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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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It is simple: when a Parabolic SAR dot appears above the price - it is a signal to buy, below - a signal to sell.

To learn more about this indicator, I'd recommend this guide about trading with Parabolic SAR indicator.


hello ed,
am Chidi from Nigeria. I want to use this opportunity to thank you for all you are doing for us (traders) in the forex world, you know it is really an amazing thing that you could come up with an idea like this just to help people for free(nothing in return), i mean it's hard to com-by in this our present world as regard to the fact that many out there just want to take advantage of you (take your hard earned money without giving you anything in return of it), IT'S REAR TO COME-BY MY FRIEND. And that is why i want to through this means say a big thanks to you, all you crew and all the members of this site all over the world for all your effort in posting and analyzing all strategies that has made this website a realty.
Before now i was always beaten by forex market, i did not know which way or had any approach (NO STRATEGY)to tackle the market until i found this site. And thank God that i did because, i was at the blink of giving up thinking that forex was another trick of taking away money from people's pocket online or a kind of game that is not meant for me. I have been able to dome trade as many strategies as i can on this site in-order to find one that fits my style and i must confess that most of them work well if you follow the rules but have come to conclusion that this one (Parabolic SAR + ADX) best suit my style.
So, what i just want to know is,what will be the best set-up for 4hour time frame? (like a moving average that will enable me filter false signer and the level at which the ADX must be to confirm a trad-able trade as well as a strong trend.) that's on a 4hours chart?
And i want to add that this strategy seems to work more on opening of the markets' sessions. I don't know if anybody in the house would want to make any comment on that.

I will be waiting for replies and any from the house and from ED will be highly appreciated . my e-mail address- donmages77bizbox(at)



Hi my Ed!
How are things going on over there? hope all are moving fine with the great job? It is your good friend CHIDI from Nigeria again. Well, i just want to quickly ask what will be the best method of exit with this strategy? is it to use a trailing stop loss tech-nice or to set your stop loss at a particular price level? And what about take profit, what should be my aim or target level for effective profit realization.
still waiting for your replies.
A big thanks to you,to your crew and to all the members of the house.



One thing puzzles me about the ADX indicator mentioned here. The 50 day parameter is suggested here, but often I see 14 days used instead of 50 in other sources. What is the difference and which one is better when using ADX(50) instead of the default ADX(14) ? Thanks in advance.


Hi Chidi,

I'm terribly late with replies on this page, I'm sorry.
Thank you for the feedback! Have you tried looking at simple Heiken Ashi candles?
They are great for confirming entries as well as for trailing stops and exits.

Here are two versions to try out:

both are for MT4 platform.

Best regards,

Hi Steve,

The default ADX period is 14. I used 50 here to avoid choppiness in +-DI lines when there is a large trend in place - then on retracements DI lines won't cross back as often. Although even after that the difference would be minimal, I just settled on that number, the same way I pick ADX 20 or 30 sometimes.

However, if we speak about measuring a strength of the market by looking at ADX line, it is better to go back to ADX 14 or 20 period.

Best regards,

Hi everybody, Im Carlos from Mexico, 6 months hit by Forex market, but always with a weak energy to get back and take my place...

I want to thank Edward and all involved people in creation of this page, not just because the big chance that every tool give us, but the connection between newbies, experts and world people who wants to play the game of life... yes.. i guess Im excited!!

I will try with this strategy, just as Edward wrote it, even it works or not, you will be notice, but, anyway, thanks again everybody and a special kind regard for Edward!!

See you next time!!

Thank you for your support, Carlos!

Best regards,