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Trading binary options using the Parabolic SAR indicator. The principle of working with Parabolic SAR on binary options and profitable strategies with it

We'll talk about this in today's lesson.

Indicator characteristics

  • Terminal: any
  • Indicator type: trend
  • Trading assets: volatile
  • options: depending on timeframe
  • Option type: Put/Call
  • : around the clock
  • Recommended brokers: ,

Description of the indicator

The full name of the indicator is Parabolic Stop and Reverse. The name comes from the fact that the indicator’s movement resembles a parabola. Wells Wilder is the author of the algorithm underlying the indicator, a famous American trader, and a specialist in technical analysis.

He also wrote the book “New Concepts in Technical trading systems”, where, in addition to the Parabolic itself, several more well-known technical indicators (RSI, and so on) are considered.

The indicator accepts a single parameter as input - the acceleration step and its maximum. The step size determines how strongly the PSAR points will be attracted to the current price.

When the Parabolic points meet the price, the indicator changes its position. The dots at the bottom of the price chart indicate an upward trend. On the contrary, the points located above indicate a downward trend.

Since the indicator is in direct contact with the price, the amount of trading noise and abnormal quotes is critical for it. Therefore, PSAR shows the best signals at relatively high TFs - from M15 and above, that is, where the trends are more stable.

Trading Rules

The rules for trading using Parabolic are as simple as possible:

  • When the Parabolic changes position from upper to lower, we buy a Call option;
  • When the Parabolic changes position from lower to upper, we buy a Put option.

That is, the indicator signal is a change in the position of the PSAR points relative to the price. We enter the market exactly when the point changes its position, that is, on the current candle.

Binary options are contracts with a fixed expiration date. Whether the price ends up in the profit zone or not directly depends on the timing of the transaction. Therefore, it is critical to choose the right time expiration.

Expiration time calculation

The optimal expiration date for trading using Parabolic is a time period two levels higher than the current one. As initial data, we take the standard progression of timeframes in MetaTrader 4: M1, M5, M15, M30, H1, H4, D1, etc. For example, when trading on the M15 TF, the expiration time should be 1 hour.

Another way to calculate expiration is by the average duration of the trend. Let me remind you that each sequence of Parabolic points is a separate trend, the duration of which is individual for each timeframe and. Knowing the average duration of a trend, we can approximately guess when it will end.

So, to calculate medium length For a trend, it is enough to add up the sequences of several movements in the previous history interval. Ideally, the trading session time on the site should correspond to your main working time.

IN in this case, average duration the trend amounted to 13 candles:(12 + 17 + 18 + 5 + 13) / 5 = 13 . The option expiration time should be about half of the average, that is, approximately 6 candles:13 / 2 ≈ 6 .


Tips and tricks

As we have already found out, Parabolic loves trends, and sideways movements completely unsettle him. Moreover, he is very picky even about trends, so any abnormal market condition immediately increases the number of false signals.

To avoid this, try to choose the hours when the market is most adequate. For each instrument this different times day - depending on the day of the week and the current trading session.

Thus, it is best to look at the situation. If the market begins to move sideways, that is, does not update the previous maximum/minimum for a long time, we try not to open new transactions.

The same goes for trading during news releases. If a rush is expected in the market, Parabolic will not be the best instrument for trading during such a period, and it is better to stop opening new transactions for a while.

Examples of transactions

We will look at examples of transactions on GBPUSD, M15. Before starting trading on an instrument, we need to calculate the appropriate expiration time. The easiest way is to choose an expiration time two levels higher than the current TF, that is, 1 hour. A more accurate option is to calculate optimal time expiration based on the average of previous movements:(5 + 4 + 3 + 3 + 18 + 4 + 18 + 7) / 8 / 2 ≈ 4 . It turns out that the expiration date is equal to 4 candles of the current TF.

Apparently, the expiration time was calculated correctly, since only one out of four trades could presumably close OTM. Otherwise, this trading method works well on currency pairs with stable trends and high volatility.


