Binary Options Indicator Parabolic SAR primarily tells traders in terms of a trend reversal. To work with the indicator is very easy.
Let's see what it looks like in a live graph:
As you can see, the indicator may be located or above the price of the asset, or at the price in the form of points. The most important thing is to analyze and understand the point of change of the trend and time to open the option in the right direction.
If the points are arranged above the price chart, it is necessary to open an option PUTAnd if the points are arranged under the price chart, it is necessary to open an option CALL.
For the accuracy of the forecast, you can use additional tools Technical Analysis.
In general, Parabolic SAR indicator recalls moving averages. Therefore, it is better to apply to trade longer options. In the short term it may appear more false signals.
As for the setting Parabolic SAR indicatorThe default is the period of 0,02. But as always you can change to suit your needs. If you install a shorter period, the indicator will beep in advance. But a high probability of a large number of false alarms. And when you install a longer period the number of false alarms is reduced to a minimum, the indicator will be slower to respond to market changes. In this case, you might miss a good chance to open the option.
I think that Parabolic SAR indicator perfect for many traders to trade in a single day.
Despite the fact that the Parabolic indicator is a trend indicator, it also showed itself perfectly as a tool for completing corrections against the main trend, when you can safely open trades.
The creator of it is the famous trader Wells Wilder, who is also the author of the famous tools ADX, RSI, ATR. The abbreviation SAR stands for Stop and Reverse, which in English means “stop and turn”.
A distinctive feature of Parabolic SAR is that it does not show horizontal price movement - Flat. He will always either grow or fall. This property is a disadvantage, because of which inexperienced beginners are confused and can not distinguish the trend from the side consolidation. For this purpose, it is recommended to use additional confirmatory indicators.
The secret of successful trading on this indicator is the ability to distinguish the usual correction from the final reversal of the market trend. Experienced pros do it without problems. But for beginners, I would recommend using the RSI Relative Strength Index and the Stochastic Oscillator in addition.
I also recommend comparing the current trend with the longer-term on higher timeframes, so as not to open trades against the main trend.
Using Parabolic can also determine the strength of the trend. The greater the distance between the points, the stronger and more confident it is.