Parabolic SAR

JJJJ
JJJJ ✭
in Using Technical Analysis
I am trying to use the Parabolic SAR on a scalping/day trading basis. If I look at the SAR signals, they may say as an example, sell on a 5 min time frame but still buy on a 15 minute time frame. There are other scenarios with different time frames that do the similar thing. I am struggling as to what is the best strategy. Do I ride only with 1 time frame or jump back and forth to other time frames and which time frame do I pull the trigger to either buy or sell ?
Thanks

Comments

  • JJJJ
    JJJJ ✭
    Oh I just had a SAR example that had the 3 minute as a sell, the 5 minute as a buy and the 15 min as a sell ?? Does this make sense ?
  • markd
    markd mod
    You would get different signals from different time frames because the numbers used to calculate the indicator will be different. A five minute bar will have a different high than a fifteen minute bar.

    Also, the 15 minute bars cannot change direction until the 5 min bars change direction long enough to cause the 15m to turn. A brief change in 5m direction may not cause the 15m bars to turn. So, the 5m can give a signal before the 15m and the 15m may not give a signal at all. And it could happen that by the time the 15m gives a signal, the 5m has already turned the other way.

    I don't use SAR, so I don't know what is the best strategy. The chart school article recommends playing with the parameters to fit each particular stock's behaviors. I think you would want to pick the most trendy time frame, which would probably be longer.

    Like most indicators, SAR is great when a stock trends, and not so great when it ranges. It also has the usual problems with selection of parameters - too narrow and you get whipsawed (in and out too soon, often at a loss), but set them too wide and you get in and out too late, cutting into the available profits.

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