Parabolic Sar Settings

Parabolic SAR or Parabolic Stop and Reverse is the most popular technical indicator used by foreign exchange traders to determine the stop loss levels. This indicator is also used for determine the market trends. In this post we will learn about how to pick the best parabolic SAR settings.

Forex participants use the parabolic sar to identify accurate trading positions. The dots in this indicator reflecting of the trend bias. This technical indicator runs very well in trending markets, but this indicator not 100% accurate - SAR can bring false trading signals in sideways markets.

Parabolic SAR is traded in measuring the trend direction of the market and to set stop loss levels. This indicator shows a series of dots, which is moved either below or above the market price. When the dots is below the market price, market is in bullish trend, and if the dots is above the market price, it means market is in bearish trend. And if the parabolic sar dots change direction, it means trend reversal. If the market price trading closer to the parabolic sar indicator, it means the market trend is starting reversal.

The Parabolic SAR moves below and above the candlestick price. Even though this indicator never one hundred correct in the predictions but this trading indicator is consistent to give a trader good analysis. We will discuss the trading strategy based on this indicator.

The Parabolic SAR settings
Usually the accelerator factor is set to 0.02 default settings
For short term traders the accelerator factor is set to 0.06

But you need try and error in the demo account, you can test many variants to get the best Parabolic Settings. This indicator never give 100% accurate in trading signals, you have to combine with other technical indicators to improve the accuracy.

Bellow I want to share a simple forex trading strategy based on Parabolic SAR.

The red marks reflect good trading signals, and the green marks reflect false signals.

The Parabolic SAR trading system
Decide entry trading after the Parabolic SAR switch trend followed by ADX indicator signals. Put a stop loss 20 - 30 pips below entry level. Exit trading if the Parabolic SAR switch trend.

Keeps in your min The default Parabolic SAR settings are 2% for acceleration factor of 2% and 20% for maximum step.

On the example chart above, we use Parabolic SAR settings 0.06 - 0.26. You can try by your self the right Parabolic SAR settings that match for your Parabolic SAR in your trading system or you can use the default settings that already available in your trading platform.