Parabolic SAR - that's all!

[Benjimang]

Originally Posted by dpaterso

The problem is that, like I said before, you eventually end up in a sort of 'hedge' situation e.g. EUR/??? and GBP/??? and then EUR/GBP - they can't all show a profit at the same time!!! One has to go down for the other to go up and while I thought that this would not be an issue with this indicator i.e. it really does not care what's up and what's down - you profits are negated after a while (that's quite a word that - negated)!!!

There are two reasons that this shouldn't be a problem, and one way that it DEFINATELY won't be a problem:

1. If you are trading inversely related pairs, then the PSAR should be on opposite sides of each pair, and your trades should be placed opposite to each other too. This way you won't have a hedge, you'll have two winning positions.

2. If you find yourself in a hedge, you'd probably find that the PSAR trends will be out of phase with each other. This means that you will have a hedge for a period of time but you will take profits at different times, making both trades profitable ones. this theory would be shot to pieces by a very stong trend. Many people have tried to make EA's on this principal alone, but they'll eventually wipe out an account during a stron trend in one direction. As you said "What pair goes up and down and up and down and up and down all day?" Well, none of them will do that forever.

3. The way to avoit this is by NOT trading inversely related pairs or crosses of two of your existing trades. It would be best to run a long term test on a lot of pairs to determine the most profitable pairs and only trade those. You might end up sticking to 5 pairs or less, but you won't be over-exposed to the market getting yourself margin called again.

[pro87]

Originally Posted by dpaterso

This daily thing that I'm banging on about is starting to NOT make sense even to me.

I mean - I just looked at the thirty minute chart of GBP/CAD for example - and compared it to the daily chart. Had you based your entry on Parabolic SAR you would have entered on 12 July at around 2.1236 (long) and today you would have been stopped out at 2.1439 - that's 203 PIP's since 12 July. But - if you entered YESTERDAY morning also based on Parabolic SAR BUT on the thirty minute chart - you would have entered at 2.1675 (short) and you would have been stopped out at around 2.1475 and - give or take one or two 'hiccups' along the way - that's 200 PIP's in TWO days.

Maybe I'm wrong here - with this daily thing. Sorry people - I don't know at this time!

I think it`s very simple daily Parabolic SAR show you very big movement i mean like 300 400 and when price its going down candle going down too it shows main direction!!! 30 minute price is moving much faster it shows you what`s movement of the price for the past days i mean going down and up and parabolic SAR shows signals let say between 40 to 200 pips that is the main difference it`s better to use 30m chart!!! it provides you much more signals.
Daily main direction of the chart of the past week 30m of the past days ))

I`ll very happy if this help you to see what is the difference between this two charts if i were you i would use 30 minutes chart.because it will give you much more pips. Happy trading

Regards,

Teodosy

[ccox]

In continuation of my last post. I know we wonder what are the best time frames to use. I'm back to thinking a daily chart may be the best.

I think the larger the time frame, the more concrete the the trend is, once it materializes. Please see the attached USD-JPY Daily chart.

I said to myself on Thursday when the new parabolic dot formed..."hmmm, a new parabolic dot, but wait, the MACD lines havn't crossed yet. In fact, not even close to crossing yet. I better wait"

Irregardless of the fact that the NFP data was coming out Friday morning, the correct play still woulda been to wait for the MACD lines to actually cross. THEN go ahead and enter the trade.

I just saved myself a big headache!!! And who knows when this pair will turn around on the daily. But when it does, I'll be watching for the MACD lines to cross, confirming to myself a new trend is beginning. THEN I'll go long.

Also, check out my EUR-USD Daily chart. Same deal.

[Big Pippin]

New guy here but not real new to trading.

First off, want to thanks Dpaterso and all others for their input on this thread its getting long, and thats great!!! I have read them all. Don't get discouraged by people asking same questions DP, just tell them to refer to previous posts.

