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Forex trading strategy #2 (Parabolic SAR + ADX)

The two indicators we are going to talk about here are found to be very well working when used side by side. This Forex trading system is an another simple discovery; and hundreds of such discoveries can be made when traders are there to learn and experiment.

Any currency pair and time frame can be used.
Indicators: Parabolic SAR default settings (0.02, 0.2), ADX 50 (with +DI, -DI lines)


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what do you recommend the ADX be before making a buy/sell move. For best result, should it be at least 25?

First of all, ADX must be rising, this is a healthy sign, no matter how low the readings is. When ADX advances through 25 (some even suggest 20), we have an established trend (up or down) - a second confirmation from ADX about trend's health.

Regards,
Edward

Hmm, with ADX made 50 it seems pretty rare for it to reach 25, at least in USD/JPY. Anybody here working on this ADX + Parabolic SAR strategy? Im doing a manual test and so far im up 80 pips, but thats composed of around 70% loss and 30% win, just so happened that the wins were in much larger pip quantity. I worry that if I miss out on those big ones, this strategy will hurt me.

Anyone care to share their experience with this?

Your fist guidance should be rising ADX, regardless of its position. However, this is not a very strong signal on its own.
The second is, of course, the 25 level. ADX 50 is quite "lazy" comparing to ADX 14 or 30, for instance, in reaching 25 level, but when it does so, it is a very strong signal.

Best regards,
Edward

im testing with euro/jpy and found that there aren't alot of entries during the day. Maybe 3 or 4. Should I trade more than one lot since there only a few opportunities as long as i get a good buying signal?

3 or 4 entries a day is a very god number.
...Although, scalpers would disagree :)
Every trader chooses his/her trading rhythm in Forex.

Best regards,
Edward

Hi Ezra:

You said that you're using the H1 chart as entry decision. What happens when your H1 signal conflicts with your H4 and daily? Do you ignore the signal from H4 and Daily?

Thanks

I believe it is quite the opposite.
It is suggested to look at 4 hour and daily charts only (by Erza), but when we get a green light to go, we descend to 1 hour chart to find a precise entry level at better price.
When 1 hour chart contradicts with 4 hour, no entry.

Regards,
Edward