The parabolic indicator SAR (parabolic stop and reverse) was created by J. Welles Wilder, and is used to find possible reversals in market trends. Points to the table show the levels of support and price resistance. This indicator is included in both MT4 and MT5, and default settings are Step 0.02, Maximum 0.2.
How to Use Parabolic SAR
So far, we have done several reviews where we have seen indicators that focus mainly on capturing the beginning of new trends. While it is very important to be able to identify new trends well, it is equally essential to be able to identify where a trend ends. After all, what good is a well-synchronized input without a well-synchronized output?
A parabolic SAR places points on a graph that indicates possible reversals in the movement of prices. These points change from being under the candles during the uptrend to being above the candles when the trend is reversed in a downward trend. This may sound complicated, but the great thing about SAR parabolic EA is that it’s straightforward to use. It’s really very simple.
Basically, when the dots are under the candles, it’s a BUY sign. We’ll have a sales signal when the points are above the candles. We are probably facing the most accessible indicator to interpret because it assumes that the price is going up or down. After saying this, this system is best used in trend markets. You should not use this EA in a hectic market where the price movement is sideways.
Using Parabolic SAR EA to Exit Operations
You can also use Parabolic SAR to help you determine whether or not to close your trade. We have performed a test of this, and we have seen how it worked as an output signal in the pair EUR/USD. When EUR/USD started to fall, it looked like it was going to keep dropping like a rock. Any trader would probably wonder how low it would still go. When at a certain point, three points were formed at the bottom of the price, suggesting that the downward trend was over and that it was time to exit those shorts. If you decided stubbornly to cling to that trade thinking that EUR/USD would resume its fall, you would probably have erased all those gains as the pair finally ended up going up.
We are looking at a very interesting tool that can certainly boost profits. Of course, configuring it correctly is important, but this is simple to do. It is ideal to complement a variety of effective expert advisors. In fact, there are plenty of Parabolic SAR based EAs located within the MQL5 marketplace being offered both for free and at a cost at this time.