Parabolic SAR - that's all!

[pip huntter]

Guys,


another thought that came to me while we trade news all who wants to participate on this group should have through their broker a very instant excuation as for me i am sure my broker has this so i don't have any problem to do it as they do have an instant excution it is like 1 sec the moment i click the moment my order excuted . so u guys should test your broker and make sure that they have this option other wise don't do that!!!

I rememebr with my x broker when i traded news i was clicking so many times and the order never excuted and when the price went against me i tried to excute the order offcourse it was excatued very fast coz i am ending up with loss!!!

Put it this way Dale ( AS I AM SURE U WILL BE ONE OF THE PEOPLE WHO WILL NEVER ACCEPT TO TRADE NEWS COZ OF YOUR BAD EXPERIANCE ABOUT TRADING NEWS) we will never do any news trading unless the news came up with unxpeceted results so if the expectation was 1 the previous was 1 and the result came with 2 then this is a vailed entry for us like what happend with the CAD on friday it came much more than what had been expected ending with 300 pips gain against the EUR and the GBP

We can test this on trading 0.1 Lot in the begining and if the results came good for the month we will begin to trade news then we will raise our lot into 1 or whatever.

What do u think about that???

Regards,

Akram

[dpaterso]

Good (Sunday) morning everyone,

Thanks for all the posts since Friday.

OK - well - I have to be very honest with you:

At this point - I'm more than just a 'little p****d off' - with this 'system' of ours AND forex trading in general. I mean - I waited for days (weeks) on end to get 'valid' Parabolic SAR trades - and - for the most part - it sure seems that everything has - and will - go pear shaped on ALL of the trades that I waited so long to get into.

I have spent the entire weekend asking myself: 'What are we missing here? We must be missing something and I don't know what it is'. I mean - as I stated above - I waited AGES for EVERY SINGLE ONE of our 'rules' to be 'satisfied' - never wavered - had patience - and the end result of going to ALL of that 'trouble' is a 'nice fat loss' at the moment.

(Also - are we (I) not trying to trade long term with a short term mentality???)

Now - while this 'nice fat loss' MAY turn to a profit at some time in the future - to be honest - on the positions that I hold at the moment - I can't see it happening - not without some HUGE drawdown - and - with the instruments that I currently have open positions on - I'm not sure that my account would be able to withstand these drawdowns if I get stopped out and have to stop and reverse (admittedly I'm 'overtrading' my account at the moment but still) - and - to be quite honest - at this point - I'm not even sure that I'd have the 'guts' to stop and reverse if I got a signal to do this from Parabolic SAR (Gold and Silver being VERY good examples at the moment).

One thing that keeps 'firing off' in my brain: J. Welles Wilder Jnr. ONLY traded commodites (like Soybeans, Lumber, Coffee, Live Cattle, etc. etc. etc.) - could THIS be why this indicator is not performing that way that we expect it to (or would like it to) on forex? There is a MAJOR difference between the price action / behaviour of Soybeans (for example) and forex pairs. One MAJOR difference (and this SEEMS to be where our 'weakness' lies) is the fact that commodities ARE NOT subject to huge 'spikes' because of economic news data and the trends that commodities follow appear to be far more 'stable' as it were. COULD this be the reason we are battling here? I'm not sure - and any input on this matter would be greatly appreciated.

Now - please don't get me wrong - it is NOT my intention to 'take the wind out of everybodys sails' - but we CANNOT simply go on with 'blind' faith in the 'system' and accept drawdown after drawdown HOPING that we're right EVEN ALTHOUGH backtesting results show long term profits. It's fine to show long term profits with backtesting but remember one VERY important thing: you have to have the margin to sustain these drawdowns before showing profits at the end - and - obviously - if you're margin called at any point - it really does not matter HOW much profit backtest results show if you can no longer be in the game.

SO - again - getting 'Analysis Paralysis' and analysing every single chart on every single timeframe - I THINK I MAY have found something that COULD very well change our fortunes and it's really very simple:

50 SMA and Parabolic SAR. That's all!!! (Where have you heard THOSE words before)???

The idea is this:

You go short when the price has CLOSED below the 50 SMA and you go long when the price has CLOSED above the 50 SMA and you use Parabolic SAR to set stops and take profit.

Once stopped out and profits taken you DO NOT reverse the position i.e. you ONLY open a new position once the price has reversed to the point where it has crossed AND CLOSED above the 50 SMA again. In other words - for example - let's say that you were in a short trade based on the 'rules' above - you used Parabolic SAR to set stops and take profit - and you only went long if or when the price crossed and closed ABOVE the 50 SMA Obviously the reverse applies if you were in a long trade based on the 'rules' above.

These 'new' 'simple' 'rules' APPEAR to benefit us how?