Conclusion

In the algorithm Parabolic SAR laid down great idea by following the trend. The indicator follows price movement and quickly adjusts when the trend changes speed or enters consolidation. This feature allows you to receive signals with minimal delay, which is fundamentally important in binary options trading.

Best regards, Alexey Vergunov

Grandma trades pies, and we trade binary options. Hmm, why, strictly speaking, “trading” if this is internal trading, where experienced guys simply take the money of losers?

Yes, because binary options, as I never tire of explaining, are:

  • simulator;
  • an excellent way to earn first capital;
  • tool for technical and psychological preparation to real trading in futures, real options, etc.

Therefore, you need to treat them precisely how to trade. How to important matter, to which you need to devote much more time than a dull job with a meager salary.

In the West, any decrepit old woman calmly deals with stocks, bonds and futures, saying in a lisping voice into the phone “Michael, buy me five shares of AAPL.” And we are all giggling and searching for a magic button to get some free money.

Yes, yes, they specially created a broker, investing hundreds of thousands of euros in him, so that they could hand out carrots to us. Figurines. To take his money, you will have to sweat. Theoretical preparation, practice and of course normal strategies.

Any strategy is a combination of certain techniques, which includes several indicators, such as , ADX, and many others.

What trading strategies generally exist?

There are a lot of strategies for trading binaries and a little cart. They can be divided into 4 types:

  • basic;
  • basic;
  • complex;
  • advanced.

The basic ones involve simple concepts like the crossover of two moving averages or the use of a single indicator, say RSI. These are simple guys, we will put them together in a separate article.

But the main class strategies are what you need. They're simple enough not to intimidate newbies, but they also offer concepts you can rethink even after a year of trading.

So, here we go: 5 strategies for trading binaries that you need to pay close attention to.

Setting up indicators for strategies

We work, as usual, with . All indicators can be selected using the button .

And to configure the parameters of any indicator, press the button in the form of a gear, with a pop-up inscription Format.

Hold your skirts, girls, we're starting.

1. Moving averages + Stochastic + RSI

The strategy is called SBS (Simple Balanced System) and includes three tools:

  • 2 moving averages with values ​​of 5 and 10;
  • Stochastic with values ​​14, 3, 3;
  • RSI with default values.

Added two Moving Average with meanings 5 And 10 . Added Stochastic. Open its parameters (click on the gear) and for the value TO on the tab Inputs enter the value 3 .

For RSI leave all default values.

Call option

  • moving 5 crossed 10;
  • stochastic is directed upward, but has not gone beyond the colored area;
  • RSI is greater than 50.

Keep an eye on the RSI. If the value approaches 70 (too high) or 30 (too low), these are signals for a change in trend.

Put option

  • moving 10 crossed 5;
  • stochastic is directed downward, but has not gone beyond the colored area;
  • RSI is less than 50.

For convenience, draw a horizontal line at 50 on the RSI chart to clearly see where the indicator line is located.

2. Parabolic SAR + DMI

Parabolic, aka – a very interesting indicator. It requires a certain approach, but in combination with various indicators it shows remarkable results.

Parabolic is part of many strategies, both ordinary and quite complex. Parabolic is loved by advanced traders, because it only seems simple, like a log. In fact, this is a thing for the future.

Tools:

  • Directional Movement.

We set parabolic by default. For Directional Movement (DMI), we need to remove the ADX parameter so that it does not interfere with us. To do this, on the tab Style uncheck c ADX and make the other two parameters fatter.

And let's make it fatter for better visibility.

Call option

The entry point is very clear. When line +DI (blue) is above–DI (red) and Parabolic gives the first sign (cross) down– a signal to buy Call.

Put option

It's the other way around. The red line is –DI at the top, the blue +DI line is at the bottom. We enter at the first sign of the Parabolic at the top.

As you can see, Parabolic and DMI complement each other perfectly. Don't forget to make the Parabolic SAR icons bolder, because by default they are extremely small and hard to see.

3. Parabolic SAR + MACD

We continue to consider the use of Parabolic in different strategies. Let's now connect it to the MACD.

