What is the Parabolic ‌SAR Indicator?

The Parabolic SAR (Stop and Reversal) is a popular⁤ technical analysis indicator​ used to ⁣determine the direction of a security’s price movement. It helps traders identify ⁤changes in trend as well as appropriate‌ entry and exit points.⁢ The indicator was ⁤developed by J. Welles Wilder Jr. ⁤in⁣ 1978 in his book, ​New ⁤Concepts in Technical Trading Systems, and has since become a popular tool among traders.

How Does the Parabolic⁤ SAR Indicator Work?

The Parabolic SAR indicator uses ⁤a trailing stop to identify buy and ​sell signals. It plots points​ above and below ‌the security’s price as​ the trend changes or the ‍security exhibits​ volatility. An upward trend‍ is signified by a series of points ​below the price,​ and a downward trend is signified by a series of points above the price.‍

The Parabolic SAR formula includes‍ acceleration factors ​which allow the indicator to adjust to the speed​ of the security’s‌ price movements.⁣ This acceleration factor helps ​the ⁤indicator to quickly change from indicating a buy to a sell.

How to Trade with⁤ the Parabolic SAR Indicator

When trading with⁤ the Parabolic SAR indicator, it is important to‍ remember ​that when the SAR value is below the price, a bullish trend ‌could be emerging and it ‌is a signal to buy. Similarly, when the ⁣SAR value is‍ above the ⁤price, a bearish trend could be emerging and it is a⁣ signal to sell.

The‌ SAR indicator should generally be used in conjunction ⁤with ⁤other indicators‌ such as the Moving Average Convergence Divergence (MACD) and Relative Strength Index (RSI) in order to avoid false signals. For instance if the SAR value is below the‌ price and looks a bullish ‌trend is forming, it’s important to ⁤confirm⁢ this by looking at other technical indicators.


The Parabolic SAR indicator ‍is a​ simple but powerful tool for traders to identify entry⁤ and exit points for trading in a security. It is important to remember that it should be used in combination with other⁤ technical indicators in order ⁤to get the most ⁢accurate signals.⁤ When used properly, the Parabolic SAR can help ⁤you stay ahead ⁢of the market and make‌ informed decisions when ‍trading crypto.

By WebPro

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