Parabolic SAR Indicator

What Is the Parabolic SAR Indicator?

The parabolic SAR indicator, developed by J. Wells Wilder, is used by traders to determine trend direction and potential reversals in price. The indicator uses a trailing stop and reverse method called "SAR," or stop and reverse, to identify suitable exit and entry points. Traders also refer to the indicator as to the parabolic stop and reverse, parabolic SAR, or PSAR.

• The parabolic SAR indicator appears on a chart as a series of dots, either above or below an asset's price, depending on the direction the price is moving. A dot is placed below the price when it is trending upward, and above the price when it is trending downward.

• The parabolic SAR (stop and reverse) indicator is used by technical traders to spot trends and reversals.

• The indicator utilizes a system of dots superimposed onto a price chart.

• A reversal occurs when these dots flip, but a reversal signal in the SAR does not necessarily mean a reversal in the price. A PSAR reversal only means that the price and indicator have crossed.