How to Use Parabolic SAR Effectively

November 1, 2020 at 7:59 by K. Prabhu

The parabolic SAR Indicator tells you the information about the short-term momentum and hence the direction of the market. When the dots appear below the price, then it is the buy signal. When the dots appear above the price, then it is a sell signal. However, when the market ranges, then you get too many signals, which appears to be confusing. Hence, you can increase your timeframe. Another way is to use a filter, which is the 50-period EMA. You can find both of these indicators for free on your MetaTrader platform.

As you can see on the chart, you can now take long positions only when both the moving average and the parabolic SAR indicate buy signal at the same time. You can shift your stop-loss or exit your long position, when you see sell signal on the parabolic SAR indicator. This method helps you filter out false signals for entry and offers you a good risk-to-reward ratio.

Tags: Forex strategy, Forex trading, Forex video, indicator, Parabolic SAR

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