joy ride'. Now - first and foremost - I'm the breadwinner - and making money must be the first priority.

Anyway - it's early days yet - so I might be eating my words - let's wait and see.

Edit:

Just for interest sake - I have attached a daily chart of the Dow Jones Industrial Average Index. I have overlayed PSAR on this chart in addition to the indicators necessary for the 'system' that I normally use to trade this Index. Take a good look at PSAR and the other indicators. I'll tell you that most of the nice long 'trends' I missed because there were no valid signals from my 'system' but there sure are a hell of a lot of entry and exits and profits indicated by PSAR. Who knows - maybe it's time for an IMMEDIATE change!!!

Regards,

Dale.

Dale i appreciate you taking the time and posting here. Yes i understand what you are doing, this is an experiment and you want to follow through with it to see what happens in say a month instead of just guessing or jumping around and changing everytime a trade goes sour. This way you can actually judge the performance of an indicator and a trading strategy. I was just happy that you were making profit after some rough periods in forex thats all.

If i may offer my humble opinion. I am not a very smart man. Probably one of the dumber traders (or wannabee traders as i am not live yet) around. However i honestly think i will be successfull. My rational is wisdom over knowledge. THere is so much information around right now most people are in overload. The people who are successfull are the ones that know what to concentrate and apply to their personal trading. They also know when to trade and when to stay out. They apply simple smart money management. It has been said before that you can make money with a SMA if you only applied proper money management and wisdom.

Anyways those are my thoughts, interested in hearing how your experiment progesses.

[dazzlar]

Thanks Dale
You deserve a response.
This all new and I have only been trading this indicator in the demo account since last Friday 27th. Only two pairs GBPUSD and EURGBP. I have also only traded the 4 hr time frame and I think that is the problem. I have now converted all my charts to daily, and added all the pairs that are available that have less than an 8 pip spread. So I am on to it and I will post the results next week.

[dpaterso]

Hey dazzlar.

The 4 hour SHOULD be OK - although it's not what I am using.

Could you post a chart or two - let's have a look - if you like.

Regards,

Dale.