Macdosma and mt4-levelstop-reverse forex trading strategy

Macdosma and mt4-levelstop-reverse forex trading strategyMACD_OsMA and MT4-LevelStop-Reverse Forex Trading Strategy

MT4-LevelStop-Reverse

Place a BUY signal when the MACD_OsMA indicator forms light green bars to the upside above the zero mark and the MT4-LevelStop-Reverse indicator displays an upward facing blue arrow.

Place your stop loss below the MT4-LevelStop-Reverse blue arrow indicator.

Exit Strategy/Take Profit:

Take profit on this trading strategy when lines of the MACD OsMA indicator crosses above the zero mark.

MACD_OsMA and MT4-LevelStop-Reverse Forex Trading Strategy Buy Signal

The chart above shows the criteria for a buy entry as the MACD_OsMA indicator forms a green bars to the upside after fading out, while the MT4-LevelStop-Reverse indicator forms a blue upward arrow, confirming a buy signal. On the other hand, the exit strategy is triggered when the MACD_OsMA indicator lines crosses above the zero mark.

Note that the buy intensity is high when the MACD_OsMA indicator bars are light green in color, but buy intensity is low when the bar is colored dark green.

Enter a SELL signal when the MACD_OsMA indicator forms deep blood colored bars to the downside below the zero mark and the MT4-LevelStop-Reverse indicator displays a red downward facing arrow.

Place your stop loss above the MT4-LevelStop-Reverse red arrow indicator.

Exit Strategy/Take Profit:

Take profit on this trading strategy when lines of the MACD OsMA indicator crosses below the zero mark.

Reverse-swing trading strategy(rsts)

Reverse-swing trading strategy(rsts)Reverse-Swing Trading Strategy (RSTS)

Reverse-Swing Trading Strategy

by Manoj Tulli

This Reverse Swing Trading Strategy (RSTS) system for intraday and short term investors.

This Reverse Swing Trading Strategy has been developed by Manoj Tulli This Reverse Swing Trading Strategy will help you make every day profits from the stock exchange.

This system (RSTS e-book) is a Simple system for l to Identify Trend Reversals Chart Pattern

The design could be identified on-the-graph, using 3 simple tools .

Low Risk Bets For Long Term Profits

Package contain:

Ebook - RSTS. pdf

—————————————————————————————

File type and requirements:

-This is a digital item! ( Download link )

-You will Need: MetaTrader 4.0 platform.

Reverse swing trading strategy for intraday and short term traders scam

Reverse swing trading strategy for intraday and short term traders scamReverse Swing: Trading Strategy for Intraday and Short term Traders SCAM

May 7, 2011 by Kevin T. Jimerson

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The Reverse-Swing Trading Strategy is all about a Simple Chart Pattern useful to Identify Major Trend Reversals in Real Time. The pattern can be identified on-the-chart, using 3 simple tools and 1 secret pattern, which keeps repeating in ALL markets, across the globe and asset class. Reverse Swing Trading Strategy is a Technical Analysis Website for Stocks listed on the Indian Stock Market. Reserve Swing Trading System Technically Analyze ALL stocks listed on the National Stock Exchange (NSE as it is called!) and provide Technical Filters and advanced technical charts for ALL stocks listed on the NSE. [more details]

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Emini day trading method reference and video training

Emini day trading method reference and video trainingEmini Day Trading Method Reference And Video Training

Day Trading Method Reference

The emini day trading method reference section is organized by related concepts and trading method terms, and for each of these will be a definition, description, and drawing or chart included.

The reference will give you the basics for understanding and/or review of trading method language, with a more detailed video on the concepts, and with method language terms also defined, and then including in the video it is related to.

Chart Mode: The direction your next trade will be if you get a setup.

