Forex – Parabolic SAR indicator
The Parabolic SAR is an indicator that follows the trend and determines the reversal point in the price channel. SAR literally means “Stop And Reverse.”
Visually, it takes the form of a series of dots that are either above or below the price chart.
How to setting parabolic SAR indicator on the olymp trade android apps?
a) First, switch to the Japanese candlesticks chart.
b) You can set the period and the color of the indicator dots. For the period, we recommend leaving the standard value – 0.02.
c) If you increase it, the indicator will give more signals, but their accuracy will decrease. If you decrease it, the signals will be more accurate, but there will be fewer of them.
d) The longer the indicator’s period, the greater the expiration time must be.
e) The farther the Parabolic SAR dots from the chart, the more stable the trend. The closer the dots, the more likely the trend is to reverse.
f) The Parabolic SAR gives accurate signals only if the market trend is strong.
Trade on the direction of the trend?
1. You can use the Parabolic SAR to trade on the direction of price movement or when the trend reverses.
2. Observe the chart. If the dots do not change direction, this means that there is no trend reversal signal and you can open a trade on the trend.
3. The trend is ascending if the Parabolic SAR dots are beneath the chart and the parabola ( candlesticks chart ) is being built bottom up.
The trend is descending if the dots are above the chart and the parabola ( candlesticks chart ) is being built top down.
How to trade on a trend reversal?
If the first Parabolic SAR dot appears beneath a green candlestick, this is probably a signal of an upward price reversal as below image following.
If the first Parabolic SAR dot appears above a red candlestick, this is probably a signal of a downward price reversal as below.
Note that the appearance of a second confirming dot after the indicator has changed direction is a trend reversal signal.
The information above is puts from olymptrade.com