trailing stop loss or determine entry or exit points based on prices tending to stay within a parabolic curve during a strong trend.
The indicator generally works only in trending #markets & creates "whipsaws" during sideways phases. Thus, Wilder recommends first establishing the
The indicator generally works only in trending #markets & creates "whipsaws" during sideways phases. Thus, Wilder recommends first establishing the
direction or change in direction of the trend through use of pSAR & then using a different indicator like Avg Directional Index to gauge strength of trend.
pSAR attempts to give traders an edge by highlighting the direction an asset is moving & providing entry & exit points
pSAR attempts to give traders an edge by highlighting the direction an asset is moving & providing entry & exit points
pSAR: Pros & Cons
During a strong trend, the indicator will highlight that strong trend,keeping the trader in trending move.
The major shortcoming of the indicator is that it will provide little analytics or trade signals during sideways market conditions.
During a strong trend, the indicator will highlight that strong trend,keeping the trader in trending move.
The major shortcoming of the indicator is that it will provide little analytics or trade signals during sideways market conditions.
pSAR: Our learnings
pSAR acts as a risk management tool helping in exits from a trade which is were most of us falter. Entries come naturally but exits are equally if not more important than entries.
pSAR helps in getting clean entries into a trade in our limited experience.
pSAR acts as a risk management tool helping in exits from a trade which is were most of us falter. Entries come naturally but exits are equally if not more important than entries.
pSAR helps in getting clean entries into a trade in our limited experience.
pSAR is as versatile as its more famous cousin RSI & can be employed on BAR-CANDLE-HEIKIN ASHI-P&F-RENKO-KAGI-3LINE BREAK.
Over the years, we have learnt that pSAR tends to work a lot better with "noiseless charting methods" such as P&F, RENKO, KAGI etc.
Over the years, we have learnt that pSAR tends to work a lot better with "noiseless charting methods" such as P&F, RENKO, KAGI etc.
Lets take the case of pSAR on a P&F chart. We know that P&F charts already filter out lot of noise given its inherent features. When pSAR is applied on a noisless chart, the signals thus generated are pre filtered of noise & therefore more reliable in nature.
pSAR in Bar Chart
pSAR in Bar Chart
pSAR in P&F Chart 1% x 3 Box reversal. Lesser whipsaw can be seen in the charts illustrated here. Lets take a look at another example of Renko Chart
pSAR in Renko Chart 3% Brick reversal.
So using pSAR on "Noise Less charts" may be more rewarding than using it on a conventional bar or candlestick chart and the drawback of whipsaws during a range bound period may also get minimised by a good measure.
So using pSAR on "Noise Less charts" may be more rewarding than using it on a conventional bar or candlestick chart and the drawback of whipsaws during a range bound period may also get minimised by a good measure.
pSAR may not be effective in buying on decline/support or selling or rally/resistance type of traders as it is more suitable for trend following / breakout/breakdown school of thought process/trading style.
Tweaking the default values is not recommended initially but only after
Tweaking the default values is not recommended initially but only after
6-12 months of testing the indicator during which your grip should have improved considerably followed by your confidence.
Remember, getting acclimatised to pSAR is much more difficult than a RSI / Stochastic / MACD as pSAR tries to keep the trader "in the trade" perennially.
Remember, getting acclimatised to pSAR is much more difficult than a RSI / Stochastic / MACD as pSAR tries to keep the trader "in the trade" perennially.
pSAR can be used across time fractals ranging from 1 min to monthly/ quarterly charts but efficacy is better is used on higher time fractal charts.
pSAR unfortunately may make you an addicted trader because of its inherent properties of continuously being "in the trade".
pSAR unfortunately may make you an addicted trader because of its inherent properties of continuously being "in the trade".
pSAR can be combined with moving average, RSI, Stochastic, MACD, CMO, ADX and the list goes on.
But we would not recommend doing so. Reason is simple, while trying out a new indicator, try it on a stand alone basis, if you are comfortable, then put it test/practice for a year.
But we would not recommend doing so. Reason is simple, while trying out a new indicator, try it on a stand alone basis, if you are comfortable, then put it test/practice for a year.
After that, start tweaking its standard default values to reap better returns with lower/equal risk. Once you have done that, only then combine pSAR with another indicator or oscillator.
Hope you will find the thread useful.
Hope you will find the thread useful.
You can go through about my journey in financial markets so far in the following tweet.
#investments #markets #trading
#investments #markets #trading
If you find our educational thread simple then we would like to share that we host webinars with the same spirit,zeal & simplicity & would be delighted if you take out time to watch few sample webinars on our YouTube Channel
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