Trading Parabolic SAR with stocks, futures and forex

The parabolic SAR is a technical indicator which is placed on the chart, similar to bollinger bands.  The basic premise used when trading with this indicator is that one should be long when the price is above the indicator while one should sell or short when the price falls below the indicator.  The parabolic SAR is typically used by traders to provide as a trailing stop loss as each successive bar forms. 

This indicator can only be used accurately in highly trending markets, and trades are more prone to success if the trade is taken in the direction of the trend.  However, the parabolic SAR does a poor job of helping investors with a stop strategy during a range bound market.

This speaker uses the parabolic SAR, along with the ADX and RSI to generate solid trading signals.  He looks for a long period of consolidation, coupled with a cross above 20 on the ADX and a move above 50 on the RSI.  Once that happens, he looks for a breakout in price above the consolidation area to get long.  Once the long entry is made, he uses the parabolic SAR to place a trailing stop.