Parabolic SAR & Stochastic Oscillator strategy
I haven't shown any strategy for quite a long time, so it's time to present a strategy based on two indicators - Parabolic SAR and Stochastic Oscillator. You should know the latter one quite well because I showed several strategies based on the stochastic oscillator. Today, however, this tool will only serve to confirm the signals generated by SAR parabolic.
If you want to learn a bit about the Parabolic SAR indicator and understand how this tool works, I recommend watching my YouTube video presenting exactly the same strategy, but in a video version. Let's move on to more important things - what parameters of the indicators? I'm in a hurry to explain. Remember to use the one-minute chart.
- Parabolic SAR - Acceleration: 0.02, Acceleration max: 0.2 (Default)
- Stochastic Oscillator - Overbought: 80, Oversold: 20
If we add both indicators, we will see a similar view to the one seen in the attached screenshot at the beginning of the post. The principle of this strategy is really very simple. If a diamond generated by the SAR parabolic appears above the candle and both lines of the stochastic oscillator are in the buyout zone, this is a signal to play the PUT option. The same applies when playing the CALL option.
AAdditional Information
You can ask what is the best option expiry time. Honestly, I have no idea. You need to see what has worked well and stick to it. That's why I can only say that you should decide to play for up to 5 minutes. I usually play options for 3 or 5 minutes. I recommend using this strategy only when there is a sideways trend on the market. Using this strategy during a strong upward or downward trend can cause a series of painful failures.
1. Set the one-minute chart
2. Add the Parabolic SAR and Stochastic Oscillator indicators with the parameters mentioned above
3. Decide to play only during the side trend
4. If over the candle a diamond appeared and on the Stochastic Oscillator both lines are located in the redemption zone this is the signal to play options PUT.
5. If under the candle a diamond appeared and on the Stochastic Oscillator both lines are located in the sales area this is the signal to play options CALL.
6. Set the expiry time of the option according to what moves have been successful recently. Remember to play up to 5 minutes.
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