Reversal Algo combined with ATR + PSAR Trailing Stop

Find reversals in any market and timeframe using our Reversal Algo combined with ATR + PSAR Trailing Stop indicator.

Strategy Idea

This strategy is about identifying Reversals. It can be hard to identify reversal especially if Buy/Sell indicators are used in the wrong way. That is why we came up with this simple strategy that filters out some signals for you.

Before using any Buy/Sell signal indicator we recommend you have a basic understanding of Support/Resistance.

 

reversal and psar strategy

Rule number #1

If you don’t understand this rule, you should look for another strategy!

 

  • Do only look for reversal during relatively high volatility. There is no point in trying to catch a reversal during low volatile markets. Better to wait for volume and volatility to come into play! The signals become way more accurate during these market states.

Reversal

A Reversal happens if the price makes a relatively significant move in opposite direction usually from overbought/oversold areas.

Reversals will only happen if there is enough buying/selling pressure. A reversal is triggered by fear and greed where investors do what they can to enter/exit the market as quickly as possible which creates a domino effect. Price usually makes a rapid move before entering a more stable trend state.

 

That is why the best reversals are found during high volatility!

Reversal likely

A Reversal happens if the price makes a relatively significant move in opposite direction usually from overbought/oversold areas.

Reversals will only happen if there is enough buying/selling pressure. A reversal is triggered by fear and greed where investors do what they can to enter/exit the market as quickly as possible which creates a domino effect. Price usually makes a rapid move before entering a more stable trend state.

 

That is why the best reversals are found during high volatility!

 

The only problem!

Yes, there is a big “problem” for traders that have limited knowledge about support/resistance and general about how to read the market.

We’re telling the truth here. 

 

What’s likely to happen when we get price moves in the opposite trend direction is that liquidity flows into the market. Liquidity is the only thing large players need to access in order to accumulate/distribute their positions. They absorb it all, and the price will continue in the trend direction, leaving traders that blindly followed an indicator trapped.

So if we blindly rely on what an indicator says, you probably gonna lose in the long run. You need to get the full picture and analyzing the higher time frames to understand where larger players can access liquidity. That is knowledge gained by studying the charts!

Quick example: Large players most likely gonna buy on weakness in positive trends until they actually start to take their profit. When they start taking their profit, the real reversal is coming. 

Do not take this signal

The Strategy

With the help of this strategy, you will be able to identify better reversals and eliminate noise.

Reversal Algo Settings

Leave all the parameter settings to default! 

 

  • Disable the “Show Reversal Trend Line”

 

  • Make sure that you only are using the “Show Reversal Signals”
Structure signals

ATR + PSAR Trailing Stop Settings

Leave all the parameter settings to default!

 

  • Disable the “Show ATR Buy/Sell signals”

 

  • Enable “Show ATR Trend Filter”
Momentum Breakout Trend Setup
Momentum Breakout Trend Setup

ATR + PSAR Trailing Stop Settings

Leave all the parameter settings to default!

 

  • Disable the “Show ATR Buy/Sell signals”

 

  • Enable “Show ATR Trend Filter”

Long Entry

Long

Enter Long: when Reversal Algo gives a Buy signal and ATR + PSAR is Green.

Bullish and Bearish Bullish Structure trades

Short Entry

Short

Enter Short: when Reversal Algo gives a Sell Signal and ATR + PSAR is Red.

Momentum breakout trades

Short

Enter Short: when Reversal Algo gives a Sell Signal and ATR + PSAR is Red.

 

Take Profit – Exit – Stop Loss

  • Take Profit Long – When price crosses over the red PSAR dots.
  • Take Profit Short – When price crosses under the green PSAR dots.

 

 Exit Long Position – When Trailing Stop turns from green to red.
 Exit Short Position – When Trailing Stop turns from red to green.

 

  • Long Stop-loss –if price close inside the lower red cloud.
  • Short Stop-loss –if price close inside the upper green cloud.
    Examples:

The holy grail

Enhance your trading result!

No matter which indicator/strategy you’re using, remember: It’s all about confirming and finding confluence around key levels/zones.