The Parabolic SAR indicator for Metatrader 5 is an extremely popular technical tool that provides stop and reverse trading signals to Forex traders.
Parabolic SAR is also known as PSAR and was originally developed by J. Welles Wilder.
When applied to a price chart, the indicator displays yellow dots positioned above and below the candles.
Trading with the Parabolic SAR indicator is simple and works as follows:
- A buy signal is generated when the yellow dots appear below the candles.
- A sell signal is generated when the yellow dots appear above the candles.
- The Parabolic SAR indicator can also serve as a trailing-stop loss tool.
The indicator offers the following customizable inputs and parameters: step, maximum, and colors.
Before using the Parabolic SAR indicator in a live trading environment, it is advisable to become familiar with it and test its functionality on a demo account.
Free Download
parabolicsar.mq5 Indicator (MT5)
Chart Example
The picture below shows how the Parabolic SAR indicator looks like when applied to the MT5 charting platform.
How To Buy And Sell Forex Pairs With The Parabolic SAR Indicator?
Find a simple trading example below:
Buy Signal
- A buy signal is confirmed when the yellow colored Parabolic SAR dot appears below the candle.
- Open a buy market order and place your initial stop loss below the yellow colored PSAR dots.
- Reverse the buy position when the PSAR dots get positioned above the candle (bearish trend reversal signal).
Sell Signal
- A sell signal is confirmed when the yellow colored Parabolic SAR dot appears above the candle.
- Open a sell market order and place your initial stop loss above the yellow colored PSAR dots.
- Reverse the sell position when the PSAR dots get positioned below the candle (bullish trend reversal signal).