Swing Reverse: This is the change in chart mode. If you have a chart mode change into sell mode, you have a swing reverse into sell.

mex cross of the blue line over the purple line

ttm reverse from red to green

dc dot shift to purple on the bottom

Sell Mode #2 on the drawing:

mex cross of the blue line under the purple line

ttm reverse from green to red

dc dot shift to purple on the top

Initial Reverse: This is the location of the swing reverse.

break1 top left-top right drawing

channel break bottom left drawing

price component break bottom right drawing

Initial Reverse Price: The price where the initial reverse occurs.

The break1 initial reverse doesnt have a price, the reverse occurs on a break of the dots.

The channel break initial reverse price is the channel this is right side only, and is not referred to as a price component in a method base setup.

The price component initial reverse is a left side price, a price action price, a focus line, or a price like a daily price or paa price that has retained relevance.

Chart Mode Concept Description Video

Each of the core method concepts will have video discussing it in 2 ways, in order to further supplement the trading method reference, these will be: (1) concept description videos (2) concept usage and trading videos.

This is a concept description video for chart mode-swing reverse-initial reverse you can see the video pdf for the charts and audio transcript below the video.

Special trade journals will be done to supplement the videos, adding more content, and especially further covering additional trades that were done.

This is what I really like about this program - vs - a course or dvd that you make and finish AND wish you had added something else being able to continually repeat and show how the method is being traded, along with discussing trading issues and problems that I can see, is paramount for learning.

Tactical Trading Method Reference Video Training

Reverse swing trading strategy

Reverse swing trading strategyReverse Swing Trading Strategy Product Report

According to the author, Manoj Tulli, the Reverse Swing Trading Strategy should be read at least three times before having anything to do with the stock market.

Perhaps not the best endorsement from the author himself (is it that badly written?). Manoj Tulli is the founder of TwoNaHalf, a Technical Analysis Website for stocks listed on the Indian Stock Market.

It is easy to get distracted by this products sales page, which is quite possibly one of the most bizarrely designed and written pages on the web. Delving below that, the book claims to reveal a simple chart pattern useful to identify major trend reversals in real time.

This is a step-by-step guide with three simple tools; the author claims it to be a system for making consistent profits on a daily basis.

The rest of the facts are directly below

Feedback Overview

Actual Customer Feedback:

Nothing new here really, just trendlines S & R and divergance on MACD. Classic stuff, divergence is easy to show in retrospective charts but not quite always so easy to spot in real time.

Reverse Swing Trading Strategy Review

Hello Dear Visitors; Welcome to our site, full of creativity and innovation, all what the creative side of you guys is looking for since long. Is it what you were looking for? Then you are probably at the best site.

We are genuine and the Reverse Swing Trading Strategy that we offer you is legal and pure and original to the fullest as well. You would not need to think twice once you read the detailed information related to the Reverse Swing Trading Strategy. The product while helping you learn new techniques would also ensure no boredom at all.

The Overview:

Large number of customers of ours has used the product and has lauded its concept and style. They like the vibrant colours used in the pictures inside. Test group of ours has revealed that Reverse Swing Trading Strategy also makes you feel relaxed. The Reverse Swing Trading Strategy gives you the choice of beginning from where you wish and is not only for this, but for many other reasons, worth spending. You would experience something you have never done before at high-quality and at best prices.

The anti martingale system-profit from-martingale in reverse

The anti martingale system-profit from-martingale in reverseThe Anti Martingale System Profit From Martingale in Reverse

For some traders, the drawdowns in the Martingale system are just too scary to live with. That “roller coaster” ride ends-up causing them sleepless nights and stomach ulcers.

Anti martingale, as trend following system

If this sounds like you, there is an alternative. The anti Martingale system does what many traders think is more logical. “Martingale in reverse” hangs on to winning trades . and drops losers . If that sounds better, read on.

Doubling-Up On Winners

The standard Martingale system closes winners and doubles exposure on losing trades. If youre not familiar with this strategy, I wrote about it last week here on Forexop. While it has some highly desirable properties, the downside with it is that it can cause losses to run up exponentially.

