Been backtesting parabolic SAR on EUR/USD and GBP/JPY pairs lately. Results seem mixed depending on market conditions.
Works decent in trending markets but gives way too many false signals during consolidation. Wonder if combining it with volume or momentum indicators makes it more reliable for intraday setups.
SAR works way better when you combine it with ADX above 25. Don’t take trades when ADX is weak.
This video has some solid tricks to make SAR profitable instead of just breaking even.
Parabolic SAR works way better for confirming trends than timing entries.
I pair it with moving averages to dodge choppy markets. Price above the 50 MA plus bullish SAR flip is worth watching.
Wait for clear direction first. SAR by itself in sideways markets can hurt your trading.
SAR works way better with market structure. I only take signals when price breaks key support and resistance in the same direction. But honestly, it’s best for managing positions, not entries. Trail your winners with the SAR dots as stops and let them run. For entries, get higher timeframe confirmation first. If the daily is trending up, then take bullish SAR flips on the 1-hour. Skip any counter-trend signals.
Used parabolic SAR for 2 years when I started trading. Same problem - it’s terrible in sideways markets.
RSI helped filter the garbage signals. If SAR flipped but RSI was between 40-60, I’d skip it. Cut false signals by about 40%.
I also tweaked the acceleration factor for different market conditions. 0.02 works for major pairs, but I drop it to 0.015 during choppy Asian sessions.
Eventually ditched it as my main signal once I got into price action. Still use it for trailing stops though - that’s where it actually works well.
Skip SAR completely during London overlap. Pure noise generator.