The best scalping indicators are designed to help traders make sense of price movements and simplify a trading strategy. And one of the widely used indicators for scalping traders is Parabolic SAR in Forex.
Keep in mind, while scalping indicators can be very helpful in identifying entry and exit points for your trades, they can never fully replace the human factor in trading. You still have to carry out your own trading duties and keep yourself aware of other events that may influence the market. But let’s look at why Parabolic SAR in Forex is a well-known key indicator.
Parabolic SAR in Forex: Stop and Reverse
The Parabolic SAR (the SAR stands for “Stop and Reverse”), is useful in showing the trend of a price action. In an uptrend the parabolic SAR will chart points below the price, inversely it will start charting points above the price to signal the start of a retracement.
When parabolic SAR only charts one or two points above the price, it is signaling that the recent price action is only a pullback and to leave your trades open. However, if it charts three or more points above the price it is signaling a deeper retracement coming or even a reversal.
While some traders use it for planning their entries, many experts say it should only be used as a trailing stop.
Whether you’re a novice or seasoned trader, scalping forex signals requires a lot of your personal time, but using the right indicators can make trading a whole lot easier. Looking to learn more about forex signals and trading?
Get more forex training from the Ideas section of SmartTrader (which all users can access, even in the free plan), or jump to the flagship 360Pro version of SmartTrader for its Analyst on Demand education material available from parent company Market Traders Institute.