Well - for one thing - margin is not unecessarily 'tied up' for days (periods) on end while the price is making up its mind. In other words - I've noticed that MANY times - when Parabolic SAR has given you a 'valid' entry signal and you take the position - the price seems to 'hang around' at that point for quite a while before it starts moving (hopefully) in 'your' 'right' direction.

It also APPEARS that we would be kept out of trades more often than not where Parabolic SAR was indeed wrong to start with.

I mean - take a look at my daily chart of GBP/CAD - my prize 'f**k up' of a position on Friday. Based on these two new simple rules - I would NEVER have been in a long in the first place AND look at the results of the short position that I COULD have taken a couple of days prior. No contest.

I don't know what you all think. Take a look at some charts and backtest. See what YOU come up with.

One other thing that appears to be evident is that this 'strategy' can be used on ANY timeframe as well. Of course - the shorter the timeframe - the smaller your potential profits (and of course potential losses or drawdowns) are. If you need to make money fast (as I do at the moment) trade the shorter timeframes with bigger lot sizes. Aside from having bills to pay - I found out yesterday that bookings for Tarja Turunen's promotional tour of her new album 'My Winter Storm' are open - and 'come hell or high water' - I at least want to have the CHOICE as to whether or not I'll see 'the angel' this year and THIS my friends is not my usual 'music banter' either!!! (And by the way my Finnish friends: she has also put out two promotional tracks from the album and it SURE does look like she's going to 'stick it' to Tuomas and Annette)!!!

Once again - I'm EXTREMELY dissapointed with the way things have turned out so far BUT refuse 'point blank' to give up. This business has cost me FAR too much financially and personally - and - SOMEHOW - I'll make it work for all of us.

The 'bottom line' now from where I sit is this:

I reckon that if you want to trade using 'pure' Parabolic SAR - trade commodites - less volatile - and better 'suited' to 'pure' Parabolic SAR. Of course - the problem with this is of course that the 'payoff' is not as good and you need to invest HUGE amounts to make decent profits. That's why forex trading is so popular i.e. highly leveraged and volatile and it appears to me NOW that Parabolic SAR cannot 'react' fast enough on forex pairs (at least not fast enough for me anymore. It would NOW appear (again - to me anyway) that using 'pure' Parabolic SAR on forex pairs is like trying 'to fit a square peg in a round hole' as it were.

Look - please feel free to disagree with me - and to play around with different MA's (SMA's, EMA's) and values - maybe you come up with something better.

Let us all know if you do.

Regards,

Dale.

[dpaterso]

By the way - there IS another way to trade - and as far I know - the 'pros' use this method:

Simply go long when the price closes above the 50 SMA and use the value of the 50 SMA for your stop loss and take profit points and go short when the price closes below the 50 SMA and - again - use the value of the 50 SMA for your stop loss and take profit points i.e. NO Parabolic SAR.

The only 'problem' with this is that your profits are significantly reduced because mose times the price has to retract a WHOLE lot before the 50 SMA is crossed - that's the reason for (possibly) using Parabolic SAR to set stops and take profits.

Again - input on this would be greatly appreciated.

Regards,

Dale.

[dpaterso]

After getting even more 'Analysis Paralysis' I may have 'come up with' something EVEN more 'feasable':

What about ONLY taking Parabolic SAR entry signals to go long when the price is closing ABOVE the 50 SMA and ONLY taking Parabolic SAR entry signals to go short when the price is closing BELOW the 50 SMA???

What do you think of that???

Dale.

[pip huntter]

Originally Posted by dpaterso

After getting even more 'Analysis Paralysis' I may have 'come up with' something EVEN more 'feasable':

What about ONLY taking Parabolic SAR entry signals to go long when the price is closing ABOVE the 50 SMA and ONLY taking Parabolic SAR entry signals to go short when the price is closing BELOW the 50 SMA???

What do you think of that???

Dale.

Dale,

I checked some graf that i have and applyed what u said and i think it has a potential. that our open postions will be better to be based on PSAR and 50 SMA if the pasar show short and the 50 SMA is above the closed candels it is a vailed entry and the vise versa is this what u mean? if so then yes i agree as i checked in my platform and i seems that it works!! although i don't want to agree now coz i already have some postions opened based on the old rules and they show some loss and they r agaisnt the new rules now!!

I agree with u that we should check it more and more as it seems to have a potenial.But why u never revert back to me concerning the news are u agaisnt what i said???

I know your loss are great now and i am so sorry for that i really feel bad for u coz at one point last week i was having the same feelings.But what i want to tell u right now is don't close any postions right now just wait for makig some profit or break even an then close them one by one till u cover your loss. i know it might be too late but this week most of the news coming from they USA is going to be good so if u do have some postions like gold and silver which bothers u then i think u should wait little bite at least give it a week.

