Profitable MACD + Parabolic SAR + 200 EMA Trading Strategy


Embark on a journey to financial success with our in-depth exploration of a powerful trading strategy that combines MACD, Parabolic SAR, and 200 EMA. This comprehensive guide not only breaks down each element of the strategy but also provides practical examples and scenarios, helping both novice and seasoned traders to enhance their market skills. Dive into the world of informed trading decisions and strategic planning with our expert insights.

YouTube video: How to easily spot trend reversals before they happen?

Maximize Gains with MACD, SAR & 200 EMA Trading Strategy

Trading in the financial markets can be both exciting and challenging. Developing a strategy that can effectively navigate the complexities of market movements is crucial for success. A popular approach among traders is the combination of MACD (Moving Average Convergence Divergence), Parabolic SAR (Stop and Reverse), and the 200 EMA (Exponential Moving Average). This article delves into the intricacies of this strategy, exploring how these three indicators can be synergistically used to identify profitable trading opportunities.

Understanding the Indicators

1. Moving Average Convergence Divergence (MACD)

The MACD is a trend-following momentum indicator. It shows the relationship between two moving averages of a security’s price. The MACD is calculated by subtracting the 26-period EMA from the 12-period EMA. The result of this calculation is the MACD line. A nine-day EMA of the MACD, called the “signal line,” is then plotted on top of the MACD line, which can function as a trigger for buy and sell signals.

2. Parabolic SAR

Parabolic SAR is a technical indicator used to determine the direction of an asset’s momentum and the point in time when this momentum has a higher-than-normal probability of switching directions. In a chart, it appears as a series of dots, either above or below an asset’s price, depending on the momentum’s direction.

3. 200 Exponential Moving Average (200 EMA)

The 200 EMA is a type of moving average that places a greater weight and significance on the most recent data points. It’s widely regarded as a significant technical indicator that helps traders to identify the long-term trend direction of an asset.

Developing the Strategy

The profitable MACD + Parabolic SAR + 200 EMA trading strategy involves using these indicators in conjunction to find optimal entry and exit points. Here’s how it works:

  • Identifying the Trend: Use the 200 EMA to identify the overall trend. If the price is above the 200 EMA, the trend is considered upward. If below, it’s downward.
  • Entry Signals: A buy signal is generated when the MACD crosses above its signal line, the price is above the 200 EMA, and the Parabolic SAR dots are below the price. Conversely, a sell signal is indicated when the MACD crosses below its signal line, the price is below the 200 EMA, and the Parabolic SAR dots are above the price.
  • Exit Signals: Exit a buy trade when the MACD crosses below its signal line or the Parabolic SAR dots flip to above the price. Exit a sell trade when the MACD crosses above its signal line or the Parabolic SAR dots flip to below the price.

Advantages and Disadvantages

This strategy offers several advantages, including its ability to filter out market noise and provide clear signals. However, it’s not without its drawbacks. For instance, in a highly volatile market, the signals might be misleading, leading to potential losses.

Optimizing the Strategy

While the basic strategy provides a solid foundation, traders can optimize it by considering the following factors:

  • Adjusting Indicator Settings: Depending on their trading style, traders might find it beneficial to adjust the periods used in the MACD or the settings of the Parabolic SAR for more sensitivity or stability.
  • Combining with Other Indicators: Integrating other technical indicators, like RSI (Relative Strength Index) or Stochastic Oscillator, can provide additional confirmation for trades and help in risk management.
  • Market Types: This strategy tends to perform best in trending markets. During range-bound or highly volatile markets, its effectiveness can be reduced.

Risk Management

Risk management is a critical component of any trading strategy. When applying the MACD + Parabolic SAR + 200 EMA strategy, consider the following:

  • Stop-Loss Orders: Always set a stop-loss order to limit potential losses. The level of the stop-loss can be determined based on recent highs or lows, or a set percentage of the trade size.
  • Position Sizing: Adjust the size of your trades based on your overall portfolio and risk tolerance. Never risk more than a small percentage of your capital on a single trade.
  • Diversification: Do not rely solely on this strategy for all trades. Diversify your trading approaches and the assets you trade.

