Parabolic SAR tweaked system

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Parabolic SAR tweaked system

Postby pip_farmer » Mon Feb 01, 2010 11:39 am

Hello fellow Pippers,

I am fairly new to trading and I have come up with a system that I believe will work VERY well. For this system to work optimally it will require an EA to be written. This system works the best on 1HR timeframe with pairs that boast the largest daily ranges such as EURNZD and GBPJPY for example. The only indicator that will be used is the Parabolic SAR with default settings on MT4. Essentially you will almost always be in a trade. This system will profit roughly 8,000-12,000 PIPS/year on certain pairs. Here are the rules:

1. Immediately when PSAR dot changes you take the direction PSAR indicates (dot moves above candle = SHORT, dot moves below candle = LONG) It is important that the execution is done at the moment the PSAR dot changes direction and not at the candle close. Example: If you were LONG and the PSAR dot changes, you close your LONG position and open a SHORT position. So far we are basically following the PSAR indicator to a tee.

2. On PSAR dot change, IF the previous set of PSAR dots resulted in a predicted profit, stay in the position you are currently in. Example: if you are LONG and profit was made in this current position, you stay LONG, essentially doing the opposite of what the PSAR indicator is telling you. An important thing to keep in mind about this rule: It does not matter whether or not you physically made a profit or a loss when deciding what to do when PSAR changes, if PSAR "predicted" a profit in the previous set of dots you do the opposite of what PSAR indicates. Simple as that.

3. Stop Loss/Take profit: In most trades the "stop loss" will be 75-100 PIPS or PSAR dot change (which ever occurs first) and "take profit" will simply be when dots change. Here is the tricky part: IF you are currently in a position that is OPPOSITE of what PSAR is indicating, you will set a stop loss of 75-100 PIPS (this is a variable which will be precisely determined by backtesting once EA is written). Once the stop loss is hit, ONLY in this situation, you will reverse the position and enter trade back in the direction that PSAR is indicating. Stop loss will again be 75-100 PIPs or PSAR dot change.

That is it, fairly simple process. There will be periods of some significant drawdown when a pair is ranging. The way I plan to combat this issue is to trade this system with at least 2 uncorrelated pairs. Taking my determined risk and cutting it in half to trade on 2 different pairs simultaneously will virtually eliminate the problem of blowing out my account. The drawdown is not that bad anyways and combined with a good money management system (i have one that we can discuss at a later time), this system will produce ALOT of PIPS. If anyone wants to attempt to write an EA for the system it would be greatly appreciated and well worth your time. I will be very active in this thread so if anyone has questions, comments, or suggestions please submit and we can perfect and create a VERY PROFITABLE EA!!!!

Looking forward to hearing from you!
Pip_farmer

P.S. I have no clue how to write an EA but I am currently trying to learn, hopefully someone can save me!
pip_farmer
 
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Re: Parabolic SAR tweaked system

Postby Edward Revy » Tue Feb 09, 2010 8:40 pm

Hi,

thank you for the interesting insight.
Yet, this is probably the first time, when I'd actually like to ask for a few screen shots, just to make sure I understood the principle correctly.

Another point, you said:

"On PSAR dot change, IF the previous set of PSAR dots resulted in a predicted profit, stay in the position you are currently in."

Understood, but what exactly do you mean by a predicted profit? Are you looking for a fixed Profit target in pips, or rather you're trailing a stop with the SAR dots, which eventually can turn into a Profit stop. Then what do you do about profits when the SAR dot changes?
Thank you!

Best regards,
Edward
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Edward Revy
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Re: Parabolic SAR tweaked system

Postby Roger » Wed Jun 09, 2010 1:24 pm

Hallo

I´m an new forex trader and this system looks very nice. thank you for this :) .

Can i use this with 5000€ account and have you some in formations about money management.?
Roger
 
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