The Parabolic SAR indicator was developed by J. Welles Wilder. The indicator shows dots below the current price bars if there is an up-trend, and vice versa. The formula for this indicator is complex, but is described in great detail in Wilder’s revolutionary book, New Concepts in Technical Trading Systems.
How To Trade Using The Parabolic SAR
The beauty of the Parabolic SAR lies in its simplicity. The default settings for the Parabolic SAR (0.02, 0.02, 0.2) is perfect for probably any time setting. Trading using the Parabolic SAR is straightforward, but works well only in a trending market. If the market is ranging, then the Parabolic SAR is prone to whip-saws.
Category: Charting Indicators