Forex Parabolic Stop and Reverse Expert Advisor Setup - Setting Up Parabolic SAR EA

Forex Parabolic Stop and Reverse Expert Advisor Setup - Setting Up Parabolic Stop and Reverse Expert Advisor - A trader can come up with an Parabolic Stop and Reverse Expert Advisor based on the Parabolic Stop and Reverse indicator explained below.

Forex Parabolic Stop and Reverse Expert Advisor rules can be combined with other indicators to come up with other EA Bots that trade using rules based on two or more indicators combined to form a system.

Parabolic SAR Analysis and Parabolic SAR Signals

Developed by J. Welles Wilder & is used to set trailing price stops. This indicator was originally developed to analyze trending Markets. It's drawn as a chart overlay, that's on the price chart itself.

This is a very accurate indicator for providing exit points & thus it is used to set trailing stops & is usually referred to as the "SAR" (stop-and-reversal).

This indicator is plotted above or below the price - it's plotted as a series of dots. The scale of the movement of the SAR Indicator will be determined by the scale of the currency movement.

In an upwards trend the parabolic SAR Indicator will be below the price. As long as the uptrend continues then the SAR will continue being below price. When price move down & parabolic SAR goes above price then the market trend reverses to bearish.

This indicator uses a parabolic calculation to draw the series of dots, This means that if the currency stops moving up with the same acceleration, the parabolic SAR Indicator will continue with same acceleration and thus at some level price will hit the indicator if it slows down too much.

Explanation

This indicator provides excellent exit points. You should close long positions when price falls below SAR and close short positions when price rises above it.

If you are long, the SAR indicator will move up each day, regardless of the direction the currency is moving. The amount this trading indicator moves up depends on amount that the prices move.

The same theory also will apply to a downwards trend, the parabolic SAR will be above the price & it should remain above the price until the bearish downtrend reverses.

The chart below shows an example of the Parabolic SAR in an uptrend market, You can see how it trailed below price(Bullish Market) til when it was hit and the market trend reversed.

Forex Parabolic Stop and Reverse Expert Advisor Setup