Learn How To Trade Parabolic Sar (PSAR) in Forex

Learn How To Trade Parabolic Sar (PSAR) in Forex

Details

Written by Peter Bosmans

Parabolic Sar, invented by J. Wellens Wilder is a trend following indicator. The PSAR dots will appear below the price in uptrends while the dots appear above the price in downtrends. PSAR (stop and reverse) is mainly used to trail stops up or down in trending markets. PSAR can also be used to identify market reversal points. Caution advised: many whipsaw entry signals will occur in range bound markets.

EUR/USD Parabolic Sar (PSAR) Weekly Chart

Type of technical indicator: Trend following

Forex signals from PSAR

1. In trending markets

In uptrends, place and continue trailing your stop UP according to the SAR dots.
In downtrends, place and continue trailing your stop DOWN according to the SAR dots.

2. In range bound markets

Using Parabolic Sar in sideways markets will create too many false entry signals.

Powerful trading combinations with Parabolic Sar

Always use PSAR in conjunction with other trend following indicators.

Suggested Further Reading

• PSAR Exit Strategy

• < Prev
• Next >