Parabolic SAR (Stop And Reverse) places dots above or below price.
- Dots below price: uptrend.
- Dots above price: downtrend.
- When price hits the dots, they flip to the other side.
How traders use it
Mainly as a trailing stop: in a long trade, move your stop up to each new dot. It hugs the trend tighter as it accelerates.
Wick says
In sideways markets SAR flips every few candles. Following it there is like taking directions from a confused GPS.
Key takeaways
- Dots below = up; dots above = down.
- Best as a trailing stop in trends.
- Useless in ranges.