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How to use the Parabolic SAR signaler in crypto trading?


The parabolic SAR, or parabolic stop and reverse, is one of the simplest signals traders use. It was developed more than 40 years ago by the well-known analyst and trader J. Wells Wilder, who is also the creator of other signals that were introduced in his book “New Concepts in Technical Trading Systems”. He named the trading system based on the parabolic time/value system indicator.

The SAR is a propensity tracking flag, it is applicable when you want to confirm the bias orientation or even identify the end of a propensity.

This indicator often becomes a useful tool to determine the possible ranges in the behavior of the asset, in addition to providing information about possible signals for trading orders. The signaller could be used by the trader to spot potential exit (stop) points, but many also use it as part of their tactic to anticipate potential entry points. If you have decided to enter crypto trading, the official BitiCodes site is one of the services that expedite access, they will connect you to brokers with extensive experience for free and safely.

Use of the SAR flag

Unlike other markers, which are displayed in a separate box on your asset’s chart, the SAR is presented in the form of dots (or plus dots depending on the trading application) plotted directly on the chart, above or below the bars. of values.

The SAR indicator appears as positive blue dots above and below stock charts (the color could be different depending on the trading app you choose). The points are grouped in the shape of a parabola moving up or down, as well as above or below the value.

This flag is easy to read and use because all you need to do is look at the position of the dots in relation to the value. Dots below the value bar signify an upward trend, while dots above the value bar indicate that the trend is moving downward.

You could also watch the movement of parabolic SAR values. In an attempt to avoid “false signals”, traders often try to find reference patterns in the number of points the signaller shows, which are evident before a trend change.

Since the signaller is based on the notion that values ​​will rise or fall, it is best used during crypto market readiness conditions. It is recommended that you do not enter or exit a position based on the indicator with values ​​that move sideways (a moving market). That’s because the signaler’s indications may be inadequate during a “weak propensity.”

How to trade with the parabolic SAR marker

Traders use it as a point at which they place trailing orders, because a stock movement away from the signal can indicate a potential reversal.

  • When you see the dots under the candlesticks, it is a signal to buy. An alert can also be noticed when the closing value crosses the SAR point, which has been above the candlesticks.
  • A sell indication occurs when the dots are above the candlesticks. Consequently, a more accurate signal can be determined when the closing value crosses below the lower SAR.
  • You can identify possible reversal signs when the signal goes from below the value bars to above the value bars and vice versa.
  • Traders can place trailing stop-loss on SAR points.

When you define your trading tactic with this indicator, it is a good idea to use it simultaneously with other trading maneuvers and incorporate other indicators to help you confirm the indications. In fact, you could use it with the Average Directional Index, Moving Averages, and Relative Strength Index.

Advantages of the commercial SAR signaler

  • It is very useful when you want to determine the direction of the value.
  • It offers signs that help traders cash in their returns when a trend appears.
  • It helps merchants increase revenue as they exit at the right time.

Disadvantages of the commercial parabolic SAR signaler

  • Although very useful in biased markets, it could provide false signals during a stock movement when a bias cannot be determined.
  • Use during rapid up and down value swings could lead to artificial indications. The flag can be used for assets with constantly changing values.
  • The indicator does not provide detailed information on the strength of the propensity, since it does not incorporate the trading volume.

Disclaimer: The information in this post should be taken for informational purposes only, not intended under any point of view to urge the purchase / sale of cryptocurrencies.



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