Parabolic SAR with ADX Filter

How the rule works

Parabolic SAR accelerates its trailing reference as a price trend extends. The ADX/DI filter tries to exclude some sideways flips, but it cannot eliminate them. A dot visible under a completed candle is not an executable historical fill at that dot. This specification treats a flip as a signal for the next quote and a separate initial-risk calculation.

Setup

• At an H4 close, a long setup requires SAR below price, a just-completed SAR flip from above to below, ADX above 23, and +DI above −DI.

Indicators

• MT5 Parabolic SAR, step 0.02, maximum 0.20
• MT5 ADX Wilder(14)
• MT5 ATR(14)

Long entry

• Buy at the next-bar ask after the long flip. Do not fill at the historical SAR dot because the final dot depends on the completed bar.

Short entry

• For short, require SAR’s completed flip above price, ADX above 23 and −DI above +DI, then sell next-bar bid.

Stop loss

• Initial stop is the signal-bar SAR value, but cap planned distance at 2.5×ATR(14); skip wider signals. The SAR can ratchet only in the trade’s favor.

Exit

• Exit at the next quote after an opposite completed SAR flip or a DI cross against the trade. Close any remaining position after 16 completed H4 bars. The protective stop may fill intrabar; update SAR-based stops after closes and never move them farther from the entry.

Risk and position size

• Risk 0.40% equity. A reversed trade is a new risk decision; do not automatically double or reverse size.

Costs and execution

• The official platform indicator has acceleration and maximum inputs; record both. Test next-bar bid/ask fills and spread, slippage and swap rather than idealized dot prices.

When the method can fail

• Avoid ADX below threshold, frequent SAR dots alternating around price, and event-driven gaps. SAR is notably vulnerable to choppy markets.

Worked example

• Hypothetical SAR flip: completed SAR changes from above price to 1.0970 below price, ADX14 is 26 and +DI exceeds −DI. Next ask 1.1000 gives 30 pips of initial risk. The eventual stop must not be backdated to a historical dot whose final value was unknown intrabar.

Historical test results

No tested pair meets the complete research-screen criterion. Positive cells alone do not qualify the strategy.

24 mechanical runs across 4 pairs on H4. Decisions use completed strategy bars; fills use native ICMarketsEU-Demo M15 Bid candles with explicitly modelled costs. Full window: 1 January 2025–18 September 2026. Shorter available histories: GBPUSD: 2025-03-13, USDJPY: 2025-03-13. Each row starts with an independent USD10,000 account.

Interpretation: these are mechanical bar-model tests, not verified real-tick or live performance. Price rules were held fixed; subjective market-quality exclusions remain outside the mechanical model. Strategy adaptation requires a new test.

Download all test metrics and assumptions (JSON) · Download simulated trade logs and reproducible research code · Broker commission and swap documentation

Execution conventions

• Bar [0] is forming; [1] is the most recently completed bar. Unless explicitly stated otherwise, indicators use Close with zero plot shift and signals use completed bars. EMA is exponential, SMA is arithmetic and MT5 ATR is its native true-range average. Use at least 300 completed warm-up bars; a longer rule-specific requirement takes priority.
• A close-based signal is executed at the first available quote after the close, never retrospectively at the signal close. Buy at ask, sell at bid; close longs at bid and shorts at ask. A standing stop or target can fill within a bar. A gap through a stop fills at the first executable price, which can be worse than the stop.
• R means the initial entry-to-protective-stop distance, fixed at entry. Convert that distance into account-currency loss using the symbol tick size and loss-side tick value. Lots = cash risk / loss per lot, rounded down to the broker volume step. Round prices to the trade tick and recheck risk plus minimum stop/freeze distances before submitting. Budget commission and slippage separately; skip if minimum size exceeds the risk limit.
• Use one position per symbol and no averaging down. A trailing stop only tightens after a completed bar and becomes active on the next quote. The entry bar is holding bar one; a time exit executes on the quote after the specified holding bar closes. When a hard stop and a close-based exit compete, the stop already active takes precedence. With OHLC-only data, assume stop before target if both can occur in one bar; tick data is needed to resolve the order.
• The article defines the price rule. Any discretionary news exclusion changes the tested variant and must be recorded in advance. Map broker timestamps to the named London/New York time zone using historical daylight-saving offsets; do not assume a fixed UTC offset. Include spread, commission, slippage, overnight financing and triple-swap days in a profitability test.

Adapt and test your version

• Treat these inputs as a reproducible starting specification. Choose a currency pair, session and holding period that match the time you can monitor the market, then record any changes to indicator periods, thresholds, stop distance or exits as a new version.
• Change one hypothesis at a time. Reserve a later period and additional pairs for evaluation before looking at their results. Include your account’s actual trading and financing costs, compare small parameter changes, and forward-test on demo. A selected profitable window does not validate the strategy or its modified version.

Reproduce the chart in MT5

• Open EURUSD on H4. Add the indicators listed above through Insert → Indicators; use Close and zero shift unless a different setting is specified. The Data Window displays exact values for the selected completed candle.
• Compare the signal candle with the required earlier bars before moving forward. Use the crosshair to read prices and times. For custom channels, session levels or Supertrend, reproduce the formula in this guide and check the calculation before relying on an external indicator.
• Draw entry, initial SL and target only after a candle has satisfied every condition. Label planned levels as plans; they do not demonstrate a historical fill. The featured chart is genuine historical MT5 context and is not a trade-performance report.

Sources

• MT5 Help: Parabolic SAR — Indicator/platform definition; not strategy performance.
• MT5 Help: ADX Wilder — Indicator/platform definition; not strategy performance.