Parabolic Sar (PSAR) Forex Exit Stategy
The Parabolic Sar indicator is a great tool in guiding you where to exit both long and short trading positions in trending forex markets. It is also a great way to remove emotions from trading and the guesswork involved.
How to interpret Parabolic Sar?
- When the currency pair is trading below the blue dots (see picture below), it simple means the price is going down.
- When the currency pair is trading above the blue dots, it simply means the currency price is going up.
Caution: Do not use Parabolic Sar (PSAR) in choppy markets, it generates too many false signals.
Forex Chart Setup
Preferred Time Frame’s: 30 min and above
Currency Pairs: Any
How the Parabolic Sar exit forex strategy works
1) In up trending currency markets, place and continue trailing your stop loss UP according to the PSAR dots.
2) In down trending currency markets, place and continue trailing your stop loss DOWN according to the PSAR dots.
The 4 hour euro/dollar chart below shows you how to trail a stop loss in an up trending market using Parabolic Sar. It’s easy and quite effective in strong trends.