When we click on PSAR indicating Bullish Reversal scan, we get a list of stocks which fulfill this criterion:
After clicking on Inox Wind, we get a technical chart with PSAR plotted in the chart:
Example 2: PSAR Indicating Bearish Reversal:
PSAR Indicating Bearish Reversal scan helps the traders to know that the bearish reversal may take place in the stock as the dots are flipping to the upside of the price bars.
When we click on PSAR indicating Bearish Reversal scan, we get a list of stocks that fulfill this criterion:
Above are examples of the PSAR scans that generate buy and sell signals and also give us a list of the stocks which fulfill the criteria of the scans for that particular day.
What does the Parabolic SAR Calculate?
The parabolic SAR is used to track price changes and trend reversals over time. In order to calculate today’s Parabolic SAR, we will need to know the most extreme price (EP), the acceleration factor (AF), as well as the most recent PSAR. We will also need to determine whether there is currently an uptrend or a downtrend.
If the pair is trading under the PSAR you should sell. If the pair is trading above the PSAR you should buy. There are many ways to trade by using this indicator. It can be traded it with additional indicators or on multiple/different time frames.
The “extreme price” will either be the highest high or the lowest low that has occurred within the relevant period. Every time a new EP is established, the trend gets updated. The acceleration factor (which begins at 0.02) will increase by 0.02 for each of the first ten times that the EP has been updated (creating a functional AF “ceiling” of 0.20).
The Parabolic SAR (PSAR) calculation is:
PSAR= Prior PSAR + Prior AF (Prior EP – Prior PSAR); for uptrends
PSAR= Prior PSAR –Prior AF (Prior PSAR – Prior EP) for downtrends
The difference between the uptrend and downtrend formula is whether the second part of the formula is added or subtracted. It’s important to note, without properly identifying the direction of the current trend, your PSAR calculations will be moving in the wrong direction.
You can filter out the stocks and can trade accordingly using these scans.
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