Parabolic SAR Dot Breakout Strategy

The strategy is very simple and works very well. You can find a lot of trading opportunities using this strategy. This strategy involves only parabolic SAR indicator with default settings.

Indicators:

Parabolic SAR with default settings (Step: 0.02, Maximum: 0.2)

Time Frame: Hourly

But you need to observe the parabolic SAR on the higher time frame of daily chart.

Markets Sessions Suitable:

Do not use this method during Asian market session. Normally this set up works before the beginning of UK market where breakouts occur.

Long Trade:

Parabolic SAR dots must be below the daily time frame candlesticks.

Parabolic SAR dots must be above the hourly candlestick and a strong bullish candlestick should cross the last Parabolic SAR dot in the upward direction.

Stop Loss:

Use a stop loss of 5 pips below the entry candlestick.

Take Profit:

Use a take profit of two times the body of the candlestick that passed through the parabolic dot.

Example:

The following is a NZDUSD daily chart and I have drawn two blue lines and highlighted the area where all the parabolic dots are below the daily candlesticks.

NZDUSD Daily Trend

Now go to the one hour chart. The following is the one hour chart for the same and since this is a long picture I divided into two parts. The following is the first part. You can see the trading opportunities and we have two trading opportunities in the first part.

NZDUSD Hourly Chart Opportunities 1 and 2

The following is the second part of the picture. You can see two more trading opportunities but one is a lost trade.

NZDUSD Hourly Chart Opportunities 3 and 4

So in total, you can see four trading opportunities out of which three are winning trades and one is a losing trade.

Short Trade:

Parabolic SAR dots must be above the daily time frame candlesticks.

Parabolic SAR dots must be below the hourly candlestick and a strong bearish candlestick should cross the last Parabolic SAR dot in the downward direction.

Stop Loss:

Use a stop loss of 5 pips above the entry candlestick.

Take Profit:

Use a take profit of two times the body of the candlestick that passed through the parabolic dot.

Example:

The following is a EURCHF daily chart and I have drawn two blue lines and highlighted the area where all the parabolic dots are above the daily candlesticks.

EURCHF Daily Trend

Now go to the hourly chart. Here I am showing only part of the hourly picture as there are a lot of trading opportunities and there will be a lot of pictures. You can see the trading opportunities in the following picture.

EURCHF Hourly Chart Opportunities 1 and 2 and 3

Note: Always move your stop loss to your entry when you are in some profit.