Parabolic SAR Technical Analysis and Parabolic SAR Signals
Created by J. Welles Wilder.
The Parabolic SAR is used to set trailing price stops. This indicator is usually referred to as the "SAR" (stop-and-reversal) & it is used to follow price action closely.
- In an Uptrend, the stop & reversal will trail below market price
- In a downtrend, the stop and reversal will trail above market price
Technical Analysis and How to Generate Signals
This trading indicator provides excellent exit points.
Exit Trading Signal for Buy trade transactions
Traders should close long trade positions when the price falls below the technical indicator.
If you're trading long i.e. The price is above the stop & reversal, the SAR will move up every day, regardless of the direction that price action is moving. The movement of the technical indicator depends on the number of pips that the market prices move. When the SAR changes the direction then the market trend also changes into downwards. This generates the exit signal for long trade transactions.
Exit Signal for Sell trades
Traders should close short trade positions when the price rises above the technical indicator.
If you're trading short i.e. The price is below the stop & reversal, the SAR will move down every day, regardless of direction that the price action is moving. The movement of the technical indicator depends on the number of pips that the market prices move. When the SAR changes the direction then the market trend also changes into up. This generates the exit signal for short trades.
Exit Trading Signal for Buy and Sell trades
Study More Lessons & Topics:
- SX5E Strategies Example
- Online Trade Learning Trading Analysis Topics
- MetaTrader NIKKEI Indices NIKKEI225 MT4 Forex Software
- FX Chaikin Money Flow Technical Indicator
- List of Trading Indicators for Setting Stop Loss
- How to Add Fractals Trading Indicators to MetaTrader 4 Software