Again about my idea concering the news trade i feel so confident about it what i meant earlier is that our vailed entry will have to be like the one we got from canada this week were the numbers come unexpected and it was like a huge different between the previous news and the expected ones that is why u had 300 pips in 1 hour!!

Regards,

Akram

[Larryfp]

I think the problem here is that this system is 100% technical and 0% fundamental. You can't blindly follow a system without looking at the big picture. Dale it's easy to see why the CAD did not do what it should have because of the news so don't feel bad about that.

I think this is a GREAT system but more attention needs to be placed on the big picture and that should be more of a factor. If you are getting a perfect signal but all the news coming out of the country is saying the opposite then watch out. If there was a 100% foolproof signal that you could follow blindly then it would have already been discovered

Just my thoughts..I appriciate all the great post that everyone leaves. I am sure in the long run everything will work out.

[dpaterso]

Hi everyone, and thanks again for posting.

First - let me say this - I am feeling extremely bad for all of you about all of this - I feel like I have let you down - and I am sincerely sorry. When I first started this thread I had no way of knowing that my first HUMUNGOUS profits were really nothing more than the result of 'being in the right place (on the right side) at the right time' - nothing more. Did Parabolic SAR have something to do with it? Well it must have because otherwise I would never have BEEN in those trades that month. Can Parabolic SAR on it's own 'do the trick again' - I actually don't know. Yes - as I have always said - patience is the key - but you CANNOT have more patience than your margin will allow.

Now - having said that - I could just 'walk away' - or - I can try and fight it - and fight it I will!!!

As far as existing trades are concerned - the ones based on the 'old' rules - I also don't have the answer as to what to do. To be honest - on Friday night - I closed all of my profitable positions - which has now left me with only the following positions open:

XAU/USD, XAG/USD, WTI1107, USD/DKK, USD/BGN, EUR/USD, EUR/RON, and COIL1107. I am EXTREMELY worried at the moment about Gold, Silver, and Oil i.e. on Gold and Silver I am far too close to getting stopped out for comfort but I'll 'take it like a man' if stopped out. Will I stop and reverse if this happens i.e. a valid Parabolic SAR entry signal which would be above the 50 SMA? I would not like to commit myself at this time. For some or the other reason Gold, Silver, and Oil, have pretty much ALWAYS been the cause of catastrophy for me and to be honest - I am really starting to develop a phobia about trading these things. Gold has single handedly been the root cause on more than one occasion in the past that has caused me to wipe out more than one live account and I refuse to allow this to happen again.

Akram, news just ain't for me my man. OK - to be honest - before I started trading with Delta - the MAIN reason that things went 'pear shaped' is because trying to trade the news at GCI spells disaster for the reasons that you mentioned. At Delta - MAYBE it's something to look at. At Delta you can place buy and sell STOP orders simultaneously within the spread AND these orders will not get 'hunted' (at least not by the broker) and they will be executed at their correct price and not 'slipped'. At GCI (you've probably already gathered that up until now THEY are my 'main' broker) this is not possible i.e. no scalping or short term trading at GCI. Try trading the news or any short term trades at GCI and they WILL feed you your 'a**e' on a plate. On the other hand - much to my dissapointment - the leverage on Delta's Indices is just far to low for me to be able to trade these intruments with them so - until I have an ABSOLUTELY HUGE account balance - I will just have to keep my Indices trading at GCI - and - to be honest - although I've REALLY been VERY 'p****d' off with GCI in the past - for the reasons that I mentioned above - since I've been trading long term and NOT trying to scalp the market and 'make a quick buck' they've been good to me. Tradex at the moment is going through some or the other 'little problem' at the moment - which I think is sorted out - but I don't have any money in my account there at the moment (just enough for me to be able to run my MT4).

Larryfp, thanks for the input. I do agree with you - totally. My problem is that I either do not have the experience, the knowledge, hell - who knows - maybe not even the intelligence, to make trades by taking fundamentals into account. Again - I been wrong too many times and - on those occasions when I've been right - or analysed the fundamentals correctly - it's not made any difference at all. I mean - I can't even 'call it' correctly for my own country - let alone a place that I know absolutely nothing about. It's for this reason that I need a trading system that works based soleley on technicals for the moment - at least until I can spend a few more years learning this business and gaining experience - withouh losing everything I have in the process. I'm 'banking' on the fact that such a system does at least exist.

Anyway - let's go again!!!

I have attached a chart explaining in more detail what I'm trying to get at.

