Parabolic Stop loss - how it works?

[david196]

Hi,

I am trying to understand how the parabolic stop works, but do not fully understand how to set it up.

I have looked here:

NinjaTrader 8

But still do not understand it.

SetParabolicStop(string fromEntrySignal, CalculationMode mode, double value, bool isSimulatedStop, double acceleration, double accelerationMax, double accelerationStep)

EntrySignal is clear: I have a name (to match the entry) or I leave it blank.
CalculationMode is clear: I use ticks.
Value: is it where the stop is initially placed (from the entry signal)? Say 20.
Acceleration: is it how fast it moves towards the current market price? Say 1. Does this mean that the stop moves by 1 tick each time the price moves 1 tick towards the profit?
AccelerationMax: is it how fast it can move towards the current market price? Say 5.
AccelerationStep: is it how fast it increases the speed? Say 1.

What should happen in practice?

The stop is initially 20 ticks below the entry. As the price moves towards the profit, the stop moves towards the price 1 tick at a time? 1 tick per tick, or more? When does it start accelerating? How does it do it? Does it mean that it then moves 2 ticks for each tick of movement of the price towards the profit? Up to 5 ticks per 1 tick of movement of the price towards the profit? Is this how it is supposed to work? Does it increase by 1 tick (AccelerationStep) each tick of movement towards the profit until it gets to the AccelerationMax?

Thanks
David

[NinjaTrader_BrandonH]

Hello david196,

Thank you for your post.

Parabolic stop orders are real working orders (unless simulated is specified in which case the stop order is locally simulated and submitted as a market order once triggered) submitted immediately to the market upon receiving an execution from an entry order.

Although logic-wise very similar, this technique works differently from the ParablicSAR indicator. The indicator will provide trailing stop levels 'always in the market' assuming a constant market position switch, either long or short (reversing). The SetParabolicStop() method in contrast will apply the same parabolic trailing technique sensitive to price acceleration to the custom strategy entry signal/position it is associated with.

Value determines where the trail stop order is initially placed in relation to the entry signal. Acceleration would be the initial start value that the acceleration step is iterated on/from. AccelerationStep determines how often/fast Acceleration increases for the trailing stop order. AccelerationMax refers to the maximum acceleration speed that the trailing stop order moves. Please note the acceleration values are not a specific tick size.

I suggest setting up a simple strategy in the Strategy Builder that uses SetParabolicStop(). Then, test that strategy on a Sim account while noting how the trailing stop moves based on the acceleration values you set.

Also, you could use the Parabolic SAR indicator and change the various settings there to visualize the stop.

See the help guide documentation below for more information.
SetParabolicStop() - https://ninjatrader.com/support/help...abolicstop.htm

And, please see this publicly available documentation about Parabolic SAR indicator - https://www.investopedia.com/trading...parabolic-sar/

Let us know if we may further assist.

[kevinsurf]

Hello, the strategy I am creating only buys longs. I have a parabolic stop set up. For some reason, a lot of unwanted short orders are created. I am very happy with the long positions
win ratio. However, it seems that almost an even number of shorts are being created in conjunction with my long orders. My profit ratio seems to mirror negatively in short positions to my positive long positions. I have 2 entry points, one during morning hours and one during night. I have coded 2 separate parabolic stops naming each entry point individually. What am I missing?

[NinjaTrader_ChelseaB]

Hello kevinsurf,

Welcome to the NinjaTrader forums!

Have you enabled TraceOrders and added prints to determine which order / condition is entering the short position?

https://support.ninjatrader.com/s/article/Developer-Guide-Debugging-using-Print-and-TraceOrders

Is this an issue with the short entry conditions?

Do you have multiple exit orders using the same fromEntrySignal for the same entry order signalName? (Including using a blank signal name)