The reverse Martingale, as Im going to describe now does the exact opposite. It closes losing trades . and doubles winners . The idea being to cut losses quickly and let profits run.

Anti Martingale is an effective trend following strategy. Unlike forward Martingale it doesnt have fat tail risks.

Take the following example in Table 1. This shows how a double up sequence works in practice. Ive set a virtual take profit, and stop loss target of 20 pips. The price starts at 1.3500. I start by placing a buy to open order. The price then moves up 20 pips to 1.3520. Following the strategy, I now double the size of my position. I add 1 lot at the new rate of 1.3520.

Tagged adx

Tagged adxTwo Moving Average Price Crossover

Place 20 EMA and 30 EMA on USDJPY 1H chart.

Rules for entry:

For Longs/Buys, wait for price to CLOSE above both EMAs and place a Buy order above the high of the bar. Stop loss will be placed at the low of the bar.

For shorts, do the reverse.

Exit current position and reverse when the opposite trade signal appears.

As with all trend following systems, this works best in a trending market and is not good for ranging or whipsaw periods.

Note that this strategy is only concerned with whether price has closed above or below the 2 EMAs. It does not matter if the faster EMA is above or below the slower one.

This differs from the other two MA crossover strategy.

Peter stone sselected publications

Peter stone sselected publicationsPeter Stone 's Selected Publications

Performance Analysis of a Counter-intuitive Automated Stock-Trading Strategy

Ronggang Yu and Peter Stone. Performance Analysis of a Counter-intuitive Automated Stock-Trading Strategy . In Proceedings of the Fifth International Conference on Electronic Commerce . Pittsburgh, PA, October 2003.

Autonomous trading in the stock market is an area of great interest in both academic and commercial circles. A lot of trading strategies have been proposed and practiced from the perspectives of Artificial Intelligence, market making, external data indication, technical analysis etc. The advent of computer and inexpensive data has given everyone the ability to test their trading ideas. This paper examines some properties of a counter-intuitive automated stock-trading strategy in the context of the Penn-Lehman Automated Trading (PLAT) simulator, which is a real-time, real-data market simulator. While it might seem natural to buy when the market is on the rise and sell when it's on the declining, our strategy does exactly the opposite. As a result, we call it the reverse strategy. The reverse strategy was the winner strategy in the first and second PLAT live competitions. In this paper, we analyze the performance of the reverse strategy: in what kinds of market, it will make profits or lose money. Also, we suggest ways to control the risk of using the reverse strategy in certain kinds of markets.

Reverse pyramiding with cfds

Reverse pyramiding with cfdsReverse Pyramiding with CFDs

Pyramiding behind successful CFD positions can be a good way to shore up winning positions and maximise your overall trading returns. While risky in itself, largely as a result of scaling up exposure, pyramiding eliminates much of the threat brought about by trading an unknown - after all, if a position has already established itself as profitable, throwing more weight behind it won't change its trajectory. That's all fine and well when the markets are moving in your direction, but what about when the markets start to take a turn for the worse? Is pyramiding still an effective strategy to be deployed in harsher trading conditions?

Reverse Pyramiding

While it might at first sound contrary to all trading logic and everything you've ever been taught about prudence in trading, the pyramiding strategy does work in down markets. It works by reducing the distance to your break-even point, because you can profit from a market recovery on the second transaction while also reducing your losses on the first.

So, if you're 10 points down and you buy in a CFD position at this new lower rate, you only need the market to move 5 points in order for you to break even - 5 points in profit, plus 5 points off the original losing position. Depending on the ratio of your investment, this can make real financial sense, and can enable you to cut out of dangerous positions without getting your fingers burned too badly.

