Forex trading strategy #2 (Parabolic SAR + ADX)

thank U for strategy...hope that usefull

Dear Friend,

Pay attention of screenshot-this is JPY. See the levels of fals signals-atack of 114 and 112.It is very dangerous to pass first time. that is the reason of losses.
Regards,
Niko

I have just had a serious look at the system you proposed and like the look of it. The beauty is in the simplicity of it's action and, hopefully, a "bread winner" if followed correctly. So, I'm going to apply this to my trading to see how it, and myself, perform.

Many thanks to you and everyone else for their system strategies and assistance with FX trading.

shabbie.

Thank you Florian,

I'm not an expert in fine-tuning the EAs, unfortunately. My only recommendation would be to limit it to trading during most active market hours, perhaps.

Kind regards,
Edward

Hi Edward,

i put your strategy into an EA. Some good trades, but more losses. Please send a mail to cool-fk()gmx.de then i will send you the EA.

Best regards,
Florian

Yes, SAR can give different signals on 1H and 4H. You have to choose preferably one superior TF to follow the signals through or to use it for confirmation.

False signals similar to the one illustrated above will happen. We can't eliminate all of them (at least this type would be difficult to eliminate). The more conditions and filters we add up, the more complex it obviously gets, and, ultimately our trading results can become less attractive.

ADX 50 will remain slow on any time frame.
I presently trade only Forex, so can't really comment on ETF's, I'm sorry.

Kind regards,
Edward

It seems this system can work well for equities as well.
I did some back testing on Tradestation and FXY came out the best for long trades. AAPL was quite good as well.
Question-
The ADX 50 seems a bit slow on daily charts-does using the hourly and 4H speed this up?
Can you comment on using currency ETF's as opposed to standard forex?
Thanks so much.

This seems like a powerful strategy, but as always, a few false entries. Take a look at the screenshot below.

I would have entered after the candle in the red box would have closed, especially after it touched the 20 line.

And then I would close/loose the trade after the candle in the green box would have closed..

Any suggestions on how to prevent this?

Started testing this strategy today. Using the ADX 50 value.

Edward, I read something about when the 1H and 4H are contradicting. Can you tell more about this?

Do you mean if the SAR has different directions in the 1H and 4H timeframe?

I agree. That would work too.

What about using the SAR as stop loss, and simply move it with every new candle?

Hi,

when in a trade, if Parabolic switches, but DI is not confirming it, I would tighten the stop very well and also examine the candlestick patterns for any clues as to how dangerous or short lived this reversal is, or may be it was a spike only.

The signals from SAR and DI don't need to appear simultaneously.

Regards,
Edward

Hi Edward And Other Users

This strategy has great potential - i have been looking at the strategy on 30 min chart. If mid-trade the parabolic switches yet the DMI's don't cross in the opposite direction should i still remain in the trade and take this as a false signal??

Also have the parabolic and DMI's got to confirm simultaneously or are you allowed to enter if there is a slight delay between DMI and parabolic signals???

Many Thanks

Hi Edward and all,

Today i decided to test this strategy on FSB(forex strategy builder).
I've configured all long/short entry/exit rules just like Edward told in the first post of this thread.I were not using any SL or TP.

Here is balance chart(in pips):

And here is whole strategy overview file: Strategy Overview

And strategy FSB file: Parabolic_SAR_ADX.xml
*Edward you can open it in FSB and have a look at entry rules setup, maybe there is some mistakes.

------------------------------------------
Symbol: EURUSD
Time frame: 1 Hour
Tested period: 2009.01.02 - 2010.02.19

Overall result:
Account balance: -397 pips
Minimum account: -931 pips
Maximum account: 530 pips
------------------------------------------

Well, as we see from the image above, strategy is not so good for period: 2009.01.02-2010.02.19
But i've also tested shorter(1 month) period: 2010.02.01 until today, and the result is better:

So the conclusion is: strategy is not so bad, but we need to choose right moment - when we can use this strategy and when we can not.

p.s. i've noticed that all big losses are coming when DI+ and DI- are crossing each other very often. Then we are getting a lot of false signals even if our ADX period is 50 or higher.

Thanks
Sid

Thank you, Abdul

the SAR would be the same, or you can also try (0.01, 0.1).
ADX could be lowered to 30, or kept the same.

Best regards,
Edward