## Stochastic & Parabolic SAR 5 minute Binary Options Indicator

## How To Setup Trading Pattern

### Expiration Time

Please setup expration time on 5 minutes.

If you still dont have IQ Option Account you can click HERE to register

### Chart Type

Please change chart type on candlestics

### Candlestics

Please setup candlestics period on 1 minute chart

### Inidicators

Please open indicator list in left down corner and select Parabolic SAR from indicators list

### Parabolic SAR

Please setup Parabolic SAR settings at:

acceleration max: 0.2

### Indicators List

Please open indicators list and select Stochastic Indicator

### Stochastic Indicator

Please setup Stochastic Indicator with settings:

## Stochastic & Parabolic SAR 5 minute Binary Options Indicator

*“Binary Options are availiable only for Non-EU Traders”*

*“Binary Options are availiable only for Non-EU Traders”*

To use this strategy with binary options we recomend to trade with IQ Option Broker , because its the best broker for Binary Options in industrii

To Join to IQ Option click HERE

### About Parabolic SAR Indicator

You can read more about Parabolic SAR Indicator HERE.

We have allready write articles about Parabloic SAR before please check it.

### Stochastic Oscillator

This is one of the oldest indicator, invented in 1950 by Dr. George Lane, and its main function is to guess or predict the future price of an asset or commodity.

### What is Stochastic Oscillator?

This is a momentum indicator that compares the closing price of an asset with its price range, the low and high range over 14 periods of time. This oscillator can get a numeral value from 1 to 100. The Stochastic Oscillator value will determine the market condition and it is best to identify an overbought or oversold condition as well as trend reversals point. Two lines are used to draw the stochastic oscillator over a price chart to identify a possible price turning point and predict the future movement of it.

### Understanding the Stochastic Oscillator

The Stochastic Oscillator is obtained by the following formula %K = 100(C – Low_{N} )/(High_{N}– Low_{N})The Stochastic oscillator is a momentum indicator, which can be graphically represented by drawn of two lines.

a) %K is the fast Stochastic, which is the line that tracks the current market rate for the asset pair.

b) %D is the slow Stochastic, which is also known as the signal line, this is the three periods moving average.

N is the preset period selected for the oscillator calculation, it is usually set at14 days or any 14 periods.

C price is the last closing price.

Low_{N} or L14 is the lowest price of the asset over the N period to be studied.

High_{N}or H14 is the highest price of the asset over the N period to be studied.

Crossover is when the %K line crosses or intersects the %D line.

a) When the %K line crosses over and move above %D line the market is gaining at a faster rate than the average and this is a powerful buy signal. The price is going to increase.

b) When the %K line crosses over and move under the %D line, the market is slowing down and a downtrend is imminent, this is powerful selling signal. The price is going to decrease.

Stochastic oscillator value equal or lower than 20 is considered that the asset is oversold and it is trading at the bottom of its high-low range.

Stochastic oscillator value equal or greater than 80 is considered that the asset is overbought and it is trading at the top of its high-low range.

Divergence is the gap or separation between the %K line and the %D line.

a) The gap increases or are more separated as the trend gather momentum

b) The gap decreases or come together as prelude to a market reversal

Stochastic relies on the possibility to predict turning points by technical analyze of the closing price and its price range. Prices tend to close consistently higher or lower than the closing price and its extreme just before a turning or market reversal point. This oscillator can identify it and gives a numerical value that rates the market condition, helping you to consider a buying or selling action.

## About Stochastic & Parabolic SAR 5 minute Binary Options Indicator

To use this trading pattern you must have IQ Option account

*“General Risk Warning: The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose.”*

## Open PUT

When Parabolic SAR Dot will show in top of candlestics and Stochastic lines are in overbought zone (upper green line) and blue line cross the red line from the top, than we must open **PUT** option

### See Examples:

## Open CALL Option

When Parabolic SAR Dot will show in bottom of candlestics and Stochastic lines are in oversold zone (bottom red line) and blue line cross the red line from the bottom, than we must open **CALL** option.

### See Examples:

*“Your capital may be at risk. This material is not investment advice.”*

## Parabolic SAR and Awesome Oscillator Trading Strategy – How It Works

## What is Parabolic SAR with Awesome Oscillator?

## How to use Parabolic SAR with Awesome?

**First** technical indicator is Parabolic SAR here. Its dots are usually placed below the current price during an uptrend and above the chart when a downtrend is more likely. Parabolic SAR compares close prices during a given period, pointing to a more probable price direction in the nearest candlestick. It also shows reversal points when the dots jump below (bullish reversal) or above (bearish) the price. However, this trading strategy is based on by-trend approach and those moments are not considered as a trading signal. The only analysis that we have to make with Parabolic SAR is just to assess the current trend.