In this case, the strategy is as simple as a rubber beach slipper. We need:

  • MACD;

Everything is with the basic values, we don’t change anything.

In this case, the entry point is not necessarily the first Parabolic sign from above or below. We proceed like this:

  • MACD crossed below, far below the center line;
  • Parabolic below, under the candles, up to 3 signs (crosses on the chart) – the MACD intersection is confirmed.
  • We buy Call.

  • The MACD crossed high, well above the zero line.
  • Parabolic at the top, above the candles, up to 3 signs (crosses).
  • We buy Put.

Parabolik and Makdi are close friends who work well together. The main thing is not to fly by with the expiration time, well, this is the main nuance of binary ones, which can be learned simply by experience.

4. MA 5 + RSI 5

A simple but very interesting strategy called “5 vs 5”. Works for any currency pairs and timeframes. Just two simple indicators:

  • Moving Average with value 5 ;
  • Relative Strength Index (RSI) with value 5 .

How we work. We are interested in the moment when the body of the candle crosses the MA 5 line, and the RSI is below or above 50, depending on whether the trend is rising or falling.

Now you need to wait until there are 15-30 seconds left before the candle whose body the line has crossed closes. This will confirm that the crossing of the body actually took place.

Call option

  • MA 5 crosses the green candle;
  • RSI should be above 50, in the colored zone.

Put option

  • MA 5 crosses the red candle;
  • RSI should be below 50, in the colored zone.

Not a strategy, but a piece of candy. Moving candles, relative strength indicator RSI - two teas for this gentleman.

5. Stochastic + RSI + half candle

Candlestick analysis contains a lot of interesting techniques. If you combine them with effective indicators, you get very interesting results.

Currently on our menu:

  • stochastic;
  • RSI (Relative Strength Index);
  • candlestick chart.

All indicators with basic parameters and use them as usual.

Call option

  • Stochastic crossed in the oversold zone (below).
  • The RSI is well below 50.

Put option

  • Stochastic is in the overbought zone (top).
  • RSI is significantly above 50.

And most importantly. We enter halfway through the next candle.

What does it mean? Let's imagine that there is a crossover of the stochastic at the top, and the RSI is greater than 50. Now we:

  • waiting for the red candle;
  • We are waiting for a green candle;
  • enter when the candle is green half exceeded the red one (because the trend is downward).

And the opposite is true for an upward trend. This dynamic system entry shows itself perfectly on different timeframes and currency pairs, just watch it in different conditions.

Trade until you win

All the strategies described, of course, are not a “money” button. But you should already understand that any strategy can become successful or not only depending on how diligently you practice it.

Don't forget another point. That's why the same strategy works for one person and not for another? Because our consciousness is individual. Same fact different people are interpreted completely differently.

In the wild mixture of strategies and indicators - there are thousands of them - there is a combination of tools that will be intuitively clear to you. It will be something truly YOURS.

How does this happen? When a critical mass of knowledge and experience has accumulated. Suddenly, at some point, you will start making predictions - to your complete surprise. But not after you've been spitting at the ceiling for six months. And after hard trading, you should feel great.

Try different things, watch, study. Trade small. It’s not money that should concern you – but from 60% successful transactions over a certain period of time. When you achieve this, bingo begins.

Because earning $1000 in binary in a minute is elementary. Successfully placed and here it is, your thousand. But earning it every single day, for months and years, that’s a problem. After all, transactions go like this:

  • successfully;
  • successfully;
  • unsuccessful;
  • unsuccessful;
  • successfully;
  • unsuccessful.

And so on. And the balance, at the end of the week, month and year, must converge, in the end, in plus. This is what distinguishes successful trader from the loser that he came, threw 300 rubles into IQ, does not know the concept of “technical analysis” and thinks that he is on the path to financial success.

So we are developing. We chose a couple of strategies and indicators. Let's study. We work on emotions, don’t be greedy, calmly and without nerves. We read about Japanese candlesticks, trend lines, support and resistance and, of course, different strategies, in all their splendor.