Case Studies and Examples

Let’s examine a few hypothetical scenarios to understand how this strategy works in practice:

  • In a bullish market, Trader A notices that the price of a stock is above the 200 EMA, the MACD line has crossed above the signal line, and the Parabolic SAR dots are below the price. Acting on this buy signal, the trader enters a long position and profits as the uptrend continues.
  • In a bearish market scenario, Trader B observes that the price of a currency pair is below the 200 EMA, the MACD line has crossed below the signal line, and the Parabolic SAR dots are above the price. This sell signal prompts the trader to enter a short position, leading to gains as the downtrend persists.


The MACD + Parabolic SAR + 200 EMA trading strategy offers a systematic approach to market analysis, providing clear signals for entry and exit points. Its effectiveness is enhanced by its simplicity and the use of well-established technical indicators. However, like all trading strategies, it is not foolproof and should be used with proper risk management and market analysis. Continuous education, practice, and adaptation to market changes are essential for success in trading.

By understanding and applying this strategy thoughtfully, traders can improve their chances of making profitable trades in various market conditions. However, it is always recommended to combine this strategy with a thorough understanding of market dynamics and sound trading principles.

Final Thoughts

Trading is a journey that combines strategy, psychology, and risk management. The MACD + Parabolic SAR + 200 EMA strategy is a valuable tool in a trader’s arsenal but should be used as part of a broader trading plan. Continuous learning, disciplined trading, and emotional control are key to achieving long-term success in the financial markets.

Further references:


PLEASE NOTE: The articles on this website are not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future.

Some of the articles have been created by Artificial Intelligence for marketing purposes. Not all of them has been reviewed by humans so these articles may contain misinformation and grammar errors. However, these errors are not intended and we try to use only relevant keywords so the articles are informative and should be close to the truth. It’s recommended that you always double-check the information from official pages or other sources.

Some of the links on this page may be an affiliate links. This means if you click on the link and purchase the item, I will receive an affiliate commission.

Try IQ Option broker and see yourself why millions of traders use it

IQ Option - download on the App Store & Get it on Google Play

24/7 Support

$1 Minimum Deal

$10 Minimum Deposit

Free Demo Account

deposit methods
Multi-chart platform IQ Option broker Tablet Mobile PC


IQ Option - download on the App Store & Get it on Google Play

Learn how to trade!


Video - How to trade CFD?How to trade CFD? (00:49)

This financial instrument allows you to speculate on both upward and downward price movements of stock without actually owning them.

Video - How to trade Binary Options?How to trade binary options*? (01:22)

Predict which direction the asset price will go in a few minutes. Profit up to 95%, with loss being limited to the sum of your investment.(*Binary Options are not available in EU)

Video - Forex. How to start?Forex. How to start? (01:01)

The largest and most liquid market in the world where the main underlying asset is foreign currencies traded in pairs. Watch video to know more.


General Risk Warning: The financial products offered by the company carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose

This website is not intended for viewers from EEA countries. Binary options are not promoted or sold to retail EEA traders.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

About Us is not an official website. All trademarks used belong to is an affiliate website and promote We are getting a commission when trader registers through our links.

We strive for all the information be most up to date but for the current offers always check IQ OPTION official website. If you would like to contact with the webmaster of this website please email:[email protected]

Automatic articles translation

The articles are originally in English. Please change the language if trading articles are not translated well. They are translated automatically and may not always reflect the meaning of the original content.

We use cookies to provide and improve our services. By using our site, you consent to cookies. To find out more please read our policies below:

© 2024 - IQ OPTION BROKER - not official | Promotional material on this website is 18+ only. Please trade responsibly.