The parabolic SAR attempts to give traders an edge by highlighting the direction an asset is moving, as well as providing entry and exit points.
Key Takeaways:
- The indicator uses a trailing stop and reverse method called “SAR” to identify suitable exit and entry points.
- A dot is placed below the price when it is trending upward, and above the price when it is trending downward, drawing attention to changes in price direction.
What Does the Parabolic SAR Tell You?
The SAR works well for capturing profits during a trend, but it can lead to many false signals when the price moves sideways or trades in a choppy market.
The parabolic SAR is also a method for setting stop-loss orders. When a stock is rising, move the stop-loss to match the parabolic SAR indicator. The same concept applies to a short trade.
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How to find where the indicators are and add them to charts?
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You can download the offline guide here Stochastic Oscillator Indicator Guide
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