In forex trading world, there are many indicators that can be used by traders in order to pursue profit and minimize the loss. Some indicators are classic, some are modern. Parabolic SAR is one of the modern indicator which is generally used by forex traders. Within the PAMM investment system, traders could attract investors to put their money so that the traders could manage the money and give the profit back to the investors.
Parabolic SAR is one of trending indicator which is usually used within the uptrend or downtrend condition. It is firstly used to detect when the trend will stop and reverse. Based on its name ‘SAR’ which stands for Stop and Reverse, Parabolic SAR helps PAMM traders or PAMM managers to determine where a stop order should be placed by seeing the current trends. Nowadays, this indicator is broadly used to be an entry point also.
Parabolic SAR is shown as a series of some dots positioned either above or below the graphic. These dots look like a parabola. When parabola is below the graphic, it means a buying signal and if parabola is above the graphic, it gives a selling signal for traders. Nevertheless, it doesn’t mean that traders have to follow these signals all the time. As a good PAMM trader, we must be very careful before making a decision. It will be better for traders to open buy when the dots of Parabolic SAR are in their position to create upward and open sell when the Parabolic SAR dots are in their position to create downward. These actions will prevent traders from the risk of mistaken buying or selling by doing a premature action. Parabolic SAR also helps traders to determine whether they must close the trading or not.
As a trending indicator, Parabolic SAR is effective in a condition when there is a price movement. Traders are suggested not to use this indicator in the sideways condition. Sideways is a condition where there is no price movement within the market. This condition usually happens when market is closed or in the position of awaiting for an important news or issue. In order to make excellent actions of buying, selling and holding, it is very recommended for PAMM traders to use this indicator in conjunction with other analytical tools such as Stochastic or RSI. But if you are a newbie in trading forex, you can use this indicator for learning to train yourself to be a great PAMM trader in the future.