Hello there,

What are the differences between these 2 indicators?

When used together they usually agree but there are times when they don't.  Interesting things can happen when they don't   Worden offers both indicators so there must be some differences.

Thanx

The calculation of the Volatility Stop is pretty simple.

In an uptrend there is an "extreme point" which is the highest close that price has reached during the uptrend. The Volatility Stop is plotted at a fixed multiple of Average True Range below this extreme point. The Volatility Stop does not retreat however. If the closess get lower or the Average True Range becomes larger, the Volatility Stop can still only go up until it is violated and switches trends.

A downtrend is calculated the same way except that the "extreme pont" is the lowest close that price has reached during the downtrend and a multiple of Average True Range is added to the extreme instead of subtracted.

The calculation of Parabolic SAR is far more complicated.

It also tracks the same "extreme point". It will track the highest high during the uptrend and track the lowest low during a downtrend. It uses this information differently however.

The extreme point of the previous trend is used as the value for SAR at the start of the new trend. So the lowest low during a downtrend is used as the SAR at the start of an uptrend and the highest high during an uptrend is used as the SAR at the start of a downtrend.

Parabolic SAR will always go up during an uptrend and always go down during a downtrend with one exception. Parabolic SAR cannot be lower than the highest high of the previous two bars during a downtrend and cannot be higher than the lowest low of the previous two bars during a downtrend.

Otherwise Parabolic SAR moves up in an uptrend and down in a downtrend by "AF" times the absolute difference between the currently calculating extreme point and the current value of SAR.

AF starts at 0 for the first bar in a trend and increase by AF Increase at each bar until AF reaches AF Max. The AF remains at AF Max once it reaches AF Max.

Once Parabolic SAR is violated, the trend switches.

Hello there,

Thank you for taking the time to explain.

I was hoping for the dumbed down version and mainly an approach for using both indicators simultaneously.

What does it mean when they agree?  Is the trend stronger/  This appears to be the case but I haven't studied it carefully.

What does it mean when they don't agree and which one should be believed?

Would it be possible to write condiitons so that one (like me) could monitor them historically?

1.  Both agree buy

2.  Both agree sell

3.  PSAR says, "sell",  Volatility Stop does not confirm.

4.  PSAR says, "buy", Volatility Stop does not confirm.

5. Volatility Stop says, "sell"  PSAR does not confirm.

6.  Volatility Stop says, "buy" PSAR does ot confirm.

I'm more than curious.

Thanks again

The trainers can't give setting, interpretation or investment advice. I can explain how the Volatility Stop and Parabolic SAR are calculated, but I can't suggest how to interpret the Volatility Stop and Parabolic SAR.

If you notice particular patterns based on when the indicators agree or disagree, I would welcome you to explore these patterns further, but I can't give advice related to these observations.

You can create individual conditions for the Parabolic SAR or Volatility Stop being above, below, crossing up through or crossing down through price if they are plotted on the chart by clicking on Parabolic SAR, Volatility Stop or Price History and selecting Create Scan Condition.

Create Conditions from Your Chart (5:25)

To combine these conditions, you would need to add them to EasyScans.

Building a Scan with Multiple Conditions (7:29)

You would need to create a different EasyScan for each one of your six scenarios.

Unfortunately, the EasyScans are only going to work for the current bar. Since it is not possible to create a Condition Formula based on Parabolic SAR, there would be no way to create a Custom PCF % True Indicator which could be used to plot spikes on the chart where these combinations of conditions were true in the past.