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Parabolic SAR indicator in binary options – simple and profitable trade
Profitable trading systems are not always complicated as one might think. Moreover, the simplification of trading systems leads to a reduction of the number of errors, which naturally, contributes to profit growth. Therefore, a trading system based on one, maximum two indicators are quite popular.
This is especially true of trading binary options, as prediction of the direction requires a more simple approach to the analysis of the market, compared, for example, with technical analysis of the Forex market.
General information about Parabolic SAR
For this simple algorithm applies one of the developments of the famous trader and analyst Welles Wilder (J. Welles Wilder) is called Parabolic SAR. The abbreviation is interpreted by the author as a stop and revers – stop and reversal.
This algorithm was developed to reduce the lag characteristic of moving averages. For convenience, let us consider an example of a trading platform Olymp Trade in which the indicator is in the list of technical analysis tools.
We find the Parabolic SAR in the terminal
Calculation formula for a bullish trend the following:
SAR i = (HIGHi-1 – SAR i-1) * AF + SAR i-1
For the bearish trend the formula is as follows:
SAR i = (LOWi-1 – SAR i-1) * AF - SAR i-1
where:
SAR i is the value of the Parabolic SAR for the current period;
HIGHi-1 – the maximum price of the previous period;
LOWi-1 – the low price of the previous period;
SAR i-1 - the Parabolic SAR value for the previous period;
AF – acceleration factor, characterizing the price change of the instrument.
Graphically, the indicator is a series of dots above or below price depending on the trend direction.
Displaying on the price chart parabolic
It is necessary to note some features of the tool:
unambiguous determination of the direction of the current trend – the instance belongs to the category of the trend;
accurate without delay the determination of a trend reversal;
when the market is in the flat condition, the use of Parabolic impractical due to the large number of false signals.
Setup and installation on schedule
Setting the indicator to the chart made its choice in the toolbars tab, "Technical analysis→Indicators". The parameter – step AF, available in the pop-up window settings should be left default. From its value depends on the accuracy of the supplied signal when the reduction increases the accuracy of signals, but increases its delay.
Increasing this parameter leads to higher sensitivity and, hence, increases the number of false signals. The final choice of parameters is confirmed by pressing "Apply".
Settings Parabolic for binary options market
Signals Parabolic SAR binary options
Despite the visual simplicity of the algorithm, the list of his signals are pretty wide:
education the first point above the price indicates the possible start of bearish trend;
Points technical indicator
education the first point below the price predicts the potential beginning of bullish trend;
How is the bullish trend in the market
the increase in the distance between the points of the indicator says about the strengthening of the current trend;
The distance between points algorithm on the chart
the closest approach points of the price chart predicts the end of the trend.
The convergence of the indicator parabolic
Trade on Parabolic SAR binary options
When the price crosses the parabolic indicator from top to bottom and the first points on the price chart should be prepared for the purchase of the option on the drop in Put. When the price crosses Parabolic upwards and the emergence of the first point under the graph of a call option on a Call.
To make the deal should be when there is 3-4 points. The fact that the SAR was calculated as the tool for the timeframe from 1 hour and above. Therefore, to maximize the exclusion of false signals on lower time frames buying put option at the onset of the third or even fourth point, using a few of these points as evidence of the reliability of the signal.
Deal binary options with the Parabolic algorithm
Expiry times are derived from the timeframe and their recommended values are the following:
TF 15 seconds – the lifetime of a transaction for 1-2 minutes;
TF 1 minute expiry time 5-10 minutes;
TF 5 minutes expiration time 15-30 minutes;
TF 15 minutes timeframe for 1 hour.
The most effective trading this way is carried out on underlying assets: Euro-dollar, dollar-yen, British pound–US dollar, US dollar, canadian dollar and Euro-yen. The optimum time to trade European and American sessions.
More reliable are the trading system using several auxiliary programs that are used as filters to filter out false signals.
Good trading results binary options show the combination of the Parabolic SAR indicator with oscillators, particularly the MACD. Both the tools are installed using the basic settings. Underlying assets and expiry times same as above. Signals to buy call option on a Call the following:
the Parabolic SAR dots located below the price;
lines of MACD crossed below the middle line, showing the beginning of a bullish trend and confirming the signals of the parabolic SAR.
Combine several indicators in a strategy
Rating of binary options brokers - trade from reliable brokers with the best conditions.
Signals to buy option to decrease Put respectively:
Parabolic points are located above the price;
the MACD line crossed above the middle line and directed from the top down, showing the beginning of a bearish trend and confirming the signals of the parabolic SAR.
The beginning of the downtrend on the chart
The Parabolic SAR indicator in binary options is a good algorithm for offline use in trading systems. However, more robust variants of this algorithm assume the availability of an instrument to confirm the signal.
Such a tool can become not only MACD but any indicator with a calculation algorithm that is different from the Parabolic SAR. And his choice depends first and foremost on the list of programs provided by the broker to its customers.
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| Category: Binary options | Added by: (07.11.2017)
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| Views: 295
| Rating: 0.0/0 |
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