Many traders are constantly looking for new tools to conduct technical analysis of the market situation. At the same time, over the long history of trading, it was created large number indicators that have long been considered classic. Their capabilities are quite sufficient to determine the behavior of quotes of the underlying asset. In today's article we will talk about Parabolic SAR (Parabolic SAR) or PSAR.

This analytical tool appeared back in 1976. Its creator is Welles Wilder. The abbreviation SAR stands for Stop and Reverse. Translated from English, this literally means stop and turn around.

Despite its venerable age, Parabolic SAR has not lost its relevance today. It can be used both for classic stock trading and for binary options.

Parabolic SAR is a standard indicator of the Metatrader 4 (MT4) trading terminal. Therefore, the desire of some traders to download it on the Internet seems somewhat strange. In order to use the tool in question, just open MT4, go to the custom indicators category and open Parabolic.

Parabolic SAR is a counter-trend tool. Simply put, it is designed to identify turning points in market trends. True, it cannot completely eliminate false signals, but they can be filtered out.

Parabolic ATS can be used in any market. A trader focused on binary options will be able to use it to determine the direction of opening a trading position.

Correct setting

Most often, the Metatrader 4 terminal already has correct settings Parabolic. However, it never hurts to check it out.

So, the Parabolic SAR algorithm allows the trader to adjust 2 indicators:

  • step or Step;
  • maximum or Maximum.

The step size should be set to 0.02. This means that at the moment a new acceleration point or extremum appears during a trend, the previous value of the acceleration coefficient will be increased by 2%.

The maximum is understood as the value upon reaching which the acceleration coefficient stops growing. It should be equal to 0.2.

In addition, the tool's settings allow you to change several other aspects. These include the size and color of the dots, as well as the time frame on which the indicator should be drawn.

When adjusting the Parabolic SAR, you should remember that by reducing the step, you will significantly lose its sensitivity to quote movements. Increasing it will have the opposite effect.

As practice shows, the set standard settings Parabolic allows you to make money on binary options good result. Reducing the step can only be justified when trading in which the role of the underlying asset is played by a low-volatility instrument. But even in this case, you should act extremely carefully.

Receiving trading signals

The main PSAR signal is a change in the position of the points relative to the price chart. It is this factor that a trader should pay close attention to.

When the indicator points go under the candles on the chart, you should expect a slowdown in the downward trend or a reversal. The opposite situation, when the points occupy a position above the candles, corresponds to the opposite interpretation. A trader should wait for a slowdown in the uptrend or a reversal.

In addition, you need to take into account the distance that separates neighboring points. With an increasing trend, this distance tends to increase. In addition, in this case the points are located further from the price chart.

When we begin to analyze the history of the trading session, it may seem that Parabolic makes virtually no mistakes. Unfortunately, practice is not so optimistic. Parabolic SAR will always generate some false trading signals. Therefore, it is better to use the tool in question in conjunction with other indicators.

The most problematic position for PSAR is flat. In a situation where there is no clearly defined trend in the market, our indicator begins to fail.

Asset quotes can fluctuate within a narrow range of 15–25 points, and the indicator points will repeatedly change their position. Opening trading positions in such a situation is extremely risky.

How to use

To date, many strategies have been invented that allow you to effectively combine Parabolic SAR with other indicators for technical analysis. Two of them are best suited for binary options trading.

Combination of PSAR and ADX

The ADX tool helps the trader draw a conclusion about the strength of the prevailing trend on the exchange, but does not provide an understanding of the direction of movement of quotes.

Our strategy will be based on the readings of the main ADX solid line. You can ignore the other two.

We need to monitor the change in the position of the Parabolic indicator points; when it coincides with the moment at which the ADX line crosses the central level, we should open a deal in the direction of the new trend.

Combination of PSAR and MACD

This strategy will give you several larger number trading signals for concluding a deal. A trading position should be opened at the moment when the change in the position of the Parabolic SAR points coincides with the moment of intersection of the signal line and the MACD histogram.

At the same time, if a powerful trend has formed in the market, then you can try to conclude transactions based only on the readings of one Parabolic.

