Forex Day Trading Strategy with Parabolic SAR & Momentum Indicator

Momentum indicator defines market direction and parabolic SAR indicates new trend of market price. So with the combination, you can get good trading setup. This strategy is based on these two indicators and gives signal towards markets trend. So this is profitable and effective strategy for traders. This strategy is suitable for day traders.

Required Indicator:

1. Parabolic SAR Click here for Parabolic SAR setup process with basic strategy
2. Momentum indicator Click here for Momentum indicator setup process with basic strategy

Buy Entry Setup Rules:

✔Market price need to turn from downtrend to uptrend
✔To understand market trend, parabolic SAR will help you.
✔If dot appears below the price, then it indicates new uptrend.
✔At the same time, momentum indicator needs to cross 100 level from lower to upper.
✔After parabolic SAR & momentum indicator confirmation, need bullish candle.
✔If above conditions appears, then place buy entry after closing bullish candle.

Sell Entry Setup Rules:

✔Market price need to turn from uptrend to downtrend.
✔Parabolic SAR will help you to understand about the market downtrend.
✔If dot appears above the market price, then it indicates new downtrend.
✔At the same time, momentum indicator needs to cross 100 level from upper to lower.
✔After parabolic SAR & momentum indicator confirmation, need a bearish candle.
✔If above conditions appears, then place sell entry after closing bearish candle.

Example of Buy & Sell Setup:

In the above EURUSD h4 chart, market trend was defined by parabolic sar and new trend was indicated by momentum indicator. Combination of both indicators gave huge pips from all setups. After 3rd setup, we can see, parabolic sar was in upward direction but momentum was on downside. So it could be false signal if we didn't use momentum indicator. So we need to be confirmed from both indicators before taking any entry.

Time frame:

For day trading, H1, H4 is best. For scalping, M15, M30 is preferable.

Currency pairs:

All trendy pair.

Take profit and stop loss:

Take profit depends on what time frame you are trading. For higher time frame, it can be 40-200 pips. Below H1, TP will be 20-70 pips.
Stop loss can be set as 35-60 pips. You can set Stop loss on swing high or low

Risk warning:

This strategy can't be use during news time. You may get false signal on ranging market from this strategy. So this strategy is suitable for trend market. So you need to find trendy pair and apply this strategy on those pairs.

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