The Big Disclaimer

There is, however, a rather massive caveat to deploying this strategy, and before you head out into losing markets throwing more good money after bad, you need to understand the extent of the risks of this kind of strategy. Firstly, just because a market has dipped, doesn't mean it will rebound. Just ask Mike Ashley, chairman of Newcastle United FC, who took a spread betting position going long on Northern Rock just after it ran into liquidity difficulties, on the assumption that the market would correct. Just because a CFD position is losing money doesn't mean it will regain ground, and that doesn't make it sensible to automatically go deeper.

What you're looking for with reverse pyramiding is a CFD that has been sold off in a panic and will likely recover, at least partially. Remember that the whole point of the strategy is to leverage the law of averages to reduce the distance to break even, so in order to deploy this kind of practice the market must first have a chance of regaining some ground if it is to make trading sense to get further involved.

When pyramiding in either direction, it's important to be cognisant of the risks involved, and to be aware that even backing a winning position is a leap of faith, let alone entering a down market. By keeping a tight reign on your leverage and ensuring you don't pyramid on a whim, you should be able to use these strategies to good (and sparing) effect in maximising earnings and minimising losses with CFDs.

Asd forex

Asd forexStrategy 11 Scalping with Stochastic

Time Frame: All

Currency Pairs: All

Indicators: WMA (10), SMA (20) (SMA = Simple Moving Average, WMA = Weighted Moving Average and Linear Weighted Average), Stochastic (10,6,6), RSI (14) MACD (24,52,18 )

When the moving average of 10 period crosses the moving average of 20 periods upward, The Stochastic has upward trend, the RSI has a value greater than 50, and MACD is greater than zero, then we would be entering with a order of buy. We will take profits when the MACD reverse its trend

Sell ??Signal

When the moving average of 10 period crosses the moving average of 20 periods down, The Stochastic has downward trend, RSI has a value less than 50, and MACD is less than zero, then we would be entering with a sale. We will take profits when the MACD reverse its trend.

One of the first indicators on that we have to concentrate, is in the stochastic, when it reaches its end points 20 or 80, we would be seeing a change of trend.

How to use aparabolic sar strategy

How to use aparabolic sar strategyHow to Use a Parabolic SAR Strategy

How to Use a Parabolic SAR Strategy 5.00 / 5 (100.00%) 1 vote

With more and more traders coming to binary options, and many of them being new traders, there is a need to know how to use a parabolic SAR strategy. The parabolic SAR is a technical indicator that was created by Welles Wilder to provide signals for price reversal. The SAR stands for stop and reverse, and the indicator shows when price is likely to reverse. It is ideal for binary options traders as the signals provided are clear and easy to discern.

How to Use a Parabolic SAR Strategy

When the parabolic SAR indicator is applied to a chart it will add a series of dots either above or below the price candles. The dots are simple in nature, with those appearing above the candles indicating a down trend, and those appearing below the candles indicating an uptrend. With this information a trader will know if he should be buying calls or puts. The ideal time to buy is when the dots reverse position, going from below to above or vice versa. This is when price is most likely to reverse direction.

The parabolic SAR can also be used as a confirmation indicator. This is the case where the trader is using a different strategy, but wants to confirm price entries when they occur. The trader could check the parabolic SAR and see if it is also signaling a buy or sell. If the signals match the trade can be entered, but if there is no confirmation from the parabolic SAR then the trade should be avoided.

The parabolic SAR is also good at determining trends because the dots will keep moving in the same direction for as long as the trend is in place. Even if there is a negative bar during an uptrend, the dots will remain below the candles if the trend is still in place. It is only when the dots switch position that we know a trend change may be occurring.

The mathematics involved in creating the parabolic SAR indicator are fairly complex, but you won’t need to understand how to do the calculations for yourself. All you need to know is how to apply the indicator to your chart and read the resulting dots.

Like any technical indicator, the parabolic SAR can make mistakes. There may be times in which it misses a good trade or signals a losing trade. This is expected from all indicators, as they all lag the market to some extent, and conditions can change more rapidly than the indicator will show them. The best way to find out how to use a parabolic SAR strategy is to test it for yourself. You can use it in a back test, or you could try a parabolic SAR strategy in a demo account to see how it performs. You will find that it gives different results with different assets and time frames, and that it works best when the market is trending, not moving sideways.

