Parabolic SAR MT4 indicator – Free MT4 Indicator

This strategy uses one of the popular trend indicators, which is Parabolic SAR MT4 Indicator. This indicator was developed by Welles Wilder in 1976. He was also the creator of such indicators as RSI and DMI. The Parabolic SAR title literally meant “stop and reversal”, and its unique purpose is that it is able to accurately predict the time of closing the position at the intersection point with the price chart.

The Forex Strategy Parabolic SAR + Stochastic will require you to at least 2 very important qualities of a professional trader:

• The ability to wait without closing the position earlier than needed;
• “Concrete nerves” or in other words, the resistance to price jumps in the market.

For this strategy, it is recommended a broker that has Metatrader 4 included.

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Parabolic SAR MT4 Indicator Chart Setup

The recommended time-frame is H1 and higher. You can choose any currency pair you like, but it is would be advisable to initially train your skills on some popular one, like EUR/USD. Now, here are the indicators you should set on the chart:

1. Parabolic SAR indicator with the settings: step – 0.01%, maximum – 0.2;
2. Stochastic Oscillator (7, 10, 4) with the levels 63 and 37;
3. Exponential Moving Average EMA with the period 100. It will indicate the main direction in which our position will be opened.

Parabolic SAR MT4 Indicator Trading Rules

BUY

We open a long position when we have 3 signals at the same time. Here they are:

• The red stochastic line rose above its level of 63;
• The Parabolic (PSAR) indicator “jumps” under the price;
• The previous candlestick was closed above the exponential moving average – EMA (100)

Parabolic SAR MT4 Indicator – Long Setup

The stop-loss should be set under the green dot of PSAR indicator, or at least at a distance of 100 points. Later, the stop loss should be transferred manually under the new points as they appear.

We don’t set the Take Profit order. You should close the position manually in case you notice a reversal pattern “doji” or after a reversal signal on the part of PSAR indicator. Also, it is possible to close the position using a trailing stop. The trailing stop value should be selected depending on the time frame and the volatility of the currency pair.

SELL

For opening a short position, we use the mirrored conditions for the long position trade described above. Here are the signals:

1. The red stochastic line is below its level of 37;
2. The Parabolic SAR indicator goes above the price;
3. The previous candlestick was closed below the exponential moving average with the period 100.

Parabolic SAR MT4 Indicator – Sell Setup

The stop loss order is set as mentioned above, and the profit is taken manually under the conditions described with the long position trade.

Time Frames
Technically speaking, you can use this indicator for all time frames. However, the shorter the time frame, you will see more fluctuation and possibly more whipsaw which may cause small losses that can eat up your portfolio quickly. We prefer to use this indicator on 1H or 4H charts for better consistency.

[Video] How to Trade with Parabolic SAR MT4 Indicator

How to Trade with Parabolic SAR

Parabolic SAR MT4 Indicator Download

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