SAR trend following forex strategy

Due to the conservative nature of this forex strategy, higher leverage can be used. Making it aggressive if so desired. Strategy was tested on historical data since 2003 bringing good results, relatively stable profits and low drawdown.

This trend exploiting forex strategy uses combination of alligator indicator and parabolic SAR, to identify and confirm trend together with immediate swing reaction. Entry is allowed by signal candle, with predefined size. Each position is protected and profits are maximized by utilizing trailing stop.

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Used tools and forex indicators

 

Alligator (130,80,50) All alligator lines must be aligned according to either downtrend or uptrend. All lines must be untangled and clearly separated. Test results were achieved for 130,80,50 settings of indicator. We have not experimented with other periods, however it is certain that indicators' calculation period can be manipulated both up and down to improve/adapt the performance.

 

Parabolic SAR (step 0.02, max:1). Often overlooked and underutilized forex indicator, due to its lagging nature. However, it works very well as suggested in this forex strategy. The SAR signal can be only con firmed by candle close.

 

Candle signal: Candle with specific size (30 – 150 pips), closing in the direction of trend. We consider candle to be the most accurate and real time trend signal. Candle with sufficient size and direction can become an immediate trend confirmation under the right circumstances. Entry is always coupled with candle close. This also ensures high accuracy of historical data testing.

 

Trailing stop. Universal trailing stop is applied on every entry. It is trailed/ adjusted after each candle close. Additional distance (30 pips) can be applied to consider the market volatility and avoid unnecessary exits.

 

Forex strategy rules

SELL

Alligator lines aligned according to downtrend from slowest at the top to fastest at the bottom (blue, red, green at the bottom).

 

SAR has closed above the price, together with bearish candle with body size range 40 – 150 pips.

We enter the trade short on new candle open.

 

TS is placed above the high of last closed (signal candle) + additional distance of pips.

Trailing stop is moved only in the downward direction with each consecutive closed candle. It is also the only way of how we close our positions.

 

BUY

Alligator lines aligned according to uptrend from slowest at the bottom to fastest at the top (green, red, blue at the bottom).

 

SAR has closed below the price, together with bullish candle with body size range 40 – 150 pips.

We enter the trade long on new candle open.

 

TS is placed below the low of last closed (signal candle) + additional distance of pips.

Trailing stop is moved only in the upward direction with each consecutive closed candle. It is also the only way of how we close our positions.

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Disclaimer:  Expert advisor was tested for profitability on historical data. All screen shots provided are displaying real results of the test. However past data will never guarantee future success. Every expert advisor needs to be tested properly on demo account. LIVE use only on your own risk. Read full disclaimer. TheForexKings Team does not give any financial advice. TheForexKings does not take any responsibility for any user’s investments and investment decisions. All rights reserved. Strictly for personal use.

 

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“Trading FOREX since 2006. Full time trader and web developer since 2013. My two biggest hobbies are trading and web development. In TheForexKings I managed to connect both of them. Even after 12 years of trading I still have the same passion for the market as at the beginning. The aspect I enjoy the most : development and testing of new ideas.” 

 

Only in 2016 - 2017 we have created more than 400 forex strategies. During this period we have also developed and published +200 MT4 Expert advisors based on those strategies. We are dedicated to provide you with viable and complete trading systems that have thrived in extensive historical testing. We want to give you complete and transparent trading solutions, that once mastered ,will set you financially free. We want to give you a fighting and winning chance in the market. ” 

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