Name: Nurwilda

NIM: 1711440009
PARABOLIC
Parabolic SAR is a simple indicator that best used when the market is trending.
According to Filbert (2016) in his book saying that the way to read parabolic SAR is very
simple, the point above means the down trend is down while the point below the candle
means that the trend is increasing. The parabolic concept is the thougth that time is an enemy.
Parabolic indicator are very useful in the condition of the driving trend of stock prices, but in
a flat trend (no price movements occur) it becomes less useful because it is not easy to know
whether such stocks can experience a significant trend in the future.
There are formulas for the parabolic SAR indicator. A rising PSAR has a slightly
different formula than a falling PSAR.
Rising Parabolic SAR ( PSAR ) =Prior PSAR + [ Prior AF ( Prior EP−Prior PSAR ) ]
Falling Parabolic SAR ( PSAR )=Prior PSAR−[ Prior AF ( Prior PSAR−Prior EP ) ]
Where:
AF = Acceleration Factor. It starts at 0.02 and increases by 0.02, up to a maximum of 0.2,
each time the extreme point makes a new low (falling SAR) or high (rising SAR)
EP = Extreme Point. The lowest low in the current downtrend (falling SAR) or the highest
high in the current uptrend (rising SAR). We also can write the general formula used
for this is:
SAR t+ 1=SAR t + α ( EP−SAR t )
Where SAR t+ 1 and SAR t represent the current period and the next period’s SAR Values,
respectively. EP (extreme point) is record kept during each trend that represents the highest
value reached by the price during the current uptrend or lowest value during a downtrend.
During each period, if a new maximum or minimum is observed, the EP is update with that
value.
α is equal to AF that represents the acceleration factor. Usually, this is set initially to
a value of 0.02, but can be chosen by the trader. This factor increased by 0.02 each time a
new EP is recorded. The meaning is that every time a new EP is observed, it will make the
acceleration factor go up. The rate will then quicken to a point where the SAR converges
toward the price. To prevent it from getting too large, a maximum value for the acceleration
factor is normally set to 0.20. The trader can set these numbers depending on their trading
style and the instruments being traded. Generally, it is preferable in stocks trading to set the
acceleration factor to 0.01, so that is not too sensitive to local decreases. For commodity or
currency trading, the preferred value is 0.02.

Entry trading with parabolic SAR

Recalling the primary use Parabolic SAR is the point of reversal, then the best entry
positions can be taken when the Parabolic SAR just switching position. The example graph
below shows how the Parabolic SAR can help you recognize potential entry-level positions.

Because it is impossible for traders to always anticipate a reversal in non-stop, then it

is often too late traders respond to signal entry Parabolic SAR. Often traders miss a moment
and just entered when the Parabolic SAR dots have long moved to follow new trends. One
way to overcome this problem is to look at the distance from the point of the Parabolic SAR
against price.
Exit Trading with Parabolic SAR
The methods were indeed being fundamental way exit trading with Parabolic SAR.
But again, here we are learning the secret of how to use Parabolic SAR. So, we do not be
surprised if the techniques we discussed will be slightly different from the common
understanding.
In this case, Parabolic SAR is once again established himself as a multipurpose forex
trading indicators. It is because, you can utilize the Parabolic SAR dots at the beginning of
the trend as a recommendation of stop loss or take profit. Let's say you put a sell order, then
the stop loss can be placed at the point of Parabolic SAR at the beginning of a trend. In the
meantime, take profit can be positioned on a level that became the site of emergence signal
reversal up earlier.