Research on optimizing PARASAR

Its almost a week, I was doing a research on Parabolic Stop And Reverse (PARSAR) indicator; the objective of my research was to identify what parameter (step and maximum) will suit for Nifty and on what timeframe (likely M1, M5,M15,M30,H1 and D1).

Before going to the result of my research just an Intro about PARSAR.
Parabolic SAR was developed by J. Welles Wilder Jr. The indicator's name derives from the shape it takes on the chart. When SAR first gives a buy or sell signal, its slope is relatively flat. PARSAR take the shape of a parabola, at times rising at virtually a 90% angle.

PARSAR provide useful entry and exit points
Long when PARSAR below the price and Short when PARSAR is above the price. The PARSAR will move along the price when price and PARSAR meets its wise to exit your direction of trade.


Important Note:
Many people blindly jump into trade when PARSAR change the direction, which is completely a wrong idea. If you want to long from short the PARSAR dot should not form below red candle, means if the current candle is red and PARSAR dot is below the candle we need to wait for the next candle. If next candle is also red we need to wait still the PARSAR dot from under green candle, to get a very effective good profitable  trade. On the other hand its same for short too, PARSAR should form above red candle then only confirmed short signal.
 

Optimizing PARSAR for NIFTY on different time frame:

By default PARSAR setting are step as 0.02 and Maximum as 0.2, I want to change this default setting to explore more profitable trade.

Now lets move to my analysis, i have changed my setting as below,
Aqua color dot PARSAR settings Step=0.1 and Maximum = 0.3

Blue color (my favorite color, since my 2year old son keep saying it as bu-ka-color)Step=0.03 and Maximum = 0.5

Yellow color: Default PARSAR setting: step=0.02 and Maximum as 0.2
 

Below is one minute(M1) chart of Nifty:

M1 hold good for scalp trading which give quick and small profit, to do this a trade need to be very discipline, assertive and aggressive.
As we see over this chart compared to Blue and yellow color, Aqua dots are very close and tight to price, in between it gave a wrong signal for the trader as I shown in red rectangle and those green rectangles are good profitable trade.
Result: on M1 – blue PARSAR setting is very effective

Below is 5 minutes chart:

5 minute was preferred by most of the traders, since its gives more profit compared to M1 and also gives very short term trend direction

Result : Aqua color PARSAR is effective, it gave many good early signal, but at the same time some places it trapped my trade, so here too I prefer Blue PARSAR.

Below is 15 minutes chart:

There is not much difference between compared to M5 as aqua react to price action very fast, some places it gave wrong signal

Result: Blue PARSAR setting is very effective when compared to Aqua and Yellow

Below is 30 minutes chart

Result: Bit confused, either we follow Aqua or Blue PARSAR, since Aqua is very close to price any fall or raise will exit the trade very safely

Below is Hourly chart 

I prefer hourly trade since I am bit lazy crock I least bother about small swings

Result: Aqua is the best

Below is Daily chart 

Result: based on Aqua and blue its not advisable to trade on daily charts. We get easily trapped if we carry our position for couple of days, so on daily chart Yellow setting is the best. 

In simple

	Aqua	Blue	Yellow
M1		good
M5		good
M15		good
M30	good	good
H1	good
D1			good

Please feel free to send your comments on about this research to niftyreport@gmail.com


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