Parabolic SAR with 50 Simple Moving Average Strategies.

                       Parabolic SAR with 50 Simple Moving Average Strategies.

 

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By the way, let’s enjoy earnmoneyfx.com research team provided a new strategy
‘’Parabolic SAR with 50 Simple Moving Average Entry-Exit Strategies’’

Parabolic SAR with 50 Simple Moving Average Entry-Exit Strategies is combined indicators
a strategy where the first indicator is Parabolic SAR and the second indicator is 50 Simple Moving
Average.

For your kind information, Parabolic SAR and 50 Simple Moving Average both are lagging
indicator.
Lagging indicator means those indicators who provide entry and exit signals after price
movement.
In simply, you get an entry and exit signal after the price has already increased or decreased a few pips.
From the lagging indicator, you are unable to get a signal early as like a candlesticks pattern trader
or price action trader.
I am sure you have a few questions now. For example, If Parabolic SAR and 50 Simple Moving
Average both are lagging indicator so why I use it and why earnmoneyfx.com research
Does the team provide it?
Is it not a waste of time, money, etc?
Here earnmoneyfx.com research team’s answer is NO.

Because…….
*** Parabolic SAR with 50 Simple Moving Average Entry-Exit is easy to understand

*** Parabolic SAR with 50 Simple Moving Average easily identify where to Entry and where
to Exit
*** Though you are master in price action or candlesticks pattern you will reentry
when you get Parabolic SAR with 50 Simple Moving Average entry signal.
Before entering deeply this strategy, at first we need a simple idea about Parabolic SAR and 50
Simple Moving Average.

Simple Moving Average:

Moving Averages are of various types. E.g. Simple Moving Average (SMA), Exponential Moving
Average (EMA), Smoothed Moving Average (SMMA), etc.
Simple Moving Average (SMA) is most uses of them because of its easy to calculate and
understand.

Definition and Calculation of Simple Moving Average (SMA):

A simple moving average is formed by calculating the average price of a currency
over a specific number of periods. 

Most moving averages are based on closing prices; for example, a 5-day simple moving
average is the five-day sum of closing prices divided by five.
As its name implies, a moving average is an average that moves.
Old data is dropped as new data becomes available, causing the average to move along the
time scale.
The example below shows a 5-day moving average evolving over three days.

 

• Daily Closing Prices: 11,12,13,14,15,16,17
• First day of 5-day SMA: (11 + 12 + 13 + 14 + 15) / 5 = 13
• Second day of 5-day SMA: (12 + 13 + 14 + 15 + 16) / 5 = 14

 

The first day of the moving average simply covers the last five days.

The second day of the moving average drops the first data point (11) and adds the new
data point (16).
The third day of the moving average continues by dropping the first data point (12) and
adding the new data point (17).
In the example above, prices gradually increase from 11 to 17 over a total of seven days.
Notice that the moving average also rises from 13 to 15 over a three-day calculation period.
Also, notice that each moving average value is just below the list price. For example, the
moving average for day one equals 13 and the last price is 15. Prices the prior four days
were lower and this causes the moving average to lag.
For your kind information, Any moving average strategy is a trend trading system.
Moving Average works well when prices are up to trend or downtrend.
In a choppy or sideways market moving average strategies are unable to well.
So we always avoid using moving average strategies when markets are choppy or
sideways.
Otherwise, it’s a chance to hit stop loss more and more.
Simple Moving Average is the default indicator in Metatrader4 or Metatrader5.
Metatrader4 Simple Moving Average plot as below
Open Metatrader4 > Insert > Indicator > Trend > Moving Average> Simple > OK

You just change the period is 50.

Parabolic SAR:
The Parabolic SAR was created by J. Welles Wilders.
In Parabolic SAR, Parabolic / Parabola means DOTS of charts when you add Parabolic SAR
indicator.
SAR means Stop and Reverse. So Parabolic SAR is called Stop and Reverse indicators.
Parabolic SAR is a trending indicator. In a strong up or down trend market Parabolic, SAR
determines where to buy or where to sell in any market like forex, stock, commodities, etc.
The Stop and Reverse feature indicates that you can always with the market. Either long or
short position every time.
The Parabolic SAR DOTS determine your BUY and SELL signal.