Rsi indicator

Rsi indicatorRSI Indicator

Relative Strength Index

The RSI Indicator, being a momentum oscillator measures the velocity of directional price movements by calculating the ratio of higher closes to lower closes.

As I said some traders are convinced that a divergence between price and the indicator is a strong indication that a reversal will be coming soon.

I will, however, say this about the RSI Indicator and reverse divergences . I believe you can make money with reverse divergences, since the setups are with the trend. But, like other profitable setups, you've got to filter them down to tight low risk entries.

Here's an example:

On this next chart of NVLS, the Relative Strength Index breaks above 70 at around 11:30 am, comes back down to 45 and then back above 70. By doing this, the RSI indicator is telling you that on this time frame, price is now in an uptrend.

It's next low is lower than the previous low, while at the same time price has made a higher high - another reverse divergence.

On this next chart of XOM, the RSI Indicator makes two reverse divergences. Both would've made good trades, but remember, even though the relative strength index is showing trades with the trend and appears to work very well in this capacity, always use a low risk stop in case the trade goes wrong.

As mentioned, if you decide to trade divergences, trade reverse divergences, that way you'll be trading with the trend instead of fighting it.

Use well placed stops, and lets the winners run just like in my breakout strategies. And whatever you do, don't try to trade oversold/overbought signals from this indicator or any other indicator for that matter.

Alternate RSI Trading Method

The RSI Indicator can also be used as a trend indicator. The 70 and 30 lines can be used as trend boundaries. For instance, if price causes the indicator to register readings above 70, then a trader may consider price to be in an upward trend and to look for set-ups to buy. Vice versa for readings below 30.

Several consecutive reading between 70 and 30 would indicate a trendless or sideways period for price movement.

One method for triggering trades once the RSI has indicated a trend is to wait for a "hook" in the indicator. A hook is just a reversal of the indicator in the direction of the immediate trend.

Here's an example below on a 5 minute chart of Goodyear Co. (GT). GT, as indicated by the RSI Indicator is in a up trend around 10:30am. However, no trade trigger is initiated since RSI did not hook upward.

Price then causes RSI to go below 30, revealing a downward trend. At this point a trader would wait for a hook down to trigger a Short trade. One may only initiate trades from hooks between 30 and 70 . or outside that boundary. That's up to the trader.

As you can see by the highlighted yellow area, RSI does a pretty good job of showing you when price is not trending. Price is causing the RSI to drift between 30 and 70.

There's a bevy of different ways to exit once in a trade. You could use the support & resistance, trendline or price target methods I've described or you could use the indicator for exits as well as entries. RSI trading exits could include, divergences or closes above/below 30/70 or even 50.

After you build up more and more screen time, the question you may eventually ask yourself is "Do I really need this indicator to tell me when a stock is in a trend and when it isn't?"

I'll venture to say that the answer is no, you won't. I know some price indicator traders will hate that I say this, but maybe just consider indicators as training wheels that can be taken off later on.

10ema reverse strategy in mcx crude hourly charts

10ema reverse strategy in mcx crude hourly charts10EMA Reverse Strategy in MCX Crude Hourly Charts

Here is a very simple yet a powerful hourly strategy in MCX crude. I would like to call it as 10EMA Reverse strategy. i. e buy signal will generate in case of hourly candle closes below 10EMA and sell signal will generate if the candle closes above 10EMA.

How to Play 10EMA Reverse Strategy

1)Every time the long and short position needs to be reversed whenever the signal arrives on the hourly timeframe

2)Position needs to be carry forwarded (Gap UP and GAP down risk is there)

3)Rs 100 brokerage is added in per leg transaction while backtesting (needs to be adjusted according to your brokerage structure)

4)Exit if the candle moves above 55-60 points on closing basis. Here stoploss is decided on closing basis.

