Parabolic Sar and EMA Trading System For MT4

Parabolic Sar and EMA Trading System For MT4

The Parabolic Sar and EMA Trading System For MT4 is a profitable trading strategy where the Exponential Moving Average will provide the overall price direction. Moreover, we will get the further aspect of the market from the Parabolic SAR to get the exact entry point. Furthermore, this trading strategy provides the best result in the H4 timeframe, and you can apply it in all timeframe. 


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What is Parabolic SAR?


Parabolic SAR is a profitable forex trading indicator that is available free on the MT4 platform. It is represented by some dots below or above the price, and the main objective is to identify the price direction.

If the price is trending higher and the Parabolic Dots are below the price, it is an indication that the overall trend is bullish. On the other hand, if the price is trending lower and the parabolic Dots are above the price, the trend is bearish.

  • Moreover, other indicators of the Parabolic SAR is mentioned below:
  • If Dots are expanding from the price, the trend is getting stronger.
  • If Dots are getting closer to the price, the trend is getting weaker.
  • If Dots remain close to the price, it is an indication that the trend is corrective.
  • If Dots comes below and above the price more frequently, it will indicate volatility and uncertainty.




In the image above, we can see how the Parabolic SAR provided the price direction.



The Parabolic Sar and EMA Trading System For MT4


In this trading strategy, we will define the price direction from the EMA and Parabolic SAR. The difference between the Exponential Moving Average (EMA) and the Simple Moving Average (SMA) is that the EMA focuses on the most recent movement.

When you analyze the market and trade in the H1 or H4 timeframe, it is obvious to emphasize the recent prices. In this way, we will get the best outlook of the market from the EMA.

Before going further to the trading strategy, let’s have a look at trading elements:


  • Exponential Moving Average (EMA)- value 5 (green)
  • Exponential Moving Average (EMA)- value 12 (red)
  • Exponential Moving Average (EMA)- value 34 (black)
  • Parabolic SAR- Step 0.03, Maximum 0.2.


Let’s plot these indicators in the chart and see how it looks like




The logic behind the use of Multiple EMA is to get a 360 view of the market. If the price is trading above the EMA 12 and 5, the trend is bullish, and if the price is trading below the EMA 12 and 5, the trend is bearish. Moreover, when the EMA 5 crosses above the EMA 12, it will provide a more accurate bullish price direction.

Besides the indicators mentioned above, you can use any Oscillators (MACD, RSI, etc.) to increase your trading probability.



Parabolic Sar and EMA Trading System For MT4 - Bullish Trade Setup


The Parabolic Sar and EMA Trading System For MT4 work well in every currency pair in the H1 timeframe.

We aim to get the price direction based on the EMA crossover with a confirmation from the Parabolic SAR. 

Bullish Trading Condition


  1. The price is trending higher in the 1-hour timeframe.
  2. EMA 5 is above the EMA 12.
  3. EMA 12 is above the EMA 34
  4. Parabolic SAR is below the EMA 5
  5. SAR makes a higher high.




Entry


You should enter the trade as soon as a candle closes after completing the conditions mentioned above. While taking the trade, make sure that the last candle is bullish and above the 5 EMA.


Stop Loss


The ideal stop loss for this trading strategy is 40 pips. However, you can consider recent swing levels to determine the better risk: reward. 


Moreover, setting the stop loss, make sure to use 10 to 15 pips buffer to avoid unexpected market behavior.


Take Profit


The ideal take profit level is based on a 1:1.5 risk: reward. Therefore, if your stop-loss is 40 pips, you should set the take profit at 100 pips. Moreover, you can select the stop-loss manually when the 5 EMA crosses down the 12 EMA.



Parabolic Sar and EMA Trading System For MT4 - Bearish Trade Setup


The bearish trade setup also works well in every currency pair. However, to get the best output, you should use this strategy in the H1 timeframe.

Overall, we will get the price direction based on the EMA crossover with a confirmation from the Parabolic SAR and enter the trade when an appropriate candlestick appears.


Bullish Trading Condition


  1. The price is trending lower in the 1-hour timeframe.
  2. EMA 5 is below the EMA 12.
  3. EMA 12 is below the EMA 34
  4. Parabolic SAR is above the EMA 5
  5. SAR makes a lower low.




Entry


You should enter the trade as soon as a candle closes after completing the conditions mentioned above. While taking the trade, make sure that the last candle is bearish and below the 5 EMA.


Stop Loss


The ideal stop loss for this trading strategy is 40 pips. However, you can consider recent swing levels to determine the better risk: reward. 


Moreover, setting the stop loss, make sure to use 10 to 15 pips buffer to avoid unexpected market behavior.


Take Profit


The ideal take profit level is based on a 1:1.5 risk: reward. Therefore, if your stop-loss is 40 pips, you should set the take profit at 100 pips. Moreover, you can select the stop-loss manually when the 5 EMA crosses down the 12 EMA.



Parabolic Sar and EMA Trading System For MT4 - Conclusion - Trade Management Idea


You should follow strong money management for The Parabolic Sar and EMA Trading System For MT4. The probable trade management ideas are mentioned below:

  • Do not take more than 2% risk per trade. If you want to minimize the risk more, you can use a 1% risk per trade.
  • Always use stop loss and take profit in every trade and move the stop loss at breakeven whenever the price makes a considerable gain.
  • Don’t lose hope after making some consecutive loss. Remember that it is a part of trading.

  • If you have lost almost 10% of the trading balance, take a breath, and avoid trading for a few days.


This trading strategy is very profitable in every currency pair. Therefore, you can use it as an individual strategy or take it as a secondary strategy to increase your trading accuracy.

Download the complete system description and the files here:

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Download the FREE Parabolic Sar and EMA Trading System for MT4.

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