Anyways, I would have to agree with ccox with going with the daily charts for the SAR. Currency has many side steps but the over all trend (best on daily or longer periods) is best, ranging market would be death to this indicator. Only way I could reccomend shorter times frames would be like news trading like today with the NFP, SAR would tell u when the dollar fall is over. But there are many other ways to tell that. I currently use a 7 ema and a 14 sma with historgrams (to make easier to see and has less fake outs) for that kind of trading.

DP, or David, I like ya bud, but I gotta be honest, you are all over the map man..lol I read every thread, you started out sticking with the plan, now your wavering..lol I understand you are looking at other avenues, we all do, but stick to it. Daily ok for SAR, 30 min...DANGEROUS, ...MANY fakeouts. ONLY way I would trade with SAR at those time frames is with many other indicators, and I dont really mean indicators, more like price action, candle recoginition, and support and resistance. I am gonna try to attach a chart of why 30 min SAR sucks. you will see how how price action, s and r, and candle recoginition is good for those time frames, not SAR.

If I had to add 1 thing to your sytsem, it would be this. Use MA's. MA's are the BEST "indicator" out there. And not as crossovers, as targets and support. I played the indicator game, we all have, I have even paid some damn good money 4 them, and when it comes down to it, MA's and what I mentioned above beats everything hands down. Trading partner showed me a factoid that said....if u were to trade the dow with a 5 ema I believe, you would have turned 100 bucks into like 16 billion, or something crazy like that, anyways, (over the life of the market) the best indicator out there tested to others. This message is not just 4 you, but others as well.

OK, now my thoughts on the sytem, now I havent tested this a whole bunch, but from what I have seen, lets take GBP/JPY (GY) for instance, for SAR, I would look at the current trend, of daily and weekly, and ONLY trade that way. ANd NOT using SAR as a trend indicator. I use 55 MA, 200MA and 500MA, which works on all times frames, but better the longer time frame. When price is below 55 MA, and parabolic is in buy, thats gonna be the waiting period. Trend says sell, and its wants to buy, and on a daily chart, NOT a good idea. The 55 MA is what the market pays the most attention to, follow by the other 2. Follow the market, don't chase it. Seems to be alot of losses or very small gains when trading against the weekly trend on daily chart with SAR. So take it as a rest time, trade another pair, and move on. NOT 30 of them..lol No offense.

Also, I know you usually trade other things, but you need to know about correlated pairs, and negativly correlated pairs, plus the news, I seen u mentioned the dead market and didnt know why. That is a bit of a down fall to low maintence trading, though I do like your system, is that you would know that NFP was coming out today, which was a horrible number, as well as a horrible expected number, market slow down for the week b4 news like that. and if it was before then when u made that post, well...lol...the dow dropped 500-600 points and carry trades unwinded, the market was EXHAUSTED..lol I took those 2 days off from trading to take a break, had been waiting for MONTHS for that OP., what r the chances?!?!? O well, hope to catch the run up.

OK, well just my thoughts, will post more when I get to test and look a bit more. Keep up the good work and keep posting, like to hear the updates etc.

BP

[Big Pippin]

SORRY, tried to copy charts to a JPG file but dont know how, Crap, more wasted time. Well take my word for ir, string of losses since SAR is a lagging indicator and some signals were against trend. So as they say, the trend is your friend.

I will save this chart and hopefully someone will help. Anyone who has GFT know how? Let me know, thanks

BP

[ccox]

I use a 5,12 EMA. And as you can see by the attached chart, its pretty accurate at spotting new trends.

I will only go long on the EUR-USD, once those EMA lines and the MACD cross. Considering the Parabolic dot has already shifted to under the candlestick.

And yes, going long once the above conditions have been met will put me in lockstep with the weekely trend!

I smell profits next week.

[NewForex]

Originally Posted by Big Pippin

Anyways, I would have to agree with ccox with going with the daily charts for the SAR. Currency has many side steps but the over all trend (best on daily or longer periods) is best, ranging market would be death to this indicator. Only way I could reccomend shorter times frames would be like news trading like today with the NFP, SAR would tell u when the dollar fall is over. But there are many other ways to tell that.

I have to concur... and do not try back testing the PSAR on short time frames either... it just does not tell you exactly what happened... That little dot can jump like crazy, giving all kinds of false signals.

