Application Trade the Parabolic

When the trend is decreasing, parabolic points appear above the stop price, and noted the level at which the position will be deployed. When the upward trend, a number of parabolic points appear below the stop price. Marking L (long - long position) and S (short - short position) indicate where the stop and Facing happen in the afternoon schedule of the June 2002 contract. S & P 500 e-mini.

Traders can usually find a nice logical levels enter the market, perhaps because they are so seriously focused on this aspect of trade. However, when and where to go from the position for them is often more difficult issue. You want to give his position a little space to work at the beginning of a potential trend, but when the trend movement, it seems, stops or starts to fizzle out, you would like to get a good signal for a rapid exit to save the maximum of profit. Using the intersection of moving averages or trend lines of analysis can make you quit too early, when the movement makes Facing fast or too late at the end of the new movement.

Option may be parabolic system of price and time, which got its name in the form of model-like parabola, or if you want a French curve, as described it Velez Vaylder in his book "New concepts in technical trading systems." In this book, published in 1978, he presented a parabolic systems and some other methods, which are the bulwark of technical analysis.

Parabolic system is used to set the sliding stop orders and stop-Facing (SAR), the appropriate approach "is always in the market", ie Once you have entered the market, each received signal completely alter your previous position. The system is based both on price and on time, so that your stop-Facing initially are broad and then narrow to the price, as time passes. As illustrated in the schedule contract in June S & P 500, shown above, this technique will not save you from losses in lateral movements, but it will give you the exact point of exit, when other methods can not give such clear signals. After a turn signal, the new parabola begins in substantial point (minimum or maximum). Pay attention to the schedule of e-mini ascending parabola begins at a minimum of approximately 1076 in late February and downward parabola starting at the maximum around 1178 in mid-March. This is the initial point of the stop-turn for the trend. Acceleration factor is used to determine where the next point of stop-turn. Acceleration factor is a progression of numbers, which begins in this example, with 0.02 and ends at 0.20 (the default options in most graphic programs). Accelerating factor or increment increases by 0.02 every day, just when was the new maximum. If the new peak has not been registered, use the latter factor accelerating.

The important point is that if you are in long position, the stop-turn will not be retained, and will continue every day, regardless of price movements. If the most favorable price, ie maximum ascending motion continues to move forward each day, the stop-turn increases slightly faster than the price, until the importance of acceleration it reaches 0.20 when the level of the stop-turn increases as fast as the price rises. If the price ranges and a maximum movement remains the same in a few days, it will not affect your long position before placing a stop-turn did not deploy it. (Of course, you can combine parabola democratic system with some other system, and open only long positions or short positions, so you will not always be in the market.) Fortunately, you do not have to worry about calculating all these values parabolika because All calculations occur automatically. All you have to do - is to follow the points system and place your stop order or stop-turn at the last point. When the price reaches this point, your position is closed and is set in motion a new direction.

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