Is Parabolic SAR a profitable stop loss?
Or otherwise, is it a false belief? Does it work at any specific time frame?
Maybe, this question is too general... but well, there's nothing bad in asking!
In my opinion the answer is NO!
Basically because it was designed to be a trend indicator rather than a stop indicator. As written in the article below: "SAR trails price as the trend extends over time. The indicator is below prices when prices are rising and above prices when prices are falling. In this regard, the indicator stops and reverses when the price trend reverses and breaks above or below the indicator."
I suggest you to read the following topic.
I think you have made a small confusion between stop loss and trailing stop... usually, Parabolic Sar is used as trailling stop measure, and not as a stop loss!
So, if you want to set a stop loss using Parabolic Sar, I also tend to believe it's not a good practice, although it's possible...
Personally I prefer to use volatility-based stops.
Thanks for the answers to you both,
I was meaning Parabolic SAR as a trailing stop. Sorry for my inaccurate words! Anyway, I really do appreciate your response, and the article attached has helped me.
Then what do you think? Can Parabolic SAR be used as a good trend indicator, or as a signal to exit when switches from up to down or vice versa? Is this point of view profitable?
I think you can use it in (SL - TS - TP) all three. specially in TP to gain the trend extension profit unless break the PSAR in opposite direction.