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 im sure that my entry is good :) thats all but using only parabolic SAR i dont think so :confused: it gives result when market has one direction but when is sideway .. i dont 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 :rolleyes:
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.
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.
Is this the system JAMES posted some time ago ?
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.
Here it is:
http://forums.babypips.com/free-forex-trading-systems/507-45-pips-per-day-system-eur-usd.html
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.
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.
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.
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.
G’day everyone.
I think the reason this indicator would work better on a daily timeframe than the 4h is all to do with ranging vs trending. Within one day there will be several ranging periods (the Asian session is a good example) and only a few trends per pair. Given that the PSAR strategy is adversely affected by periods of ranging, trading with it intra-day would require some careful planning with regard to timing. Probably best to start around 5-6am GMT to catch the London open and only trade for a few hours, or one good trade. Then try again a couple of hours before the NY open. Does this make sense to anyone?
As for trading the daily charts, ranging periods don’t occur as regularly. This period of time will be telling, because there is typically less volatility at the biginning of the month. With most economic news releases comming out after around the 10th and continuing through most of the rest of the month, the second half of the month should be the most profitable.
My point is this system should work better on the daily due to the regular ranging periods that will occur on any smaller timeframe. I’m not saying the PSAR can’t be used on a smaller timeframe, but you will need to be selective with WHEN you trade within the day. Just my thoughts.
-Benjimang
Totally agree - and well put!
I had something happen today - totally unexpected.
Attached is the daily chart (today) of EUR/SEK.
You’ll notice that the price penetrated PSAR - stop and reverse order was executed - and then the price retracted. At this point however you are now long.
What would you do?
Again - in keeping with the point of this thread - I’ve stayed long. I have placed an order to stop and reverse at the value of the PSAR dot for the previous day.
Just interesting - it appears that this was a news ‘spike’ or something else happened (I NEVER get false spikes at this broker so the movement was valid - no question) - and on no other chart that I examined has PSAR ever been taken out on the first dot. The only other thing that I can think of is that this is a high spread pair.
Edit:
Sorry - what I should have mentioned is that this morning I opened a short position on this pair because a new PSAR dot had appeared. Not long after that was the stop and reverse executed hence the long position described above.
Thoughts anyone?
Regards,
Dale.
I guess that’s the only tricky part of trading the daily with this method. Within one day, the price can move so far up or down so as to ‘flip the dot’, then retrace far enough to re-flip it. I am not yet trading this method, but I have an idea that might help. IT HAS helped me with the system that I am currently trading:
Wait until a new bar opens up before you act. This way, you know that the indicator has settled for the previous bar and it won’t change again. This has helped me to be more mechanical with my trading and be less influenced psychologically. dpaterso, I am the same as you… I can’t help but check my open positions ALL the time. By introducing a rule that I only act at the beginning of a new candle, I have SEVERELY reduced the amount of instances where I pull a position too soon because I wuss out, so to speak. I use this technique on all timeframes and it is one of the best things I have done with my trading. There are two drawbacks though:
-
You might miss some profits. By waiting till the new candle opens, you may be reacting a little slowly to the market. I believe this is offset by the amount of times it will keep you in a profitable trade, or stop you entering a trade prematurely.
-
Determining what time of the day the daily chart opens a new candle can be tricky. Also, you might be asleep or at work when the new candle opens, so your reaction time might be even slower.
See what you think and let me know.
Cheers,
Benjimang
Good Morning, Good Morning, Good Morning (ever watch ‘Fawlty Towers’)?
Benjimang:
Thanks for the input and insight.
I am the same as you… I can’t help but check my open positions ALL the time. By introducing a rule that I only act at the beginning of a new candle, I have SEVERELY reduced the amount of instances where I pull a position too soon because I wuss out, so to speak. I use this technique on all timeframes and it is one of the best things I have done with my trading
Glad to hear I’m not the only one!!! Like I said before - I say ‘damn - I should not have pulled out when I did’ many many more times than I say ‘wow - am I glad I got out when I did’!!!
- You might miss some profits.
Not worried about this anymore - the profit is what counts - and I’d rather make smaller profits more often - than huge profits which invariably get offset by huge losses.
