Trading using the Parabolic SAR and other Oscillator Indicators-Money Classic Research
There are many different indicators which are used for different indications in the technical analysis. The indicators are used to generate equity tips in the form of equity intraday tips. The main indicators are divided in the broad categories of momentum based indicators and oscillator indicators. The parabolic SAR is a trend following indicator and helps to identify the current trend as well as to follow the trend. The parabolic SAR is represented by the dots above and below the price levels. If the dots are above the price levels a down trend has just started or is in place. Similarly if the dots are below the price levels the uptrend has just started or the uptrend is continuing.
The parabolic SAR is used along with an oscillator indicator like ADX or RSI to determine the confirmation of the buy and sell signals. The RSI is an indicator which is used to specify the overbought and oversold levels. RSI stands for Relative Strength Index and this index takes a value between 0 and 100. The lower values specify that the market is oversold and higher value that the market is overbought. The values 30 and 70 are taken as the threshold values. The values below 30 are taken as oversold values and the value above 70 are taken as overbought levels. Using RSI and parabolic SAR confirms the buy and sell signals and there are high probabilities that the trade will be profitable.
Similar to RSI the ADX can be also be used in conjunction with Parabolic SAR to find accurate buy and sell signals. The ADX help to determine the strength of the trend. The ADX helps to determine if the trend is strong, weak or of medium strength. Thus if the trend is strong and uptrend, the buy trade can be placed. Similarly if the trend is weak and uptrend there is more chances of trend reversals and thus placing the buy trade is risky. Similar strategy holds for the down trends also. Money Classic Research is an advisory firm which use the strategies like stated above to generate accurate equity market tips.