Parabolic Trader
📘 Summary
Indicators | - MACD (12, 26)
- EMA (200)
- PSAR |
Suggested Chart Timeframes | 15M, 1H, 4H, 1D |
Long Entry | - Closing price is above EMA200
- Closing price is above PSAR.
- The ADX must be above 30.
- MACD signal line crosses the MACD line from below. |
Short Entry | - Closing price is below EMA200.
- Closing price is below PSAR.
- MACD signal line crosses the MACD line from above. |
Suggested Exit Signal | - Fixed Stop-Loss/Take-Profit levels (e.g., 1% and 3%).
Or
- Next MACD crossover |
📚 Details
The strategy is a straight-forward combination of momentum and trend indicators. It basically enhances a basic MACD strategy with additional quality layers.
Required Indicators
To kickstart this strategy, you will need two key indicators (well, actually four — however, we use the Exponential Moving Average in three different ways):
- Parabolic SAR (PSAR): Utilized for determining trend direction and identifying potential trend reversals.
- Exponential Moving Average (EMA 200): Used to define the overall market trend.
- Moving Average Convergence Divergence (MACD): This indicator tracks the relationship between two EMAs of a token’s price, pinpointing potential buy and sell opportunities. In context of this strategy, the MACD gives the final buy/sell signal.
Chart Timeframes
This strategy is versatile across several chart timeframes, including 15M, 1H, 4H, and daily charts. However, backtests have shown that hourly and daily charts yield the best results.
Entry Signals
Let’s have a look at the entry signals. The strategy provides a clearly defined entry signal for both long and short trades. However, it is important to make sure that all criteria are met before opening a trade!
Long Entry Signal
Short Entry Signal
Obviously, the short entry is the opposite in terms of indicators.
Exit Signal
When it comes to the exit signals, you can have more flexible approaches. However, make sure to define your exit strategy before you enter the trade.
Here are two options:
- Set fixed Stop-Loss/Take-Profit levels (e.g., 1% and 3%). You can backtest the best levels before executing your trade (Crypto OS offers a straightforward feature to backtest your strategies).
- You can also use the MACD as exit signal and close the trade with the next crossover.
Backtest Results
Depending on market conditions, take profit/stop loss levels, and chosen tokens, success rates of 65% - 75% have been observed.
How To Apply The Strategy?
All indicators required for this strategy are available on TradingView, making it accessible for traders at all levels.
For those looking for a more direct approach, Crypto OS offers this strategy as a pre-defined signal for more than 200 crypto tokens, simplifying the process even further.