**Second** technical indicator is Awesome Oscillator. It works as a confirmation tool, however, it’s importance cannot be underestimated. The reason is that Awesome oscillator shows the market momentum with its histogram being above (uptrend) or below (downtrend) zero level. Colours of bars also matter as sometimes it happens that bullish momentum is getting exhausted during an uptrend, signalling a possible consolidation period or even reversal likelihood. Both options are not acceptable for continuous trading on binary options market as traders are looking for a stable price action to maximize the profit. In that case, Awesome oscillator changes the colour of its bars from green to red (uptrend, bearish threat) or from red to green (downtrend, bullish threat), even if they are above or below the zero level, respectively. And again, those signals are not considered as the best trading signal for this strategy. Moreover, traders should stop buying options in the same direction once that happens. We’re looking for continuation signals here, so Awesome oscillator should keep the colour of its bars during the trading process.

If you like this strategy, you might also be interested in this Fibo and Stochastic Oscillator **Third** technical tool is a 5-bars exponential moving average. If both indicators described above signal a trend continuation but the price bounces against the main tendency, crossing the EMA5, a divergence occurs, pointing to a perfect entry point on the candlestick close. Once the price crosses EMA5 from above, it’s time to get ready for buying call options while put options should be bought with the opposite case, when the price crosses EMA5 from the downside. Traders should keep buying the same options until Parabolic SAR dots jump above the price (call options) or below the chart (put options). The cycle has to be stopped also if Awesome oscillator changes the colour of its bars from green to red (call options) or from red to green (put options).

## Example – How that Works

An example below shows the Parabolic SAR indicator and Awesome in action with two trading cycles on EUR/USD 30-minutes timeframe. As we can see from the chart, the strategy gives more than 90% efficiency.

## The Stochastic and the Parabolic SAR Strategy for Profitable Trading on IQ Option

A strategy that I will be writing about today, combines two indicators. One is called the Stochastic Oscillator and the other one the Parabolic SAR. The IQ Option platform is a very good place to practice this strategy on digital options.

## Parabolic SAR

There is a whole article about the Parabolic SAR on our website, thus I will not repeat myself. If this indicator is a stranger to you, I highly recommend reading the quoted article.

The Parabolic SAR on the IQ Option platform

## Stochastic Oscillator

The Stochastic oscillator is considered one of the oldest indicators. Dr George Lane invented it in 1950. Its task is to help in predicting the future situation on the market.

It consists of two lines that go between 0 and 100 value. You will see three lines on the chart with the value of 20, 50 and 80. 50 shows a middle, and 20 and 80 indicate oversold and overbought areas.

The Stochastic evaluates asset‘s closing price with its price range, low and high, over 14 candles. It is a momentum indicator which is calculated using the formula

**%K = 100 (C – LowN )/(HighN– LowN)**

One of the two lines is the %K line and is the fast Stochastic that follows the present market price of a pair of assets.

The second one is known as %D or the signal line, and it is the slow Stochastic that is the 3 periods moving average.

N represents the current period used to calculate the oscillator. Normally, it is set for 14 periods.

C stands for the most recent closing price.

LowN or L14 is the minimum price that was measured during a given period N.

HighN is the maximum price during a given time.

The most interesting points are when the two lines of the indicator cross each other.

In case the %K cuts the %D line from below, and continues above it, the market gains faster than average and this is a sign the price will rise. This is a moment to buy.

In case the %K intersects the %D from above and moves below it, the market slows down and the price will fall. This is a signal to open a sell position.

I have mentioned that this indicator is used to determine the oversold and overbought areas. The asset is considered to be oversold when the value of the Stochastic drops below 20. When the value rises over 80, the asset is claimed to be overbought.

Another thing you should keep observing while trading with the Stochastic oscillator is its divergence. Divergence is the distance between the %K and the %D lines. When this space grows, the trend builds up. When the gap narrows, the trend most likely will soon reverse.

The Stochastic oscillator on IQ Option

## Configuring the Stochastic and the Parabolic SAR on the IQ Option platform

Naturally, you will need the account on the IQ Option platform to perform trading. Once you are logged in, you will have to decide what asset you would like to trade and select the candlesticks type of the chart.

Selecting indicators for the strategy

Now, click on the chart analysis icon and search for the two indicators of our interest in the list of popular indicators. Once you select them, they will appear on your chart.

## Using the Stochastic and the Parabolic SAR strategy for CALL options

Look at the picture below. The Stochastic oscillator is below the 20 line which means it is in the oversold area. Moreover, the blue line of the indicator crosses the red line from below and continues above it. Now take notice of the Parabolic SAR. The dots of this indicator appear below the candlesticks. This is the perfect situation to open a CALL option.

Signal to open a CALL option

## Using the Stochastic and the Parabolic SAR strategy for a PUT option

This time, we are looking for a moment when the %K and %D of the Stochastic oscillator are in the overbought area (which means they are above the value of 80) and the blue line cuts the red one from the above and moves further down the red line. The Parabolic SAR dots appear on the top of the candlesticks. All this together signal a good moment to open a PUT option.

Signal to open a PUT option

The strategy that combines the Stochastic oscillator and the Parabolic SAR requires that you will analyze the situation on the market thoroughly. You have to observe both indicators simultaneously. Only then the strategy will work. But with the guidelines from this article, you should not have any problems. Go to your IQ Option account and use the Stochastic and the Parabolic SAR strategy today.

**Good luck!**

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