Parabolic sar strategy tradingview example

 A simple Parabolic SAR strategy on TradingView involves using the indicator's dots as a basis for trend identification and potential entry points. When the dots are below the price, it signals an uptrend and might be a good time to buy. Conversely, when the dots are above the price, it indicates a downtrend, which could be a signal to sell. 

Here's a more detailed breakdown:

1. Trend Identification:

• Uptrend:

  The Parabolic SAR dots will be below the price bars or candlesticks, indicating an upward trend.
• Downtrend:

  The Parabolic SAR dots will be above the price bars or candlesticks, indicating a downward trend. 

2. Potential Entry Points:

• Long Entry (Uptrend):

  When the Parabolic SAR changes from being above the price (downtrend) to below the price (uptrend), it can be a potential long entry point.
• Short Entry (Downtrend):

  When the Parabolic SAR changes from being below the price (uptrend) to above the price (downtrend), it can be a potential short entry point. 

3. Example Strategy:

• Trend Confirmation:

  Confirm the trend with other indicators or timeframes. 
• Entry Point:

  Enter a trade when the Parabolic SAR changes direction, as described above. 
• Stop Loss:

  Place a stop-loss order below the previous low (for a long trade) or above the previous high (for a short trade). 
• Take Profit:

  Use a trailing stop-loss, or calculate a take-profit level based on risk/reward ratio. 

Important Considerations:

• Lagging Indicator:

  The Parabolic SAR is a lagging indicator, meaning it can sometimes signal a trend reversal after it has already occurred. 
• Sideways Markets:

  The Parabolic SAR may produce false signals in sideways markets. 
• Default Settings:

  The indicator has default settings that can be adjusted for different trading styles. 
• Confirmation:

  It's often advisable to use the Parabolic SAR in conjunction with other indicators to confirm trend direction and minimize false signals. 

Example TradingView Scripts:

• Multi-Timeframe Parabolic SAR Strategy: This strategy confirms trend direction across different timeframes. 
• Trend Following ADX + Parabolic SAR: This strategy combines the Parabolic SAR with the Average Directional Index (ADX). 

By understanding how the Parabolic SAR works and how to use it in conjunction with other indicators, traders can develop a strategy to potentially capitalize on trends and minimize the risk of whipsaws.