Place stop loss outside closest band and use an appropriately sized Trailing Stop since there is no target to aim for.
So with the basic logic of these two indicators has been used in this trading strategy. Market price normally reverses from overbought and oversold area, Parabolic SAR confirms new trend. So this trading strategy is very effective and winning ratio of this strategy is very high.
You need to wait for rejection from this level. When the dots of Parabolic SAR appear below the price, then it confirms buy signal. You have to buy at the next candle like as below image. How to get Sell signal Upper band of Bollinger Bands indicates overbought area.
When market rejects from upper bands, then you need to look at Parabolic SAR. When the dots of Parabolic SAR appear above market price, then it confirms sell signal.
You have sell at the next candle like as below image. H1 time frame is suitable. You can also use higher time frame. Take profit and Stop loss: You can set pips take profit. You can exit manually when opposite signal comes. You can set stop loss above swing high for sell entry like above image. Place stop loss outside closest band and use an appropriately sized Trailing Stop since there is no target to aim for.
I do just larger than the stop loss. I have a copy of "New Concepts in Technical Trading Systems" by Wilder coming in the mail to see if my system actually makes sense it includes an explanation of the Parabolic SAR's formula , and 7 of 9 is not statistically significant.
Still, I am wondering if maybe I am on to something. Has anyone tried anything like this and what was your opinion of it? Thanks for any and all responses. Check out this thread and see if it answers any of your questions Thanks for the link. It'll probably take a while but I'll make sure to read all of it. Also, I've been doing more tests, the points I was referring to also correspond to the trend shifts on the Heiken-Ashi candlesticks and the flat lines of the Kijun-Sen on Ichimoku Kinko Hyo charts.
Although, seems like on the larger time charts the midline of the Bollinger Band is better than the opposite band, but that could just be from the limited testing I've done. I tried the method again this morning with surprising results. I was right that it seems to get "snared" when the price hits the center line of the Bollinger Band on larger charts minutes so I placed my take-profits there.
I managed to make 8. I very nearly had good news this morning about my system. Even the stoploss was ignored.
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