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Bodger SAR Method

  • #1
  • First Post: May 9, 2007 9:09pm May 9, 2007 9:09pm
OK, I'm not sure that this is even a "method" yet, because I haven't used it at all - not even in a demo account. But I stumbled across this tonight and rather than spending weeks/months testing this in private, I figured I would offer this up to the forum and see if I am missing any obvious landmines.

This method utilizes nothing but a basic price chart and the Parabolic SAR - on multiple time frames. The multiple time frames are the key to the whole thing. I have been experimenting with the TEB MTF method and, sad to say, I'm not getting the same positive results. I'm sure I'm doing something wrong, but my consternation led me to look at other multiple-timeframe alternatives tonight and this is what I came up with.

Create a basic price chart with either bars or candletsticks (whatever you're most comfortable with) and place the Parabolic SAR on it. Start your analysis on the 4-hour chart. For all I know, this might work with other timeframes, but I'm doing my initial analysis with a 4-hour timeframe.

Once you're chart is set up, check it at the close of every bar to see if you have a SAR indicator in a new direction. For example, you may be seeing a long line of positive SAR indicators (meaning that the SAR spots are below the price bar), so you are looking for the first bar that has a SAR spot above the price bar. You will open your position on the closing price of the first bar that shows a reversing SAR spot.
  • #2
  • May 9, 2007 9:12pm May 9, 2007 9:12pm
This shows an opening signal for this method. On the 4-hour chart, the Parabolic SAR direction has changed.
Attached Image (click to enlarge)
Click to Enlarge Name: bodger sar usdjpy open1.gif Size: 19 KB
  • #3
  • May 9, 2007 9:19pm May 9, 2007 9:19pm
Once you have an open position, switch to a 1-hour chart. This is crucial. If you stay on the 4-hour chart, over time you will get whipsawed mercilessly, as is often the case for any SAR-based system. Once you have dropped down to the 1-hour chart, you will hold the position open until the direction of the Parabolic SAR on the 1-hour chart moves against you.
Attached Image (click to enlarge)
Click to Enlarge Name: bodger sar usdjpy close1.gif Size: 20 KB
  • #4
  • May 9, 2007 9:23pm May 9, 2007 9:23pm
Hi and question

Are your settings: Steps 0.002
Maximum 0.3
  • #5
  • May 9, 2007 9:25pm May 9, 2007 9:25pm
That's it - it's that simple. Maybe it's too simple, I don't know. But I think the fact that you drop down to the lower time frame for an exit point is a subtle, but significant distinction from simply trading the raw SAR signals on a single chart. The nice thing about the method is that it gives you clear entry and exit points and switching to a lower time frame for exits alleviates the effect of whipsaws.
  • #6
  • May 9, 2007 9:26pm May 9, 2007 9:26pm
Quoting WHTenn
Hi and question

Are your settings: Steps 0.002
Maximum 0.3
Thanks and good question. My settings are the defaults that come with my installation of MT4 - Steps = 0.02, Maximum = 0.2.
  • #7
  • May 9, 2007 9:28pm May 9, 2007 9:28pm
Now you don't have to switch screens.
Attached File(s)
File Type: mq4 #MTF_PSar.mq4   3 KB | 736 downloads
  • #8
  • May 9, 2007 9:32pm May 9, 2007 9:32pm
I have personally been annoyed by some of the systems/methods that are posted here where the authors clearly pick the best example to illustrate the process. In some cases, they have blatantly glossed over reams of whipsaw data to jump to the one example that illustrates their system's effectiveness. So let's look at a negative example, which happens to follow directly after my first example. Notice that if we stay on the 4-hour timeframe we go short around 113.94 and close the position around 114.55 - a loss of 61 pips.
Attached Image (click to enlarge)
Click to Enlarge Name: bodger sar usdjpy open2.gif Size: 21 KB
  • #9
  • May 9, 2007 9:34pm May 9, 2007 9:34pm
Well why not? I'll give a look. I like the TF's. Seems like all the other MTF methods have us going all the way down to 15M or 5M for entries and that is just too low for me. 4H for entry and 1H for exit is doable.
  • #10
  • May 9, 2007 9:40pm May 9, 2007 9:40pm
By dropping to the 1-hour chart, the position is now closed around 114.10, for a more-manageable loss of 16 pips.
Attached Image (click to enlarge)
Click to Enlarge Name: bodger sar usdjpy close2.gif Size: 21 KB
  • #11
  • May 9, 2007 9:46pm May 9, 2007 9:46pm
Quoting mr.marketz
Now you don't have to switch screens.
Many thanks! Having perused it, I'm not sure if I'll use it or stay with the old-fashioned screen-switching because it will probably take me a little while to get used to the extra set of lines drawn around the price data, but this is certainly a helpful indicator for this "system". Thank you for sharing!
  • #12
  • Edited May 10, 2007 2:15am May 9, 2007 10:11pm | Edited May 10, 2007 2:15am
OK, I've just realized the first hole in my thinking. I'm opening a position based on the 4-hour SAR and then, presumably, closing it when the 1-hour SAR moves against me. However, it's possible to have the new 4-hour SAR pointing in one direction while the 1-hour SAR is still pointing in the other direction (which would, in theory, lead to an immediate closure of the position). So maybe the rule is that you only open a position when you receive a reversal signal on the 4-hour SAR AND it is confirmed by the 1-hour SAR?
  • #13
  • May 9, 2007 10:19pm May 9, 2007 10:19pm
First test orders:

