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Parabolic SAR
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The Parabolic SAR sets trailing price stops for long or short positions. Also referred to as the stop-and-reversal indicator (SAR stands for "stop and reversal"), Parabolic SAR is even more popular for setting stops than for establishing direction or trend.

When a possible reversal pattern is forming, and the Parabolic SAR could change the direction. A trend could be established, then trading with the Parabolic SAR in the direction of the trend as stop loss line. If the trend is up, buy when the indicator moves below the price. If the trend is down, sell when the indicator moves above the price.

The Parabolic SAR is an outstanding indicator for providing exit points. Long positions should be closed when the price sinks below the SAR line, short positions should be closed when the price rises above the SAR line. It is often the case that the indicator serves as a trailing stop line.

If the long position is open (i.e., the price is above the SAR line), the Parabolic SAR line will go up, regardless of what direction the prices take. The length of the SAR line movement depends on the scale of the price movement.



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