OK the next technical indicator that I'm about to share with you in this course is the parabolic essay
are essay are here stands for stop in reverse similar to the moving averages.
This indicator can tell you whether a coin is in an uptrend or downtrend and it can give you an instant
signal on whether the trend will reverse.
This information is extremely helpful because it shows you exactly when to buy and when to sell your
coin.
The parabolic SARS composed of a series of dots either above or below the price during an uptrend.
You'll find that the dots appear below the price and when there's a downtrend you'll find that the dots
appear above the price.
The first thing you'll need to keep in mind when using this indicator is don't use this indicator alone.
You must use it with other technical indicators like the exponential moving average.
That's because the parabolic SLR generates the best signals during a trending market.
But when the market is consolidating it would likely generate a lot of false signals that can get you
in trouble.
Here's what the parabolic essay or indicator looks like.
As you can see the parabolic essays are indicators a series of dots placed either above or below the
price when the DOTs are below the price candles.
This means we're in an uptrend and vice versa when the DOTs are above the candles we're in a downtrend.
So how can we use this indicator to determine market trends.
The nicest thing about the parabolic essay are is that it's very easy to use by looking at the dots
you can instantly know the overall market trends.
Basically when the DOTs are below the candles or price bars we're in an uptrend when the dots move from
above to below the candles.
It's a buy signal.
And when the DOTs are above the candles we're in a downtrend when the dots move from below to above
the candles.
It's time to sell your coin.
Simple right.
Yeah I thought so.
This is probably the easiest technical indicator to use but you should keep in mind that this indicator
works much better in markets that are trending that have long rallies and downturns to avoid false signals
you should always use this indicator with another trend following indicator.
The best thing is that this indicator works perfectly well with the moving average crossover strategy
you've learned in the previous lessons using the EMEA crossover in the parabolic SDR together will give
you more confidence when analyzing the market trend.
Why.
Because if the EMEA crossover strategy shows an up turn signal the parabolic SDR should also show the
same signal.
So in summary we'll buy a coin when the dots move from above to below the candles.
And when the moving averages show an up trend signal and on the other hand we'll consider selling our
coin when the dots move from below to above the candles.
And when the moving averages show a downtrend signal OK.
Now let's learn how to set up the parabolic essay our indicator in your trading tool.
Setting up the parabolic SSR indicator is very simple.
You simply click on indicators click on the search box and type parabolic as you can see we have the
parabolic s.a.a here.
Simply click on it to add this indicator to the chart.
Now click on the gear button will use the default configuration.
You can click on the style tab to change the dots color will change the color to green.
You can increase the size of the dots here then change the dot style to circles.
After you do you'll see the screen here we have the dots above and below the price candle's which tell
us the overall market trends in the next lecture will dive into many examples.
So you can understand clearly how to use this indicator.