Buy AUDCAD @ 0.9204, SL @ 0.9163
Buy EURJPY @ 162.50, SL @ 161.80

I determined the SL levels by using half of the pair's daily range.
  • #14
  • May 10, 2007 12:13am May 10, 2007 12:13am
Quoting Bytebodger
I have personally been annoyed by some of the systems/methods that are posted here where the authors clearly pick the best example to illustrate the process. In some cases, they have blatantly glossed over reams of whipsaw data to jump to the one example that illustrates their system's effectiveness. So let's look at a negative example, which happens to follow directly after my first example. Notice that if we stay on the 4-hour timeframe we go short around 113.94 and close the position around 114.55 - a loss of 61 pips.
I had looked at this indicator in the past and seem to keep coming back to it. The MTF confirmation seems to be the way to go with it.

Maybe a filter for this is that once you get the reversal, make sure the 1 hour lines up. If so, set your limit order for the HIGH or LOW of the 4-hour bar.

In this loss shown, it would have kept you out of the trade.

Scanning the charts, it would have delayed some entries a few days and saved a few losing trades.

David
  • #15
  • May 10, 2007 12:26am May 10, 2007 12:26am
Quoting DavidH
I had looked at this indicator in the past and seem to keep coming back to it. The MTF confirmation seems to be the way to go with it.

Maybe a filter for this is that once you get the reversal, make sure the 1 hour lines up. If so, set your limit order for the HIGH or LOW of the 4-hour bar.

In this loss shown, it would have kept you out of the trade.

Scanning the charts, it would have delayed some entries a few days and saved a few losing trades.
Here is an example of waiting until it breaks the 4 hour bar. The red arrows would have all be loses, but wait until the break and you would not have been in the trades. Maybe an option...

David
Attached Image
  • #16
  • May 10, 2007 12:30am May 10, 2007 12:30am
Quoting Bytebodger
OK, I've just realized the first hole in my thinking. I'm opening a position based on the 4-hour SAR and then, presumably, closing it when the 1-hour SAR moves against me. However, it's possible the have the new 4-hour SAR pointing in one direction while the 1-hour SAR is still pointing in the other direction (which would, in theory, lead to an immediate closure of the position). So maybe the rule is that you only open a position when you receive a reversal signal on the 4-hour SAR AND it is confirmed by the 1-hour SAR?
Hi BB
I use this exclusively for entries, and look for other PA for exits.
AND, I only take PSAR trades with the daily trend. Using confirmation of the SAR between TFs is safer.
The thing to watch out for are spikes around news when using 1hr charts, as I expect you realise anyway. But if you look at entries with the trend (I look for retracements on the longer charts (4hr - daily) and place entries on the shorter charts (1 hr) you may find this works.
  • #17
  • May 10, 2007 2:21am May 10, 2007 2:21am
Quoting DavidH
I had looked at this indicator in the past and seem to keep coming back to it. The MTF confirmation seems to be the way to go with it.
Agreed. I had looked at this indicator briefly in the past but had quickly discarded it, only to now realize that there might be some value in it. Of course, I've looked at, discarded, and eventually returned to darn near every indicator at one point or another!
  • #18
  • May 10, 2007 2:28am May 10, 2007 2:28am
My two trades from earlier this morning are both sitting nicely in the green (although I understand that you can't count on unbooked pips and, by definition, this system will give back at least some pips before a position is closed). I placed 4 more trades at 12:00 GMT:

Buy EURCAD @ 1.5004, SL @ 1.4942
Buy EURGBP @ 0.6803, SL @ 0.6775
Sell GBPCHF @ 2.4224, SL @ 2.4325
Sell GBPUSD @ 1.9910, SL @ 1.9976
  • #19
  • May 10, 2007 2:37am May 10, 2007 2:37am
Quoting DavidH
Maybe a filter for this is that once you get the reversal, make sure the 1 hour lines up.
Yes, within 30 minutes of posting the original rules, I have already changed them to indicate that you must drop down to the 1-hour timeframe for confirmation BEFORE you open the trade. Otherwise, you end up opening the trade on the 4-hour chart and then, when you switch to the 1-hour chart, you realize that the trade should be immediately closed because you are already facing a reversal signal on the 1-hour level.

Quoting DavidH
Maybe a filter for this is that once you get the reversal, make sure the 1 hour lines up. If so, set your limit order for the HIGH or LOW of the 4-hour bar.
Hmmm, I think that sounds promising. If this system has any future, it will probably perform better with some additional filtering in place. That being said, I'm going to do my initial testing without such a filter for the purpose of getting a cleaner baseline. Once I see how the "baseline" system works, we can be better prepared to make decisions regarding possible filters.
  • #20
  • May 10, 2007 6:09am May 10, 2007 6:09am
Quoting Bytebodger
Of course, I've looked at, discarded, and eventually returned to darn near every indicator at one point or another!
The story of the previous four years of my life.
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