# PSAR Trend Filter 1 & 2 (Parabolic SAR) Advance Settings

#### **Key Parameters:**

**1. Timeframe**

* **Definition:** The **timeframe** refers to the time period over which the Parabolic SAR is calculated. For example, a **1-minute timeframe** will use the last minute of price data, while a **1-hour timeframe** will use the last hour.
* **How It Works:**
  * Shorter timeframes (e.g., 1-minute, 5-minute) are useful for quick reactions to short-term price changes and fast trend reversals.
  * Longer timeframes (e.g., 15-minute, 1-hour) provide more stable trend identification, making them useful for identifying more sustained trends.
* **Use Case:**
  * **Shorter timeframes:** Ideal for **quick trend reversals** and capturing fast-moving markets.
  * **Longer timeframes:** Better for identifying **longer-term trends** and providing more reliable signals over a greater period.

**2. Trend 1 Start (Initial Trend Start Point)**

* **Definition:** The **Trend 1 Start** value determines the initial point at which the Parabolic SAR begins calculating the trend. This is typically set at the beginning of the **current trend** (either bullish or bearish).
* **How It Works:**
  * The **Trend 1 Start** defines the starting point of the first trend phase, helping the SAR to either track an uptrend or downtrend.
* **Use Case:**
  * Setting the **Trend 1 Start** correctly is essential for determining the beginning of a trend and avoiding lag in trend-following strategies.

**3. Trend 1 Increment (Acceleration Factor)**

* **Definition:** The **Trend 1 Increment** is the rate at which the Parabolic SAR accelerates as the trend continues. It is a multiplier used to adjust the sensitivity of the indicator.
* **How It Works:**
  * The increment increases the distance between the price and the SAR as the trend develops. Typically, it starts at a small value (e.g., 0.02) and increases incrementally (e.g., 0.02) each time the trend continues in the same direction.
  * Higher increments will make the indicator more **sensitive** to price movements, causing it to react more quickly to trend changes.
* **Use Case:**
  * **Larger increments:** Used for **fast-moving trends** and **aggressive trading** strategies.
  * **Smaller increments:** Used for **slower-moving trends** and **long-term trend-following strategies**.

**4. Trend 1 Max Value (Maximum Value for Trend 1)**

* **Definition:** The **Trend 1 Max Value** is the maximum possible value for the **Trend 1 Increment**. This sets an upper limit on how fast the Parabolic SAR will accelerate.
* **How It Works:**
  * This cap ensures that the SAR does not become too sensitive and start providing too many false signals in volatile conditions.
  * For example, a value of 0.2 may be used to cap the SAR's acceleration after a certain trend length, preventing the indicator from reacting too aggressively.
* **Use Case:**
  * **Larger Max Values** help the indicator track strong trends without becoming overly sensitive.
  * **Smaller Max Values** are suitable for **less volatile conditions**.

**5. PSAR 1 Distance % (Parabolic SAR Distance for Trend 1)**

* **Definition:** The **PSAR 1 Distance %** determines how far the SAR value will be from the price, expressed as a percentage.
* **How It Works:**
  * A higher percentage will place the SAR farther from the price, making it more conservative in detecting trend reversals. Conversely, a lower percentage will bring the SAR closer to the price, causing it to react more quickly to price movements.
  * Typically set between **0.02 to 0.05**.
* **Use Case:**
  * **Higher distance %:** Used to **avoid false signals** by ensuring that trend reversals are confirmed over a longer period.
  * **Lower distance %:** Better for **fast trend shifts**, but could lead to more **frequent stop-outs**.

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#### **Trend 2 Settings (Opposite Trend Filter)**

**6. Trend 2 Start (Start of Trend 2)**

* **Definition:** The **Trend 2 Start** parameter sets the point where the second trend (typically the opposite of the first trend) begins.
* **How It Works:**
  * When the Parabolic SAR signals a trend reversal, this setting determines where the second trend phase will begin (whether moving from a bullish to bearish trend or vice versa).
* **Use Case:**
  * This value is important for marking the beginning of a **trend reversal**, and it works with the other parameters to help filter out incorrect signals in sideways markets.

**7. Trend 2 Increment (Acceleration Factor for Trend 2)**

* **Definition:** Similar to Trend 1 Increment, **Trend 2 Increment** adjusts the rate at which the SAR reacts to price changes during the second phase of the trend.
* **How It Works:**
  * It accelerates the indicator's movement when the market begins to reverse. This allows it to track the reversal closely and confirm the new trend's strength.
* **Use Case:**
  * A higher **Trend 2 Increment** makes the SAR more sensitive to the **newly established trend**, while a lower increment makes it more **stable and less likely to be affected by market noise**.

**8. Trend 2 Max Value (Maximum Value for Trend 2)**

* **Definition:** The **Trend 2 Max Value** works the same way as the Trend 1 Max Value, capping the acceleration of the SAR during the second trend phase.
* **How It Works:**
  * This setting ensures that the SAR does not become too sensitive and overly react to price fluctuations in the opposite trend.
* **Use Case:**
  * A **higher Trend 2 Max Value** provides a **more stable reversal signal** while **smaller values** make the SAR **more reactive** during reversals.

**9. PSAR 2 Distance % (Parabolic SAR Distance for Trend 2)**

* **Definition:** The **PSAR 2 Distance %** parameter sets the distance between the price and the SAR during the second trend phase (the reversal phase).
* **How It Works:**
  * Similar to the Trend 1 PSAR distance, a higher value ensures that the SAR remains **farther from the price**, preventing **false trend reversal signals**.
* **Use Case:**
  * **Higher distance %:** Used in markets that experience **strong, sustained trends**.
  * **Lower distance %:** Suitable for **quick trend reversals** where fast changes are expected.

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#### **Example Configuration for Parabolic SAR:**

1. **Timeframe:** 5-Minute (for capturing short-term trend reversals)
2. **Trend 1 Start:** 0.02 (initial acceleration factor for uptrend)
3. **Trend 1 Increment:** 0.02 (gentle acceleration)
4. **Trend 1 Max Value:** 0.2 (maximum value to cap SAR's sensitivity)
5. **PSAR 1 Distance %:** 0.05 (closer SAR to track price movements more accurately)
6. **Trend 2 Start:** 0.02 (beginning of trend reversal)
7. **Trend 2 Increment:** 0.02 (gentle acceleration for trend reversal)
8. **Trend 2 Max Value:** 0.2 (same cap for consistency)
9. **PSAR 2 Distance %:** 0.05 (similar distance as Trend 1 for stability)

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#### **Summary:**

The Parabolic SAR is a versatile trend-following indicator that helps identify trend reversals. By adjusting the **Timeframe**, **Trend 1 and Trend 2 settings**, and **PSAR Distance %,** traders can fine-tune the indicator to their specific strategy, whether they are trading fast-moving markets or long-term trends. These parameters allow for more **accurate trend reversal identification**, helping traders filter out false signals and make more informed trading decisions.
