You can minimize your lot size so that if the 1st PSAR is hit, you will only lose 1% or 2% of your account… Don’t need to use full lots.
And filters seems to be important because of PSAR’s lousy record during non-trending markets. No need to waste money here. Staying out is the best solution than riding out the losses.
Hi I am new. Some very good info on these forums. I like the simplicity of this method and from looking through the charts it looks like this is very profitable in trending markets. It looks like it gets you in early to me? Although when it goes against the trend not so good.
Just wanted to know if people agree that just using the PSAR alone was good enough or could u say add stochastics and pivot points to help? or am i just complicating things if I do that?
I’ve tried using the IcyCloud system which uses the PSAR and Bollinger Bands, but it just didn’t work for me, so I havent tried this one.
After some more research, I’ve just read that the PSAR system was actually developed as a “Stop-Loss” system used to set trailing stops. However, as it’s known to work best in a trend, it’s less reliable in ranges or congestive phases. Therefore I do think a complementary indicator is needed.
This brings me to the ADX (Average Directional Movement Index) which I’ve just been studying up on lately, and actually just found an interesting article suggesting that is be used as a filter for the PSAR. There are 3 lines: The ADX itself, the +DI & the -DI. The ADX line value indicates the strength of the trend, +DI is the up trend, -DI is the down trend.
So, for example, the ADX is above 20 and rising and the +DI line is above the -DI line, all sell signals can be ignored (-DI above +DI all buy signals ignored). if the ADX is below 20ish, it’s in a range and perhaps stay out.
Anyways, I’m going to try it and find out. 
Geez: I was worried that this thread would ‘die’ but it seems (happily) that this is not going to be the case.
Right: here is a ‘system’ (for all you ‘stunningly lazy’ people that don’t want to ‘put in the slog’ and want to ‘get rich quick’) based on Parabolic SAR using Fractals:
(By the way: this ‘system’ is SO good that I’m going to ‘copyright’ and ‘patent’ it so be sure to give credit to me when posting this somewhere else otherwise I WILL find you and kill you)!!!
(As you can no doubt gather I get bored while Mr Wilder’s ‘Swing Index System’ makes me a ‘gazillionaire’ so I have to keep my mind occupied and then I come up with ‘gems’ like this)!!!
Right: here we go!!!
After OVER A YEAR of ‘studying’ and ‘analysing’ Parabolic SAR (and a ‘couple of K losses’ to ‘boot’) I (we???) all know that the MAJOR drawbacks of using Parabolic SAR are ‘encapsulated’ in the following paragraph:
Parabolic SAR is ‘taboo’ in a ranging market and the (sometimes) potential losses are HUGE if the trade goes against you and you’re using Parabolic SAR to set your stop losses (as per it’s original ‘design’).
SO: What would you say if I told you that I have the solution (finally)???
Check this out:
You need:
Parabolic SAR (default settings i.e. don’t ‘mess’ with it)
Fractals (default setting which is normally 5)
Procedure:
Watch the chart closely.
Watch some more.
Have another good look at the chart.
Wait for a Fractal to appear.
If an ‘up’ Fractal appears then wait for another bar to CLOSE above the high of the bar where the (last) ‘up’ Fractal appeared or, if a ‘down’ Fractal appears, then wait for another bar to CLOSE below the low of the bar where the (last) ‘down’ Fractal appeared (and we will call this bar the ‘signal bar’).
Ensure that the direction of Parabolic SAR at this point is going IN THE SAME DIRECTION as the ‘signal bar’.
Place a stop order ‘a couple of ticks’ above the high of the ‘signal bar’ for a long entry and place a stop order ‘a couple of ticks’ below the low of the ‘signal bar’ for a short entry.
Your INITIAL stop loss is ‘a couple of ticks’ below the low of the bar where the PREVIOUS ‘down’ Fractal has appeared (that is the PREVIOUS ‘opposing’ ‘down’ Fractal) for a long entry and your INITIAL stop loss is ‘a couple of ticks’ above the high of the bar where the PREVIOUS ‘up’ Fractal has appeared (that is the PREVIOUS ‘opposing’ ‘up’ Fractal).
