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GJB21 wrote:
>
> Realtraders,
>
> Does anyone successfully use the Parabolic indicator in their
> stock trading system?
>
> I have been doing some studies on the Parabolic and it seems
> that it needs another indicator to filter out the choppy markets,
> any suggestions?
>
> Thanks,
> Greg
> GJB@xxxxxxx
It has been suggested (Lebau and Lucas ? in Comp. Analysis of the
Futures Mkt.) to combine ADX with the parabolic. As I recall, the
suggestion is only to take parabolic signals if ADX is increasing also,
and only in the direction of the new trend (I think this meant only take
longs if DI+ was over DI-). The ADX increasing requirement is supposed
to keep you out of choppy markets. At least you won't be constantly
reversing in congestion, like the parabolic tends to do.
A similar idea might be to only take a parabolic signal after a certain
amount of consecutive or near consecutive up days (for a buy). This
seemed to (visually) show some promise for futures trading, altho I did
not follow up on it.
Like one of the other respondants, I use the parabolic as the main
mechanism of setting exit (stops), altho I override with a minimum and
maximum based on ATR.
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