Parabolic sar is an interesting indicator that is very popular among traders. It was made by J. Welles Wilder Jr, and it is used to find the direction of a trend. Furthermore, you can also use it as an entry signal generator, or as a trailing stop loss indicator. That’s right, you can also use it as an exit signal generator. This is one of those rare indicators like Ichimoku Cloud, that tries to show different kinds of information on it’s own.

Parabolic sar indicator is very easy to use and easy to understand. And Like always, I am going to test this Parabolic sar trading strategy 100 times in my next video, to show its real win rate. Maybe Subscribe to see it. After all, you don’t want to risk your hard earned money, on a strategy that doesn’t even work.

On Trading View, this is what the Parabolic sar Indicator looks like. Once you add it on your chart, you will see some dots above and below the candles. On most trading platforms, Parabolic sar will look like this. But on some, these dots can look very different. No matter how different they appear visually, They all will do the same job, as long as you have the default settings.

First of all, lets see the basic Parabolic sar Trading Strategy, then I will show you a way to filter the false signals given by the Parabolic sar indicator.
So, here’s how the Parabolic sar indicator is used by many traders.
When the Parabolic sar dot is below the candles, the market is considered to be in an uptrend. You can enter a long position, when the dot is placed below the candle for the first time.

Similarly, When the Parabolic sar dots are above the candles, the market is considered to be in a downtrend. And you can enter a short position, when the dot is placed above the candle for the first time.

Remember, Parabolic sar is a lagging indicator. Therefore, you should wait for the entry candle to be completed. Then and only then, you should consider taking the trade at the closing price of the candle.

Here’s an example. The dots flipped below the candle. In this long setup, We could have entered a long position, when the dot appeared below the candle for the first time.
Here’s a short example. The dots flipped above the candle. We could have entered a short position, when the dot appeared above the candle for the first time.

Remember, I am going to test this Parabolic sar indicator 100 times in my next video, to show it’s real win rate, and to see if it is a profitable indicator or not. Till then, I don’t recommend taking trades with this indicator alone. Use it with something else, that you know works. Maybe subscribe to see this Parabolic sar indicator tested 100 times in my next video.

That’s All.
Now you know how to use the Parabolic sar indicator properly. I am going to test this indicator 100 times, to show its real win rate. I will do that in the next video. Maybe Subscribe to see it, so you don’t miss it.

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