21.07.2019
AAKASHAYA PATRA SEVEN STAR SMART EDUCATION SERIES PART – 17
:
Oscillators - Parabolic SAR (PSAR)
Parabolic SAR is very easy to understand and important indicator for
to know the direction of the
Trend, probable reversal as well as to put the stop loss and
trailing stop loss Parabolic SAR is more accurate in Trending market it means
when we clearly identify the trend of the security, Parabolic SAR will be more helpful
and gives probable reversal level Parabolic SAR will not work properly or gives
false signal in side ways or range bound market.
How to use Parabolic SAR :-
I.
Parabolic SAR is just like a DOT form upper side
or lower side of the Candlestick When it form down side of the candlestick it indicate
that from that price level probable reversal may will take place and price will
appreciate and go up ward side Down side formation of the Parabolic SAR also
indicate the end of the lower swing and price will may go up side.
II.
Similarly, When it form above side of the candlestick,
it indicate that from that price level probable reversal may will take place and
price will depreciate and go down ward side Upper side formation of the
Parabolic SAR also indicate the end of the Upper swing and price will may go
down side
III.
To give a more accuracy to this indicator,
crossover is play an important role in this It means when the falling PSAR from
upper side and rising candlestick from below side crossed each other and
candlestick made a close above the price level of the falling PSAR from upper side,
that will be a potential signal for swing reversal and from that price zone
PSAR will start to form below side of the candlestick and that will be a
condition of the probable Up Move
IV.
Similarly, when the Rising PSAR from Lower side
and Falling candlestick from upper side crossed each other and candlestick made
a close below the price level of the rising PSAR from lower side, that will be
a potential signal for swing reversal and from that price zone PSAR will start
to form above side of the candlestick and that will be a condition of the
probable Down Move
V.
Parabolic SAR is a Trend Identification
Indicator which work best in Trending Market, it may gives false signal in
sideways or range bound market, so please fallow condition of point number 3
and 4 when market like side ways or range bound.
VI.
Parabolic SAR gives good result in longer time frame
like 1 hour chart or Daily chart as campair to shorter time frame like 5 Min
and 15 Min chart.
VII.
When PSAR comes very close to candlestick, its
a sign of probable reversal for opposite side
Use of Parabolic SAR to Put stop loss and
Trailing Stop Loss : -
If we look at the name of the indicator Parabolic SAR where SAR
means STOP and REVERSE
It means it help us to know the probable reversal of the Trend /
Swing When PSAR start to form below side of the candlestick it means down swing
might be over and price will may go up ward side So if we plan a buy side
trade, first PSAR which formed below side of the candlestick will be the Stop
Loss of that particular trade Similarly in case of Up Trend / Swing reversal,
when PSAR start to form upper side of the candlestick it means its a end of the
Up Trend / Swing So if we plan a sell trade over there, first PSAR which formed
above the candlestick will near the probable stop loss for that particular
trade.
To Put a Trailing Stop Loss with the help of PSAR :
PSAR is rising or falling with candlestick chart, so when it form
above or below side of the candlestick, put the stop loss for the trade at the
price of first PSAR and trail stop loss with PSAR whether it rising or falling
so it will give protection to your profit when ever any BIG bullish or bearish
candlestick form against your trade and try to eat your earned profit...!!!
I hope you find this article informative to know trend direction,
probable reversal and how to put
stop loss and trailing stop loss with the help of Parabolic SAR
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