5)Trade every time with two lots of MCX Crude

Equity Curve

Why this strategy could be profitable in MCX-Crude?

I have only very limited set of data. I backtested only with exisitng november month contrat and the data size covers only two months. But MCX market is a extended market nature i. e more than 12 hours in a per day session makes the market to trade in a compressed manner in a higher timeframes like a hourly timeframe which generates a lot of signals with a 10EMA indicator. Probably we are profitable on most of the contra trades due to the compressed nature of the trading instrument in hourly timeframe and we will be able to eat every small profits.

Can this strategy could be applied to other markets too?

You cant apply this strategy in stock markets due to limited session(7-8 hours session per day) trade time compared to MCX or International forex markets. These kind of strategies normally works with commodities where the trendiness is very slow on the given timeframe.

Put your opinions, observations and your experience here about this strategy and make it a better one!

Disclaimer. Strategy is provided here for study purpose only. Marketcalls will not be responsible for your losses/profits incurred. Do it at your own risk.

About Rajandran

Rajandran is a trading strategy designer and founder of Marketcalls, a hugely popular trading site since 2007 and one of the most intelligent blog in the world to share knowledge on Technical Analysis, Trading systems Trading strategies.

Parthasarathy says

A good observation. I feel you can try in Natural gas as it suddenly goes deep up or down once in every week. I hope with your tools you can test and help.

sekhar says

Buy signal will generate in case of hourly candle closes above 10EMA and sell signal will generate if the candle closes above 10EMA.

Rajandran R says

Its a reverse strategy. Rules are right not a classical one though.

Ravindra Kumar Karnani says

Rajandran, In both, i.e. BUY as well as SELL signals are generated you say when the candle closes above 10EMA. Its same in both cases, not possible. You probably mean to write :

Reverse strategy. i. e buy signal will generate in case of hourly candle closes (above) below 10EMA and sell signal will generate if the candle closes above 10EMA.

Its simply not possible to have both BUY and SELL when Candle closes above 10 EMA.

Its surely a typo. ??

Rajandran R says

Yes is is typo corrected now. Thanks for the notification.

kiruba says

I tested it in MCX crude, it generates too many signals during non trending days. Difficult to make profits using this strategy.

I feel super trend was better than this system

Rajandran R says

This strategy is more profitable during non trending days I request you to recheck your backtest settings.

VIKAS says

I think you need to add some indicator for added confirmation or some higher value EMA to get a feel of Trend..that way lot of whips can be reduced profitability maximized. I am already using similar set up (as per suggestion given) in 15tf on stocks..Trade less - Trade Quality..

satya prakash says

vikram says

better go for fixed deposit in bank.

vikram says

How to use moving averages

How to use moving averagesHow to Use Moving Averages

Moving averages help us to first define the trend and second, to recognize changes in the trend. That's it. There is nothing else that they are good for. Any thing else is just a waste of time.

I won't be getting into the gory details about how they are constructed. There are about a zillion websites that will explain the mathematical make-up of them. I'll let you do that on your own one day when you are extremely bored out of your mind! But all you really have to know is that a moving average line is just the average price of a stock over time . That's it.

The two moving averages

I use two moving averages: the 10 period simple moving average (SMA) and the 30 period exponential moving average (EMA). I like to use a slower one and a faster one. Why? Because when the faster one (10) crosses over the slower one (30), it will often signal a trend change. Let's look at an example:

You can see in the chart above how these lines can help you define trends. On the left side of the chart the 10 SMA is above the 30 EMA and the trend is up . The 10 SMA crosses down below the 30 EMA in mid August and the trend is down . Then, the 10 SMA crosses back up through the 30 EMA in September and the trend is up again - and it stays up for several months thereafter.