Your stop loss STAYS here (there) UNTIL Parabolic SAR has ‘taken over’ i.e. has ‘locked in’ profits OR is a closer stop than the INITIAL stop as detailed above.
THAT’S IT!!! (It’s so simple that even a ‘novice’ can trade with it)!!!
Take a look at the attached chart for a ‘graphical’ explanation.
To be serious now:
Why does this work? Reason: because Fractals signal ‘key’ turning points on a chart AS WELL AS support and resistance. What you’re looking for in these trades is a Parabolic SAR trade where the price has broken through support or resistance IN THE SAME DIRECTION as Parabolic SAR.
Have fun!!!
(By the way: from what I can see this works on ANY timeframe and, ironically, appears to be more profitable on shorter timeframes i.e. shorter than the daily timeframe).
Hi Dale,
This system is very similar with the icycloud system. have you seen that system? any thoughts or additional inputs regarding the icycloud system?
Btw Dale iss this the only system you use?
Thanks Dale for sharing your learnings to us newbies
Raffy.
Hi,
Thanks for the post (and it’s my pleasure).
I have not looked at the ‘IcyCloud’ ‘system’ (but I’ll go and have a look now for sure i.e. maybe I can ‘sue’ the person)!!! (Only kidding)!!!
I don’t use this ‘system’ myself (I only trade Wilder’s ‘Swing Index System’ now) but, now and then, when I ‘come up with an idea’ I post it here.
To be honest I’m ‘playing with it’ right now i.e. because this ‘appears’ to be able to work on shorter timeframes it will give me something to do while my ‘mutha load’ (Swing Index) trades work themselves through (and keep me from ‘messing’ with them)!!!
By the way: something else that should (could) be mentioned with regard to the above ‘system’:
If ‘fortune is smiling upon you’ and the trade is going well in your direction and you get another entry point in the same direction (as detailed) then this gives you an opportunity to ‘load up’ on some more lots. The ‘nice’ thing about this is that if you do this you already HAVE a ‘nice’ ‘profit cushion’ behind you so that IF the trade goes against you then at worst case you should ‘break even’.
Try it out and let me know what happens. If I discover something ‘bad’ about my idea I’ll let you know.
Nope, just had a look at ‘IcyCloud’ and I don’t see the similarity at all.
The Fractal Indicator is giving you TOTALLY different information from Bollinger Bands (and I personally have never ‘cared’ for Bollinger Bands). The Fractal Indicator is showing you the last point of support or resistance based on price whereas Bollinger Bands (to me anyway) are far to ‘wishy washy’ i.e. not ‘exact’ enough for me.
I’ve ‘toyed’ with the Fractal Indicator quite a lot in my time and it’s a very ‘misunderstood’ and ‘underrated’ indicator in my opinion. Bill Williams makes ‘liberal’ use of fractals in his ‘Trading Chaos’ systems (just thought I’d mention it is all).
Good to see another idea from you Dale. To be honest with you, I’d never even heard of fractals until I read your post. Worth further research I reckon.
Going back to our original system (or a system along the lines of the original system which I am still using). Yesterday all my indicators were lining up to go long on EUR/NOK and I took the trade. However, when I logged into my account later in the day, I found I had added an extra zero to my lot size, hence I was 10x overexposed to the trade. I couldn’t take the risk so I had to close at a loss and lost 1.5% of account balance on the day. Lesson learned for sure.
By the way:
The ‘new’ ‘system’ described above (let’s call it the ‘PSARFrac System Revision 1’ shall we) (pronounced ‘saarfrack’) WILL keep you out of some good trades BUT it will keep you out of MANY MORE BAD trades which is ‘key’ here.
Also: you can use ADX (as mentioned by Sweet Pip) which was, after all, developed by ‘the man’ (Wilder) and Wilder HIMSELF actually suggests using ADX with Parabolic SAR in ‘the book’ (‘New Concepts In Technical Trading Systems’). All I have added really is the ‘correct’ use of the Fractal Indicator.
I agree with you Sweet pip. I like to use ADX for exactly the reasons you mention. Although I must add, I have also missed a few good trades because of it.
