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| The Parabolic SAR (Stop and Reverse) is a technical indicator identifying potential price reversals in a financial asset. It was developed by J. Welles Wilder and is widely used in trading. The Parabolic SAR indicator is a visual representation of the price trend of an asset. It appears as a series of dots either above or below the price bars of a chart. When the dots are below the price bars, it indicates that the price is in an uptrend; when the dots are above the price bars, it means that the price is in a downtrend. As the asset price increases or decreases, the dots move closer to the price bars, creating a trailing stop that can be used to manage risk. When a trend reversal occurs, the indicator works by "flipping" its position. For example, if the dots are below the price bars (indicating an uptrend), and the price falls below the dots, it signals that the trend may be reversing, and the dots will then move above the price bars (indicating a downtrend). |
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 Parabolic SAR - Technical Analysis from A to Z
The Parabolic Time/Price System, developed by Welles Wilder, is used to set trailing price stops and is usually
referred to as the "SAR" (stop-and-reversal). The Parabolic SAR provides excellent exit points. You should close
long positions when the price falls below the SAR and close short positions when the price rises above the SAR.
If you are long (i.e., the price is above the SAR), the SAR will move up every day, regardless of the direction
the price is moving. The amount the SAR moves up depends on the amount that prices move.
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