Greetings, dear readers of the blog site. In this article we will talk to you about the parabolic for binary options. Undoubtedly, this technical analysis indicator has gained real popularity within the Forex market.

However, it works great in the field of binary options, and this area is actively developing, so it makes sense to figure out how to use the parabolic on binary options.

The creator of this tool is the famous stock exchange figure Welles Wilder. He first described it in his book “New Concepts in Technical Trading Systems”, where the author explained on what the parabolic based its readings and how to correctly apply it directly in trading.

The first thing you must understand is that parabolic is a purely technical analysis with all the ensuing consequences. That is, he is characterized by all the strong and weaknesses similar tools.

It will perform excellently in a trend, but as for flats, false signals cannot be avoided even with a strong desire. In addition, it is recommended to use it in conjunction with other indicators.

Unfortunately, just one set on the price chart is not enough to find good entry points. IN mandatory it is necessary to connect filters in order to somehow exclude false signals, but we will talk about this a little later.

Now on your screens you see the Parabolic Sar installed on the chart. As you can see, it represents signal points that, taking into account market movements, change their position relative to the price.

If the market observes , then the parabolic points fall under the price, confirming the current direction of the market. If the indicator points are above the price, then we have the development of a downward trend. It seems that everything is very simple and clear.

But it was not in vain that I told you that it is imperative to use it during periods of a trend, and nothing else. To confirm all this, I will give you a vivid example:

Here you can notice that the market is developing. With all this, the parabolic constantly changes its readings, jumping from place to place. If in this period If a trader purchased options here, he would definitely receive a series of significant losses.

Description of Parabolic in binaries

As I said earlier, the parabolic for binary options is a standard trend indicator in technical analysis. It can be used on almost all underlying assets; there are no clear restrictions.

But you must understand that it would be most advisable to use it on . For example, a currency pair such as EURGBP is unlikely to be a good fit, since this asset has low volatility, and accordingly, trends are quite rare.

Look


As for time periods, it is perfect for low intervals, . It fits poorly into the context of large periods, since it is noticeably behind the price. In such conditions, the trader will simply be forced to enter the market at a price that is not favorable to him, which only once again increases the chances of an unfavorable outcome.

Parabolic has two main settings: step (0.02) and maximum (0.2). Increasing these variables will make the indicator smoother, and it will respond even less to the dynamics of market changes.

Accordingly, if you reduce these variables, the sensitivity of the indicator will increase!

In my opinion, the most optimal are the standard parameters, but everything specifically depends on the trader himself.

How to trade?

In fact, everything is very simple here! As soon as the point of the probolic is below the price, we purchase a call option. If its point is above the price, then you can buy a put option here.

Here is an example when you could purchase a put option, and the deal would have worked out perfectly, since the price stubbornly moved in a downward direction for the rest of the day. But, as I already said, you definitely need to find filters for yourself so that the quality of transactions significantly increases.

For these purposes, as an option, I can advise you to use a stochastic oscillator as a filter!

Here we can see that the parabolic point is above the price, so we can purchase a put option. At the same time, the stochastic confirms the current direction of the transaction, since overbought conditions have appeared in the market.

Ultimately, the price did move in a downward direction, and the trade itself could have been profitable. But one problem remains - expiration time. If within the framework of Forex we do not care about this issue, then in the context the expiration time is a priority issue.

I want to say that, in my opinion, the minimum expiration time should be at least an hour.

Why? It’s just very important for us that the price moves at least a little in our direction. Simply, if the expiration time is very short, the transaction may be closed with a loss, and only after that the market itself will move in a certain direction.

In any case, there is no point in giving any specific recommendations on this issue; here everyone decides for himself what expiration time to choose. You can choose it only by trial and error.

Conclusions

Ultimately, I would like to note that parabolics is a truly interesting tool for technical analysis.

Actually, like any other indicator, it has its own strengths and weaknesses, which should definitely be taken into account when trading.

Who will it suit? First of all, it is perfect for traders who prefer to trade by catching. But you must understand that there will be unprofitable signals, since the parabolic is not the grail, it is just an assistant.