What is Parabolic SAR Indicator

technical analysis

So far we have focused on indicators that focus on finding the beginning of new trends. But just as important to identify new trends, it is equally important to be able to identify a trend where it ends.

After all, what good is a successful entry without a successful exit?

parabolic sar
What is Parabolic SAR
An indicator that can help us determine when a trend may be ending is the Parabolic SAR. The Parabolic SAR places dots on the graph indicating the investment potential price movement. With the above chart we can see that the change points being down the candles when the price goes up to be above the candles when the price returns to a downward trend.

Using the Parabolic SAR

The best of the Parabolic SAR is that it is easy to use. Basically, when the points are below the candles is a buy signal and when the points are above the candles, is a sell signal.


This is probably the simplest indicator to interpret because it assumes that the price goes up or down. This tool is best used in trending markets with large increases or decreases. Do not use the Parabolic SAR in a market where the price moves in both directions.


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