By default Parabolic SAR indicator setting, The DOTS rise or fall with price accordingly
which is called acceleration.
When Parabolic SAR DOTS spot below the price that means the market will be uptrend.
When Parabolic SAR DOTS spot above the price that means the market will be downtrend.
Parabolic SAR DOTS are also used as TRAILING STOP LOSS. When you get a BUY signal by Parabolic SAR that
means you must close your previous SELL position thereafter you can buy.

Calculation of Parabolic SAR:

It is very important to understand the calculation of any trading indicator. By understanding, you
will avoid nuances associated when using this indicator.
The Calculation Of The Parabolic SAR is:  
SARn+1= SARn + Α(EP – SARn)
 SARn is the current period
 SARn+1 is the next period value
 EP equals the extreme high or low value in the current trend
 “A” is the acceleration factor

Metatrader4 Parabolic SAR plot as below
Open Metatrader4 > Insert > Indicator > Trend > Parabolic SAR > OK
No need to change Step and Maximum value
An important fact of Parabolic SAR with 50 Simple Moving Average Entry-Exit Strategies which
must remember as below:

1. For trend identification, We must use 50 Simple Moving Average. We will buy when the price
above 50 Simple Moving Average and We will sell when the price is below 50 Simple
Moving Average.

2. We do not stop and reverse by Parabolic SAR if it creates contradiction with 50
Simple Moving Average buy sell signal. Here 50 Simple Moving Average is the most
priority.

3. We must trail our stop loss by Parabolic SAR DOTS. You can take partial profit as
your profit-taking strategy.
Let’s discover how to entry and exit this strategy

Parabolic SAR with 50 Simple Moving Average Entry-Exit Strategies:

Parabolic SAR and Candlesticks same time signal

Image point number – 1, Candlesticks cross 50 Simple Moving Average. Please note, here
candlesticks close below 50 Simple Moving Average. Touches 50 Simple Moving Average is
not acceptable. Close is mandatory.

Image point number – 2, Parabolic SAR dots flipped above of 50 Simple Moving Average
crossing candlesticks. As per this strategy rules, It’s a SELL signal.

Image point number – 3, Conservative or aggressive traders put their SELL STOP order 2
pips below 50 Simple Moving Average crossing candlesticks.

Image point number – 4, Conservative or aggressive traders place STOP LOSS Parabolic
SAR dots.

Image point number – 5, Conservative or aggressive traders place 50% take profit level
on the near swing low or 1: 2 or 1 : 3 risk-reward ratio. The rest of 50% will be open till Parabolic
SAR dots flipped.

Image point number – 6, Parabolic SAR dots flipped before hit off the near swing low or 1: 2
or 1 : 3 risk-reward ratio. If you are a conservative trader you will exit 100%. If you are
an aggressive trader then you will wait until the price cross 50 Simple Moving Average.

Parabolic SAR and 50 Simple Moving Average Swing Trading Entry-Exit
Image 2:

 

Image point number – 1, Parabolic SAR dots flipped candlesticks which are above of 50
Simple Moving Average. We do not sell here as per rules.

Image point number – 2, Candlesticks cross of 50 Simple Moving Average. But We do not
sell here as per rules.

Image point number – 3, Parabolic SAR reverse dots flipped. We will get a chance if
candlesticks unable to cross 50 Simple Moving Average.

Image point number – 4, Candlesticks failure to cross 50 Simple Moving Average also
Parabolic SAR reverse dots flipped. Its our entry candle.

Image point number – 5, Conservative or aggressive traders place their SELL STOP order
2 pips below of Parabolic SAR reverse dots flipped candlesticks.

Image point number – 6, Conservative or aggressive traders place STOP LOSS Parabolic
SAR dots.

Image point number – 7, Conservative or aggressive traders place 50% take profit level
on the near swing low or 1 : 2 or 1 : 3 risk-reward ratio. The rest of 50% will be open till Parabolic
SAR dots flipped.

Image point number – 8, Conservative or aggressive traders exit rest of 50% when
Parabolic SAR dots flipped.
For your information, if Parabolic SAR dots flipped before hit of the near swing low or 1 : 2 or
1 : 3 risk-reward ratio you will exit 100%.

Image point number – 9, Again swing entry exit strategy as per Image point no 1 to Image
point no 1.
This swing entry will happen again and again till candlesticks cross 50 Simple Moving
Average.

 

——- Thanks for giving your valuable time to read this article ——–
(To be continued)