If you do use PSAR, use it on long time frames (daily +) and definitely use it in conjunction with something else...

We once had a very "nice" system worked out with the PSAR and when you back tested it worked wonderfull... when you start trading it you will see how those dots can jump from one side to the other. Lagging indicator and you can achieve same / better results for the trend with MA's.

[willsucceed]

Originally Posted by Big Pippin

New guy here but not real new to trading.

First off, want to thanks Dpaterso and all others for their input on this thread its getting long, and thats great!!! I have read them all. Don't get discouraged by people asking same questions DP, just tell them to refer to previous posts.

Anyways, I would have to agree with ccox with going with the daily charts for the SAR. Currency has many side steps but the over all trend (best on daily or longer periods) is best, ranging market would be death to this indicator. Only way I could reccomend shorter times frames would be like news trading like today with the NFP, SAR would tell u when the dollar fall is over. But there are many other ways to tell that. I currently use a 7 ema and a 14 sma with historgrams (to make easier to see and has less fake outs) for that kind of trading.

DP, or David, I like ya bud, but I gotta be honest, you are all over the map man..lol I read every thread, you started out sticking with the plan, now your wavering..lol I understand you are looking at other avenues, we all do, but stick to it. Daily ok for SAR, 30 min...DANGEROUS, ...MANY fakeouts. ONLY way I would trade with SAR at those time frames is with many other indicators, and I dont really mean indicators, more like price action, candle recoginition, and support and resistance. I am gonna try to attach a chart of why 30 min SAR sucks. you will see how how price action, s and r, and candle recoginition is good for those time frames, not SAR.

If I had to add 1 thing to your sytsem, it would be this. Use MA's. MA's are the BEST "indicator" out there. And not as crossovers, as targets and support. I played the indicator game, we all have, I have even paid some damn good money 4 them, and when it comes down to it, MA's and what I mentioned above beats everything hands down. Trading partner showed me a factoid that said....if u were to trade the dow with a 5 ema I believe, you would have turned 100 bucks into like 16 billion, or something crazy like that, anyways, (over the life of the market) the best indicator out there tested to others. This message is not just 4 you, but others as well.

OK, now my thoughts on the sytem, now I havent tested this a whole bunch, but from what I have seen, lets take GBP/JPY (GY) for instance, for SAR, I would look at the current trend, of daily and weekly, and ONLY trade that way. ANd NOT using SAR as a trend indicator. I use 55 MA, 200MA and 500MA, which works on all times frames, but better the longer time frame. When price is below 55 MA, and parabolic is in buy, thats gonna be the waiting period. Trend says sell, and its wants to buy, and on a daily chart, NOT a good idea. The 55 MA is what the market pays the most attention to, follow by the other 2. Follow the market, don't chase it. Seems to be alot of losses or very small gains when trading against the weekly trend on daily chart with SAR. So take it as a rest time, trade another pair, and move on. NOT 30 of them..lol No offense.

Also, I know you usually trade other things, but you need to know about correlated pairs, and negativly correlated pairs, plus the news, I seen u mentioned the dead market and didnt know why. That is a bit of a down fall to low maintence trading, though I do like your system, is that you would know that NFP was coming out today, which was a horrible number, as well as a horrible expected number, market slow down for the week b4 news like that. and if it was before then when u made that post, well...lol...the dow dropped 500-600 points and carry trades unwinded, the market was EXHAUSTED..lol I took those 2 days off from trading to take a break, had been waiting for MONTHS for that OP., what r the chances?!?!? O well, hope to catch the run up.

OK, well just my thoughts, will post more when I get to test and look a bit more. Keep up the good work and keep posting, like to hear the updates etc.

BP

Ok by no means do i want to hijack the original thread. I appreciate what dp is trying to do and i would like to hear more. However if i may please could you please elaborate on the MA's and how they act as S/R? Also what you would you suggest as a MA on a daily chart? I have always considered MA's only for people who can't draw a trend line on a chart, maybe i am wrong.

