I call it a toy indicator because when i am using it I feel as if I am playing with a toy!
Full of fun, thrill, happiness, suspense and challenge !
It is as simple as playing with a toy!
Absolutely no more thinking required than playing with a toy!!
It's called
"Parabolic SAR"
SAR stands for : Stop and Reverse
This indicaotr is the younger brother of RSI
because the father to both was J. Welles Wilder, Jr
So, what is this "toy" indicator?
Just look at the followng graph
Basic Rules:-
If Parabolic dots are below the price line - Buy.
If Parabolic dots are above price - Sell.
the changeover occurs when the dotline touches priceline.
Advance Rules:-
If the price is moving in the direction of the Parabolic dots, the price reversal will take place when both touch!
If the price is moving opposite to the direction of the Parabolic dots, the price reversal is NOT likely to take place!
The Parabolic SAR works well in trending markets, but generates a lot of whipsaws in ranging markets.
When this happens look at bigger-period chart and stick to that trend!
Also, once in a while, whenever in doubt, take help from another indicator.
The main idea behind SAR is that the longer the trend, the more chance it will stop.
Price like a rocket constantly needs fuel to continue to rise. With time every trend will become weak and ultimately reverse.
The Parabolic SAR is also commonly used as a Trailing Stop Loss better than the constant stop loss that does not take into account the length of the trend and the volatility of the market. This way you will never hold onto a trade that goes against you because it will tell you when to exit.
The child in every trader never grows up!
And SAR is the ultimate toy for that lovely child craving for coins!!!
No comments:
Post a Comment