Home » Forex Charts » 27. How to Trade the Parabolic SAR – Stocks, Futures, Forex

www.informedtrades.com A lesson on how to trade the Parabolic Stop and Reversal (SAR) indicator for traders of the forex, futures, and stock markets. In our last lesson we learned about the Average Directional Index (ADX) an indicator which helps traders determine the strength of trends in the market. In today’s lesson we are going to look at another indicator called the Parabolic Stop and Reversal (Parabolic SAR), which helps traders enter and manage positions when trading those trends. The Parabolic SAR is an indicator that, like Bollinger bands is plotted on price, the general idea of which is to buy into up trends when the indicator is below price, and sell into downtrends when the indicator is above price. Once traders are in positions the indicator also assists in managing the position by providing guidance as to how one should trail their stop. Example of the Parabolic SAR While this is an indicator that works very well in trending markets, as you can see from the below chart simply following the basic be long when the indicator is below price and be short when the indicator is above price will lead to many whipsaws in range bound markets. Example of Whipsaws in Range Bound Markets To combat this problem the developer of the indicator J. Welles Wilder (who also developed the RSI and ADX) recommended establishing the strength and direction of the trend first through the use of things such as the ADX, and then using the Parabolic SAR to trade that trend. As mentioned
Video Rating: 4 / 5

25 thoughts on “27. How to Trade the Parabolic SAR – Stocks, Futures, Forex

  1. FXCommissionRebates says:

    Get a 44% commission?? discount when? opening? a forex Dukascopy Bank account through FX Commission Rebates!

  2. saweaq1 says:


  3. innamoratissimo says:

    @kenpoka65 this is crazy…before you speak you can think what are the positives and the? negative of this video…hmmmm..I learn something HYPER INTERESTING and I cuss the production errors…the conclusion is I am not thinking…

  4. innamoratissimo says:

    @kenpoka65 this is crazy…before you speak you can think what the positives of the? negative of this video…hmmmm..I learn something HYPER INTERESTING and I cuss the production errors…the conclusion is I am not thinking…

  5. FreeFOREXautoROBOTS says:

    Have a great results? with free forex ea

  6. tigpips says:

    Best Forex Rebates, earn free additional money as you trade. Works with all types? of strategies or systems. If you think you can only earn from money from just profits on your account, well you’re wrong.

    With forex rebates, you earn money whether you win a trade or lose a trade. Thereby giving you 2 income streams, one from the profits on your account and one from your rebates.

    Sounds unreal?

    Check it out —-> freeforexrebates.info

  7. alizanorrellfht says:

    ? She is hot and sexy wonna meet her gettop5.info

  8. AfiliatAds says:

    for? more money watch this

  9. mrares00 says:

    i love these lessons!! you are? great!!

  10. abcsofgas says:

    $RIFIN (faz = rifin x3)
    The $RIFIN is looking very bullish.. FAZ tracks 3x the? $RIFIN intraday.
    Long-Term Target is 880 if the russells financials don’t break 800 in march/april 2010..
    Watch out Fazzers.. You might want to look at some puts ..


    FAZISLIFE d.o.t blogspot d.o.t com

    youtube bans links.. the site is FAZISLIFE

  11. panda532 says:

    it means you change your stop to a higher price when ? your stock is in an uptrend

  12. umayanarosy says:

    Nice try. Keep it up check out esteembpo? + com for social media marketing. m,m

  13. Bolawale says:

    Thanks for this video. I noticed on several charts that whenever the parabolic point is breached on the direction of? the major trend, it seems to provide an opportunity of at least 6points.
    What do you think?

  14. OptikNerv1138 says:

    Some people like to use the SAR as a point to place a trailing stop, rather than a trade entry/exit signal. A trailing stop is used to lock in profits? as the trade moves along. If you are long, you keep raising your SELL STOP order as the security rises. Eventually when the trend breaks, the price will fall back enough to trigger the sell order. This is how I use the SAR. Don’t bother buying indicators, such as the “trading with an edge” advertisement below. waste of money.


  15. wa7sh999 says:

    I don’t understand the part of trailing stops plz someone? reply

  16. TradingWithAnEDGE says:

    SAR is like most indicators. Useless.

    See my? custom software on my video

    Trading with an EDGE

  17. nizmo034 says:

    Hi David, love your work. I wanted to make? a request. Is there any chance you can put up a video on VWAP? Cheers.

  18. Yellowknight888 says:

    How is this parabolic SAR? relevant on a real stock trading environment? You can place a trailing stop by specifying to your broker, but you can specify to stop based on parabolic SAR, can you?

  19. Clemmitt27 says:

    i cant watch? this video

    i cant watch this video vy

  20. elwalvador says:

    Kenpoka, shut your mouth. Don’t be a whinny little bitch. Dave is providing us with valuable information and doing a damn good job of it too.

    Keep? up the good work Dave!

  21. mikeoneill2376 says:

    From all the questions? Ive read here, you guys could do with taking a look at this ebook to take your trading to the next level…dont worry…its free.. thestockmarketcode (dot) com

  22. schrutzen says:

    hey folks these sites? should help you too if youre reading more or a begginer in stocks..

    econtrader. com
    about. stocks. com
    investopedia. com
    howtotradestocks. org

    i dont think you really need investools since most books and online resouces
    should be enough for you to learn if you are just resourceful!!
    focus on economics too it should help a lot!

  23. jtking2504 says:

    Agreed, Dave is doing an amazing job here, we? are very privilleged to have this info., can’t believe how some people can find fault ANYWHERE!

  24. InformedTrades says:

    Hi Frrobs, I haven’t done any lessons on pivot points yet but there are some over on InformedTrades in the free? course section. Best Regards, Dave

  25. Frrobs says:

    Hi David, I am missing the pivot points. Is there a reason for this? I found some lessons on your homepage and followed the strategy? last week in the DAX. As a resistance and support strategy very effective.
    Thanx for your effort. frrobs

Comments are closed.