- Determining what time of the day the daily chart opens a new candle can be tricky. Also, you might be asleep or at work when the new candle opens, so your reaction time might be even slower.
Fortuanately not a problem for me. As you probably know I’m in South Africa so the daily ‘ticks’ over at 06h00 here which is 00h00 NY time (at two brokers) and 07h00 at the other (I’ve never been able to figure out why their daily is an hour behind but not realy a problem). What’s great for me is that I normally work (watch) until about 23h00 which allows me to cover the European and US sessions. I’ve tried to cover the Asian sessions as well but it became extremely counter productive very quickly. Actually - that’s something I have noticed - my trading sure has improved now that I’m getting sleep!!! That may sound strange but I’ll tell you - your mind does need to be awake - otherwise you really make stupid decisions.
Anyway - I’m going to give your advice a try. Thanks.
As far as the thread is concerned I have made some more observations this morning:
1 - There were quite a few positions that I did not open last week when I first started this because there were already two or three PSAR dots showing. I had a good look this morning and I figure that with PSAR you COULD theoretically open positions no matter how many dots are showing. Why do I say this? Because remember that although you are opening positions late your stop loss is much smaller if you are using the indicator as designed. So - the logic being - you are getting in late - if the trend continues - good for you - if not - you stop and reverse with a minimal loss.
2 - I also realised that I have been TOTALLY stupid when opening all these positions at my one broker!!! I forgot that they have a Level 2 platform!!! On Level 2 the spreads are minute compared to the normal orders. There is commission payable on every trade but this equates to be far less than the cost of the spread on normal orders. I can’t believe I forgot about this!!! I mean - sometimes - there is NO spread - and when I looked at some of the spreads just this morning - I’ve opened some positions where there is a fifteen or sixteen PIP spread on normal orders and on Level 2 that same pair only had a three PIP spread. This makes is more viable to trade what are normally high spread pairs like most of the exotics.
3 - Take a look at what happened this morning with EUR/SEK (the problem child from yesterday)!!! Now there is a PSAR dot at the top and a PSAR dot at the bottom!!! What to do??? I added (and I know this is cheating) an indicator called ‘TRIX’ just to get a ‘heads up’ and this indicator tells me that the trend is still up (this indicator is some or the other tripled or quadrupled doubly smoothed something or the other and is designed to indicate the direction of the major trend and keep you in the trend as long as possible). Now - don’t get me wrong - I’m not circumventing PSAR - it was just on this pair that I had no direction at all - still don’t!!!
4 - There is an inherent problem opening as many pairs as I have opened. I just realised that by opening as many positions as I have that you are effectively creating ‘hedges’. It’s almost like going long AUD/USD and short NZD/USD. While both pairs wont move at exactly the same time and by exactly the same amount the one will show a loss and the other will show a profit and the nett effect will be either a smaller profit or smaller loss. On the other hand - I have still not quite cleared this in my mind. Does this actually make a difference? Actually - I’m talking nonsense (I think). If I take a look at these same two pairs they are BOTH going south based on my PSAR positions so they are not effectively ‘hedging’ each other. Actually - the bigger danger appears to be that BOTH of them go against you at the same time!!! I need to research this phenomenon in more depth but any comments or input would be greatly appreciated!!!
By the way - as I type - profit on what is now 36 positions / 36 pairs is $1916.71 I did not get any ‘new’ PSAR dots this morning - just trying my ‘it’s OK to enter late theory’ as detailed above).
Edit:
I’m ‘wracking’ my brain on this one i.e. with the number of pairs. I keep thinking to myself I should not be trading the ‘crosses’ e.g. it’s not making sense to me to be trading EUR/GBP AND anything else EUR/??? and GBP/??? for example. In other words - I have a lot of other EUR/??? positions and a lot of other GBP/??? positions - and are these other ???/??? positions not pretty much dependant on the movement of the EUR or GBP??? Thinking!!!
Another edit:
Also - is it just me - or are the currency markets not really doing anything??? I’m getting reminded once again why I trade the Indices and Commodities and not Forex!!!
