Forex Scalping Strategy: Trading with Parabolic SAR

Forex Scalping Strategy: Trading with Parabolic SAR
February 23, 2022 Market Traders Institute

Traders can make sense of price movements by using scalping indicators. They can also simplify a trading strategy. One of the most widely-used indicators for scalping traders in Forex is Parabolic SAR.

Keep in mind, while scalping indicators can be very helpful in identifying entry and exit points for your trades, they can never fully replace the human factor in trading. You still have to carry out your own trading duties and keep yourself aware of other events that may influence the market. But let’s look at why Parabolic SAR in Forex is a well-known key indicator.

Parabolic SAR in Forex: Stop and Reverse

The Parabolic SAR (the SAR stands for “Stop and Reverse”), is useful in showing the trend of a price action. In an uptrend the parabolic SAR will chart points below the price. And, inversely it will start charting points above the price to signal the start of a retracement.

When Parabolic SAR only charts one or two points above the price, it is signaling that the recent price action is only a pullback. In this case, you should leave your trades open. However, if the indicator charts three or more points above the price, it is signaling a deeper retracement coming or even a reversal.

Many experts say the Parabolic SAR should only be used as a trailing stop, not for planning entries. Scalping forex signals requires a lot of your personal time. However, using the right indicators can make trading a whole lot easier.

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