Also why would you not want to use PSAR to indentify a trend? For a day chart this is a great lagging trend identifying indicator i thouught?

[dpaterso]

Hello everyone!

Thanks for all the messages (especially 'Big Pippin') - nice 'meaty' thread!!! Thanks.

Well - as you have all probably noticed - I have not posted on this thread for a couple of days. That usually means one of three things:

1 - I'm losing money
2 - I'm too embarassed to admit that my 'system' does not work
3 - I'm too hungover from the weekend to care

Actually - in this case - it's none of the above would you believe - just stocks giving me a 'royal pain' now all of a sudden.

As far as Parabolic SAR is concerned - I'm still using it with pretty good results on its own - BUT - I have to be honest - once again - I've started looking at other indicators to try and 'justify' using Parabolic SAR on its own - if that make any sense at all.

You know what I don't get with Parabolic SAR though: if you look at historical charts - it does not matter what time frame you look at - it works like a charm (and I mean live charts not demo charts) - many many PIP's - but the moment you start trading with it - those PIP's just don't materialize! Why is that for goodness sake! It just does not make any sense at all!

Anyway - having said that - please don't worry about hijacking this thread - with anything at all that works!!!

I agree with you all that using indicators is NOT the ideal way to trade. John F. Carter - in his book - actually sums this up quite nicely by basically saying that by the time an indicator gives you a signal - all the other traders and dealers have already acted - you're just getting in on the tail end (if you're lucky) OR you're getting in just in time for the reversal to take you out (that's my line though)!!!

There is just one thing that I forgot to mention because I did not think that it was important - but since I have been looking into this indicator again - it has become very apparant to me again (I actually did mention this in a thread that I started months ago when I first started trading and everybody thought I was 'paranoid' and was just looking to blame the broker for my losses).

Before you use Parabolic SAR or any other indicator or any EMA's, SMA's, etc. etc. cross check your charts / indicators with others from a different source.

This may sound ridiculous my good and trusted friends but read on:

When I first started trading live the funny thing is that this was the very first indicator that I used - and lost a lot of money - and could never figure out why - and - of course - gave up on the indicator.

Eventually - as I got braver - I opened another two accounts at different brokers - and - to my amazement - realised that the Parabolic SAR signals I had been getting at my first broker - were totally different from the Parabolic SAR signals that I was getting at the other two brokers. In other words - at the other two brokers I may have been given a buy signal and then no other signal for a long while - and then eventually a new sell signal came - and so on and so forth. At the first broker - during that same time period - on the same time frame - for the same instrument / pair - using EXACTLY the same Parabolic SAR settings - I had received a 'gazillion' buy / sell signals i.e. many many false signals. Now - whether or not this is because whoever programmed the thing did not know what they were doing - OR (which I suspect) - the programmer actually knew VERY WELL what they were doing - get my drift??? Now that I have started looking at this indicator again - I noticed this again. The big problem that I have is the the first broker is my 'main' broker because they offer CFD's and the Indices etc. etc. so I've stuck with them for this reason. Needless to say - I don't use Parabolic SAR to trade the Indices!!! I have noticed this same 'anomaly' (for want of a better word) with MA's at this broker as well i.e. a 50 SMA at the first broker does not look anything like the same 50 SMA at the other two brokers!!!

Now - I'm really not trying to make you paranoid or anything like that - all I'm saying is just check - that's all. On the instruments that I can trade at my 'main' broker - that are offered at the other two brokers as well - I use the Parabolic SAR entry points as indicated by the other two brokers (they are both identical).

Anyway - like I said - post away!!!

Regards,

Dale.

[Neally]

Daily results for 5 years using SAR only Long trades only:

GBPUSD
Net profit: $41,700.00
Max. Drawdown: $21,260.00
% Winning: 48.98%

GBPJPY
Net profit: $60,701.01
Max. Drawdown: $11,941.80
% Winning: 64.71%

EURUSD
Net profit: $23,096.50
Max. Drawdown: $17,859.50
% Winning: 37.25%

Including short trades, the performance worstens.

Be prepared for some huge drawdowns my friends.