Forex Trading With Parabolic SAR And MACD
Trading strategy with Parabolic SAR and MACD will work well when the market is trending strongly. A pending order (buy stop or sell stop) is performed after the MACD curve intersects the signal curve and the pSAR point changes position according to the direction of the trend.
This trading method is very simple and accurate enough. Can be used on all time frames, however, the higher the time frame trading will be more accurate. The main factors required are patience in waiting for trading signals, and indicators used only parabolic SAR (pSAR) and MACD .
Entry and exit rules:
1. Standard MACD settings (12, 26, 9). Wait until the MACD curve and the intersecting signal curve (MACD cross)
2. Default pSAR setting (step = 0.02 and maximum = 0.2). Observe whether the pSAR point on the chart has changed position.
3. If at the same time there is MACD cross and change of position of pSAR point then place pending order buy stop at around the highest price of candlestick then, or sell stop at around the lowest price of candlestick then.
Point A: the movement of the pSAR point changes position from above the price to the bottom of the price, indicating the signal for the buy entry or signal to exit sell.
Point B: Place the buy stop order as soon as the MACD curve intersects the signal curve from the bottom up (signal to buy), and the pSAR point changes from above price to price (A).
Point C: the movement of the pSAR point changes from below the price to the top of the price, which indicates a signal for the sell entry or a signal to exit buy.
Exit the buy position, and or place sell sell orders as soon as the MACD curve intersects the signal curve from the top down, and the pSAR point changes from below price to price (C).
Point D: Exit a sell position, and or place a buy-stop order as soon as the MACD curve intersects the signal curve from the bottom up, and the pSAR point changes from above price to price.
4. If at the same time there is no MACD cross and pSAR point position change then there is no order placement.
5. Stop loss can be determined at the nearest support or resistance level, and adjusted to the planned risk management .
This method will work well when the market is trending strongly.