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The “Parabola Run” Trading Strategy

Are you familiar with the parabolic curve pattern? It is time to learn how to recognize, interpret, and trade this powerful chart pattern. Traders view the parabolic formation as one of the strongest uptrend patterns that precede reversal. Parabolic arc chart patterns are classical curves that signal the possible reversal of a bullish trend. The pattern is named after the “parabola” geometric shape, a curved line with an upward trajectory.

The Parabola Run Strategy fits trading any asset with significant price trending. As a rule, price changes its direction sellers and buyers struggle on the market. You do not need to be an expert to understand that it is ideal to open a trading position at the beginning of the waves, whether it is uptrend, downtrend, or correction. How to determine where the previous wave ends and the next one begins?

For the Parabola Run Strategy we will use Parabolic SAR. By and large, this powerful tool can be used alone to generate clear signals for entering a deal.

Read more and learn about a effective strategy based on two indicators: Parabolic SAR and ADX. The system is called “Parabola Run” and can be easily implemented in the Pocket Option terminal.

How to set up indicators and chart for trading

Let us start with the statement that the strategy is an impulse system. It means that we have to trade assets with high volatility (say “no” to low or even medium volatility). You can choose cryptocurrencies and currency pairs.

M5 is the recommended timeframe. Set the chart to Japanese candlesticks or bars.

Parabolic SAR is located on the chart and consists of dots arranged in the shape of a parabola, which is the reason for its name. You should choose the step value of 0.01 and change it from the default 0.02 in the settings. It will help reduce the market noise.

Regarding ADX, we are interested in its negative and positive lines. In our case, they are colored red and blue respectively. You can choose your own colors in your terminal. It is a good idea to check what color of each of the lines in the settings to avoid confusion.

We need a combination of those tools: they are useless if used separately.

How to trade with the Parabola Run Strategy

The basic use of the Parabolic SAR is to buy when the dots move below the price bars—signaling an uptrend—and sell or short sell when the dots move above the price bars—signaling a downtrend. This will result in constant trade signals, as the trader will always have a position. That can be good if the price is making big swings back and forth—producing a profit on each trade—but when the price is only making small moves in each direction, these constant trade signals can produce many losing trades in a row.

Now it is time to look for signals as you follow the “parabola” and look for confirmation by ADX.

Execute a CALL contract when the Parabolic SAR point has moved under the candle and the positive ADX line is above the negative line.

Execute a PUT contract when the Parabolic SAR point appears above the candle and the red line is above the blue line.

The expiry time is set at 15 minutes.

The parabolic curve pattern develops during strong bullish trends. It is a bearish reversal indicator that is fueled by the exhaustion of buyers. You can certainly rely on the parabolic curve indicator to make trading decisions. However, no chart formation is 100% accurate. Be sure to implement proper money management when trading the parabolic curve.

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