Basically - you take a long position when the price CLOSES above the 50 SMA and you take a short position when the price CLOSES below the 50 SMA. The 50 SMA is your stop and reverse point UNTIL Parabolic SAR has locken in your profits and from that point on you use Parabolic SAR to set stops and take profit. Once stopped out by Parabolic SAR you only take future Parabolic SAR trades base on where the price is relative to the 50 SMA i.e. if the price is still above the 50 SMA you only take long positions and if the price is stilll below the 50 SMA you only take short positions. Your initial 'stop loss' is the 50 SMA line UNTIL Parabolic SAR has started to lock in profits at which point you then revert to using Parabolic SAR to set stops and take profit.

The timeframe no longer appears to be an issue here.

By the way - there may be merit also in using a 50 EMA instead of a 50 SMA. Experiment.

Anyway - have a look see - and tell me what you think.

I have been trying all day to find 'exceptions' and I don't see any. The ONLY problem that I CAN find is when a pair is range bound for a couple of days (periods) and I have not quite figured out a solution should this situation present itself so feel free to 'jump in here' (maybe in a case like this my 'Break Out Point Software' could be used i.e. if HBOP is hit AND the price now closes ABOVE the 50 SMA then you take a long position and if LBOP is hit AND the price now closes BELOW the 50 SMA then you take a short position).

Also - I have removed ALL other indicators - mainly because they 'plant to many seeds of doubt' in my mind and frankly - from what I can see at this time - really don't seem to mean too much anymore. Funny enough - I was going through my John F. Carter book again today ('Mastering The Trade') (it always helps to 'lift' me when I'm 'down') and you know - it's funny - that the same indicator can be intepreted differently - depending on the interpretor. As an example - I would interpret Stochastics above 80 a signal that the instrument is oversold BUT you could ALSO interpret this as a sign that you're in a bull market i.e. Stochastics are above 80 BECAUSE the bulls are so strong at this point you should NOT be looking to go short but rather long. See what I mean?

Anyway - like I said earlier - I'm sorry for (possibly) 'leading you up the garden path' as it were - it was NOT my intention - and in the beginning - I REALLY believed that Parabolic SAR was 'The Holy Grail' but it no longer appears to me to be that way and hopefully - with these new 'simpler' rules - we can ALL get back to where we were and then some.

Let's have a FANTASTIC week!!!

Regards,

Dale.

[dpaterso]

OK - well - for what it's worth - I've got two new positions open based on the (my) new rules:

AUD/CAD - Long
USD/JPY - Long

AUD/CAD - I already know - will PROBABLY (hopefully) go against me i.e. Gold will drop. If it does not though and keeps going up - at least my loss of Gold will now be reduced by AUD/CAD.

I do not have stops set yet as I have only just opened taken the positions BUT I do have email and SMS alerts set so that I can come at check IF the 50 EMA line has been crossed during the day and make a judgement call i.e. to wait for tomorrows close or exit the position immediately.

One other good thing that I've noticed is that it would appear that if you have already missed a good move (I had already missed on USD/JPY) you can get in now without having to wait for a 'Parabolic SAR reversal' i.e. based on our 'rules' I would have to wait for USD/JPY to reverse before being able to take a position (would have been short probably).

I have not gone to look at the 4 hour charts or lower as, frankly, I'm just too tired at the moment and I actually think that a good nights sleep will change my perspective on things. You can be sure though that from tomorrow morning I will be 'scouring' the 4 hour charts and the 1 hour charts looking for entry points.

By the way - I have elected to use (at the moment anyway) - a 50 EMA and not a 50 SMA - but - like I said - you need to 'experiment' and then share your results and conclusions.

Regards,

Dale.

[dpaterso]

OK - also - for the record - I have closed all my positions held since Friday (those that were taken based on our 'old' rules). At the moment I now only
have the two positions taken earlier on tonight and Gold, Silver, and Oil.

For what it's worth - both AUD/CAD and USD/JPY are showing a profit already.

I think that the 50 EMA is actually telling you that a trend has aleady been established and by taking positions based on the direction of the 50 EMA you're actually being 'forced' to only buying or selling in the direction of the trend. This may very well be 'it'!!!

Regards,

Dale.

[pip huntter]

Originally Posted by dpaterso

OK - also - for the record - I have closed all my positions held since Friday (those that were taken based on our 'old' rules). At the moment I now only
have the two positions taken earlier on tonight and Gold, Silver, and Oil.

For what it's worth - both AUD/CAD and USD/JPY are showing a profit already.

I think that the 50 EMA is actually telling you that a trend has aleady been established and by taking positions based on the direction of the 50 EMA you're actually being 'forced' to only buying or selling in the direction of the trend. This may very well be 'it'!!!

Regards,

Dale.

Dale,

I checked the new system again and again that is why i didn't comment on your posts before but yes i feel it is working quite well but when i appaly them on 4 hours they give me an oppostie signals!! so i think perfectly for this system is daily. how do u think about that?

Regards,

Akram