Parabolic SAR

[GreatPig]

Any of you technical traders use Parabolic SAR for anything?

I just added an implementation of it to my AmiBroker plug-in and get decidedly poor backtesting results if using just that to generate buy and sell signals (based on daily prices). If I play around with the acceleration factor (ie. rather than just using the 0.02 value) I can sometimes get better results, but even then mostly poor relative to other methods.

If you do use it, how do you use it - by itself or in combination with other things somehow?

Cheers,
GP

 

[tech/a]

GP.

The learning curve is almost vertical when you have software like AMI to Prove/Disprove some well accepted ideas.

Parabolic SAR should be used when protecting a profit in a fast moving stock.
Youll find that attempting to use it on every stock will be in efficient as most stocks spend long periods ranging.
Parabolic works best when price action is Parabolic (Sharp rises.)
CUE is a good example.

Ill post a chart tonight showing its practical use on CUE tonight.
Dont have EOD charts at the office.


tech

 

[tech/a]

Found this Pik on how Parabolic is calculated that i made up a few years ago for someone else.

May help you understand the indicator better understanding how its calculated.

 

[GreatPig]

Parabolic SAR should be used when protecting a profit in a fast moving stock.

Thanks, Tech. That makes sense.

CUE is a good example

I took a look at that last shoot up in CUE and the parabolic SAR works quite well there, giving very similar results to using ATR. Best results though are obtained in that case with a lower accelerator increment than the standard 0.02.

Cheers,
GP

 

[bvbfan]

tech/a, I think you've got the interpretation of the Parabolic SAR around the wrong way

The buy trigger should be activated when the prices moves above the stop level when the level is above the price, and sell trigger when price moves below stop level when the trigger is below the price

If you look at the link at Incredible Charts
You will see how it is employed

From my experience I've found Parabolic SAR is a good indicator on 'selected' stocks, and average 60%+ profitable trades using it alone

 

[tech/a]

The points shown on the chart are the starting points for the calculation of the parabolic.Not the reference points for the interpretation of the indicator.