Here are the rules:

Focus on long positions only when the 10 SMA is above the 30 EMA. Focus on short positions only when the 10 SMA is below the 30 EMA. It doesn't get any simpler than that and it will ALWAYS keep you on the right side of the trend!

Note that moving averages only work well when a stock is trending - not when they are in a trading range. When a stock (or the market itself) becomes "sloppy" then you can ignore moving averages - they won't work!

Here are the important things to remember (for long positions - reverse for short positions.):

The 10 SMA must be above the 30 EMA.

There must be plenty of space in between the moving averages.

Both moving averages must be sloping upward.

The 200 period moving average

The 200 SMA is used to separate bull territory from bear territory. Studies have shown that by focusing on long positions above this line and short positions below this line can give you a slight edge.

You should add this moving averages to all of your charts in all time frames. Yes. weekly charts, daily charts, and intra-day (15 min, 60 min) charts.

The 200 SMA is the most important moving average to have on a stock chart. You will be surprised at how many times a stock will reverse in this area.

Use this to your advantage!

Also, when writing scans for stocks, you can use this as an additional filter to find potential long setups that are above this line and potential short setups that are below this line.

Support and resistance?

Contrary to popular belief, stocks do not find support or run into resistance on moving averages. Many times you will hear traders say, "Hey, look at this stock! It bounced off of the 50 day moving average!"

Why would a stock suddenly bounce off of a line that some trader put on a stock chart? It wouldn't. A stock will only bounce (if you want to call it that) off of significant price levels that occurred in the past - not a line on a chart.

Stocks will reverse (up or down) at price levels that are in close proximity to popular moving averages but they do not reverse at the line itself.

So, suppose you are looking at a chart and you see the stock pulling back to, let's say, the 200 period moving average. Look at the price levels on the chart that proved to be significant support or resistance areas in the past.

Those are the areas where the stock will likely reverse.

(Interview) 3 Ways the Elliott Wave Principle Enhances Your Trading

How to Scan For Stocks

Parabolic sar

Parabolic sarParabolic SAR

Before reading this lesson, you should have previously read through:

SAR stands for stop and reverse and it is a trend following indicator, designed to identify the turning point in price action .

SAR stands for stop and reverse and it is used to identify the turning point, or reversal, of a trend. It is shown on a chart by a series of small dots. If the dots are above the price, then the trend is likely to be down; if the dots are below the price, the trend is likely to be up.

The parabolic SAR is shown on the charts as a series of small ‘dots’ that are placed either above or below the price. When the price is trending to the upside . the dots are below the price action and when the price is trending to the downside . the dots are above the price action.

As the price move comes to an end, the parabolic SAR moves steadily closer to the price until the price ends up touching the dots - the SAR then begins to form on the other side of the price, indicating that the price is changing direction.

The Parabolic SAR can be used effectively for:

Determining the trend

Entry and exiting trades

Trailing stops

The chart below demonstrates the parabolic SAR indicating and then tracking an uptrend .

Parabolic SAR

HOW THE PARABOLIC SAR CAN BE USED AS A TRAILING STOP

The parabolic SAR (stop & reverse) can be used in a similar way as the volatility stop.

One way to use it as a trailing stop is to keep your initial stop in place until price moves sufficiently away from the breakout area (this part is discretionary based on the chart pattern and price movement) and then adjust your profit exit underneath the indicator.

Another way, is to simply just use it as the original stop, which in the example below would of worked just fine. Though, I think you'll find, in most trades it's better to use chart patterns or price structure to set an initial stop.

However, in this particular case, the SAR would've given a slightly better exit. I'm not saying either one is a better trailing stop. I simply wanted to point out that difference.

As with other exit methods this indicator will offer great trading moments and other times you'll promise yourself you'll never use it again. One of the themes of this website is diversification. Diversify your entries, diversify your exits. Personally I like other methods better than this one, but to each his own.

Here's another example of this indicator as a trailing stop. when it's working really well.