And yet another edit (actually this is more of a ‘message to self’):
HANG IN THERE!!! Now that there is no movement I am SOOOO tempted to just close all of the positions that are showing a nice profit!!! What happened to the ‘violent’ movements I saw last week and on Monday / Tuesday this week??? After the ‘shinnanigans’ last week on stocks even the Indices seem to be asleep!!! It’s like what I imagine to be the ‘doldrums’ (I’d make a terrible sailor - although - if the truth be told - that’s EXACTLY where I want to end up - Alaskan Crab Fishing on the Bering Sea with my son - once I’ve paid off all my debts and bought a crab boat - ala ‘Deadliest Catch’ - just think - I could trade the DOW and the DAX via satellite)!!! Let me go and wash my car!!!
Regards,
Dale.
G’day dpaterso, there are quite a few ‘correlated’ pairs. AUD and NZD move in a very similar way for two reasons: wer’e both CommDolls (heavily influenced by commodity markets), and we both have high interest rates (good for carry trading). Swissy and Yen are related due to their low interest rates. They’re often more volatile due to the role they play in different trading strategies, and will move in similar patterns across all the different majors. GBP and EUR are quite similalry behaved for the obvious ties in economies.
Basically, if you place one lot in each of two correlated pairs, it’s very similar to placing two lots in one. It is a little bit different in the way that your trade will behave during news releases. You should take that into consideration according to your money management plan.
Good evening all!
OK - well - bad news - I had to close out some positions - purely because my margin percentage started to drop below 30% at some point during the day (and the broker where I had all of these pairs open does not take kindly to that - which is good for the trader anyway). So - what I did - I closed out all the positions that were showing a profit (was still a nice little profit) and left the ones that have not been stopped and reversed.
It’s not a problem though - I will continue with the ‘experiment’ - it’s still early in the month - no problem - BUT - every new position I open I will open on their Level 2 Platform (much lower spreads e.g. I just opened a new position on GBP/NOK - Level 2 spread at the time was 92 PIP’s - ‘normal’ order spread is 150 PIP’s - makes a big difference when you are using an indicator that has to eat your PIP’s before a reversal).
Sorry about that people - no choice.
Oh - and another observation - after today I don’t advise opening positions after a few dots have already appeared i.e. only when the first dot has appeared do you open a position - opening positions with a few dots already showing this morning is actually what caused the problem in the first place i.e. because you don’t already have a profit to fall back on if the direction changes temporarily - you are already in a loss position from the ‘get go’ - just not worth it. Also - since - starting this ‘experiment’ last week - I have noticed that your profit accelerates at the beginning of opening a position but price acceleration starts slowing down toward the end (but PSAR starts accelerating to protect profits - that’s by design) - so - there is no point in opening positions late by the looks of things - the amount of time you might be ‘lucky’ will just not outweigh the losses.
Regards,
Dale.
Hello again.
You know what - I’m starting to think that I am making a fool of myself here.
I mean - out of sheer boredom - waiting for the NYSE to close - I was flipping through some forex charts - and I noticed this on quite a few of them:
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!
Regards,
Dale.
It seems to me, the more important question when deciding to enter a trade, is… now that there is a new parabolic dot, is there a 2nd indicator, confirming this?
Please see my attached chart as an example of a bad time to enter, even though a new parabolic dot appeared.
And I really think, you could potentially wait for a couple dots, even if you’ve had a 2nd confirming indicator, and still get a win. Today was just a bad day to trade. With the big NFP coming out tomorrow. The market just wasn’t moving, and for the most part, stayed in a very tight range. So its no wonder if people were getting stopped out, using this system, on a day like today.
Thank God for demo accounts!!! 
Hello - thanks for the input.
You know - I’ve spent the whole day looking at this again - and I reckon this indicator does work EXTREMELY well - except for one thing - you have to have only ONE pair open - not the fifty thousand that I had. 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)!!!
Anyway - continuing with my ‘experiment’ - what pair goes up and down and up and down and up and down (you get the picture) all day (or at least most of the time)? I just want to try something else. Some of these pairs have a huge movement and then do nothing for the rest of the time - and that certainly will not work with this indicator.
Regards,
Dale.
I would suggest playing with yen crosses. They tend to be correlated and are fairly volatile.