HOW TO TRADE FOREX WITH PARABOLIC SAR TECHNICAL INDICATOR

Parabolic SAR is one of simple forex trading indicators, which can be applied in finding the trend of the currency pair and also the entry and exit points. This indicator is made by the dots above and below the candlesticks. 

Trading forex with parabolic sar, source: metatrader4.com

The dots below the candlesticks represent the support levels and dots above the candlesticks represent the resistance levels. In another way, the series of dots work like a trend line. Let see how to trade with parabolic SAR.

When a dot is appeared below the candle sticks, the indicator indicates a bullish trend, and all dots below the candlesticks create a rising series, which represents the support levels as a bottom trend line. 

Now, If the dot at the edge of the rising series is crossed by the down trend, the cross is considered as a bearish break out. When the break out takes place, the dots below the candlesticks become disappeared, and at the same time, the dots above the candle sticks appeared. 

When  dots above the candlesticks appeared, the parabolic sar indicates that the currency pair is likely to go down. Here the dots above the candlesticks will create a falling series, which represents the resistance levels as a top trend line. 

For a long entry to the bullish trend, we should wait for the break out of the dot at the end of the falling series, and for a short entry we should wait for the break out of the dot at the end of the rising series.

However, trader can place a buy order with parabolic sar, when the dots above the candlesticks disappeared and dots below the candle sticks appeared, and can place a sell order when the dots below the candle sticks disappeared and dots above the candlesticks appeared.

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