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Stop and target based on the Parabolic SAR
The Parabolic SAR indicator has a very good reputation. Once a trend is underway, the Parabolic SAR follows the trend closely. This stalwart technical analysis indicator has many fans.
This example shows the Parabolic SAR indicator. If there is a trend, the indicator follows the trend closely.
Using the Parabolic indicator as a stop loss and a profit target
These are the advantages of this unique pack:
- Place a stop loss order, which follows the Parabolic SAR.
- Place a target order based on the Parabolic SAR.
- Use the stop and the target during manual and automated trading.
- Combine the stop and target with any other trading strategy.
- Capture large market trends perfectly.
- The price is only € 10.
The stop loss can be used on its own or together with the target. The placement of the stop and the target is done automatically by the NanoTrader platform, as usual.
When a position is bought, the initial stop loss is placed on the low of the last 10 candles. This parameter 10 is the span of the Parabolic indicator. The parameter can be changed.
If the profit is equal to the initial risk (i.e. equal to the distance between the entry price and the first stop), the stop moves to the entry price. Now the trader cannot lose any more. From this moment on the stop order will follow the Parabolic indicator.
The profit target is a multiple of the initial risk. The
default setting is that profit target is 2x the risk. The
trader can change this setting in the DesignerDialog.
This example shows the Parabolic stop (red) and the Parabolic target (green). The stop starts at the lowest price over 10 periods. Once the profit is bigger than this initial risk, the stop moves to the Parabolic SAR curve. The profit target is 2x the initial risk. The target is reached and the position is closed with a profit.
This example shows a short sell position. The stop starts at the highest price over 10 periods. Once the profit is bigger than this initial risk, the stop moves to the Parabolic SAR curve. The trader can no longer lose. The profit target is 2x the initial risk. The market touches the Parabolic stop and the position is closed with a profit.
This example combines one of the free trading strategies, Range Break-out, with the Parabolic stop. The stop places itself on the Parabolic curve once the profit is bigger than the initial risk. The Parabolic stop is placed at a very good level for this short sell position. The position is closed when the market price hits the stop.
Follow these steps in NanoTrader Full.
- Select the financial instrument you want to trade and open the chart.
- In the WHS Store folder, select "Parabolic stop" and, if you wish, also "Parabolic target".
- Adjust the parameters if required. 'InitialGap' allows the trader to place stop and target a little further from the Parabolic. ‘MultipleOfRisk' is the distance from the target expressed as x times the initial Parabolic risk. ‘StopToBreakeven' indicates when the stop is automatically shifted to the trader's entry price (the break-even level) expressed as x times the initial Parabolic risk.
- To trade semi-automatically (manual open, platform close), activate TradeGuard+AutoOrder in the chart. To trade automatically, activate AutoOrder in the chart.