Hey Boca,
I got a signal to long EUR/NOK the day before (from Wilder’s ‘Swing Index System’) and my order was hit and then the price retraced ALMOST to a ‘Trailing Index Stop And Reverse’ (or ‘TISAR’) but I see today it has turned again AND IT HAD BETTER KEEP ON UP OTHERWISE I’M GOING TO ‘SPIT BLOOD’!!! I went to a ‘hell of a lot of trouble’ ‘choosing’ that trade (based on Wilder’s CSI and my PSCALE) so I’m going to be REALLY ‘peed off’ if it goes ‘sour’ on me I can tell you!!!
This actually brings me to a very good point (but I think I need to post this over on the new thread). Sorry: but I want to keep things ‘together’ over there.
For ‘continuity’ (sorry):
Sorry Dale, I meant to say Long… I was long as well, but had to exit as i F****D up with the lot size, hence my loss on that one.
Hi Dale
I most impressed with you and your writings, I really thank you for all your input, and hope to even meet face to face someday, even if far away from America, I wish to ask of you a big favor, i am trading the daily charts on the psar system, and it takes a lot from me to stare at the screen for so long without any action, if you know what I mean, so if there is any custom indicator that will email me the moment the dot changes course, it will be more than helpful, could you please tell me if there is any and how I can get my hands on it.
Thanks a Million in advance and have a nice weekend.
Ricardo
<[email protected]>
Hi Ricardo,
I’m so sorry for only replying to you now i.e. for some or the other reason I did not see that there was a new message on this thread until now!!!
Thanks for the kind words.
The only ‘custom Parabolic SAR indicator’ that has an alert added is one for Metatrader 4 AND I don’t even have it i.e. I just saw it mentioned somewhere on another thread. From what I remember it will email you when Parabolic SAR is ‘penetrated’ and you can then ‘reroute’ the email to your mobile phone so that you get an SMS (that’s what I do with my other stuff anyway). Other than that there are a whole bunch of sites that will email you (or even SMS you directly depending on where you are) when MACD crosses or MA’s cross and stuff like that but for some or the other reason I have never come across a site that has an alert available for Parabolic SAR. The only thing I can suggest (sorry I know it’s not what you were looking for) is to ‘Google’ ‘Parabolic SAR’ and ‘Metatrader’ or ‘MT4’ and see what you find. I know there is one: I just don’t remember where I saw it (hey: maybe it’s another ‘service’ that I can add to my ‘new business’)!!!
MT4 does have a PSAR study, it also has e-mail & phone alerts. You have to do a bit of programing but I think you can get the alerts to warn you when a new trend starts. I have not done this but I think it is possible.
By the way, great system! I have been looking at this for a few months and it seems realy consistent. I worry abit about the large stops but I have been changing my stops levels a bit to be more conservative and things seem to be working. I am just waiting for a decent entry point now to start with real $. Wish me luck…
plz kindly send me daily current cerrency price rate
Well, all I can say is that so far I’ve been blown away by this system. I’m in the 4th week of testing now. As I stated before, I started off with only $1200 in my account, and am now at $6921. Of course it’s early days yet, but I’m quietly optimistic. I’m posting the results on my website on as regular a basis as I can manage.
Dale, very interesting post about adding the Fractal indicator. As soon as I get some time I’ll start testing that as well. I’ll post the results of both systems on my blog.
I am new to forex and have only dabbled on a Demo Account once about a year ago. I love the look of this system and want to extend my explicit graditude to you for doing the work to create it. I plan on using the Metatrader system to set up on. Where do I find the settings for the Parabolic SAR and Fractal Idicators. I saw the updated version and liked the fact that it also worked on shorter time frames. I plan on demoing this for quite some time before going live but am anxious to get started. Any help would be greatly appreciated. John
Never mind my last post I think I found it on your updated version. I am planning on also using the Awsome Ossilator as a double check for direction. Do you think this is a good idea or mistake. John
I tested this today on gbd/usd, using a demo account and a 1 minute chart.
I had 4 wins in a row within 2 hrs for a total profit of $4700. I entered a long or short at every reversal of the dots. Beginners luck?
