Best trend following “Forex Momentum Parabolic SAR Trading System” – Parabolic SAR is a trend following indicator developed by Welles Wilder and designed to confirm or reject trend direction, to determine trend end, correction or flat stages as well as to indicate possible exit points.
The underlying principle of the indicator can be described as “stop and reverse” (SAR).
- Time Frame: M5 or higher
- Currency Pairs: GBPUSD and EURUSD
- Parabolic SAR Color
- QQE Alert
- Momentum VT
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- Use a demo account or a small live account first to practice this trading system
- Parabolic SAR Color: Yellow dots
- OBOS Channel: Lime circle below the previous swing low
- QQE Alert: Up arrow
- Momentum VT: Above the level 0
- QQEA: The red line above the yellow line
- Parabolic SAR Color: Magenta dots
- OBOS Channel: Red circle above the previous swing high
- QQE Alert: Down arrow
- Momentum VT: Below the level 0
- QQEA: The red line below the yellow line
When using Parabolic SAR indicator we should take into consideration it’s positioning against the price chart as well as its acceleration factor which increases together with the trend.
Despite being a popular tool of analysis, it has limitations and may give false signals infrequently changing market conditions.
The indicator may signal the following:
- If the indicator is plotted below the price graph, it stands for an uptrend;
- If the indicator is plotted above the price graph, it confirms a downtrend.
Exit points determination
- If the price drops below Parabolic line during an uptrend, there may be a sense in closing long positions;
- If the price rises above the Parabolic curve during a downtrend, there may be a sense of closing short positions.