Parabolic Indicator

DEFINITION of 'Parabolic Indicator'

A technical analysis strategy that uses a trailing stop and reverse method called "SAR," or stop-and-reversal, to determine good exit and entry points.

Parabolic Indicator



Also known as Parabolic Stop And Reverse (PSAR)

BREAKING DOWN 'Parabolic Indicator'

This method was developed by J. Wells Wilder. Basically, if the stock is trading below the parabolic SAR (PSAR) you should sell. If the stock price is above the SAR then you should buy (or stay long).

RELATED TERMS
  1. Trailing Stop

    A stop order that can be set at a defined percentage away from ...
  2. Chartist

    An individual who uses charts or graphs of a security's historical ...
  3. Technical Analysis

    A method of evaluating securities by analyzing statistics generated ...
  4. Golden Cross

    A crossover involving a security's short-term moving average ...
  5. Cup and Handle

    A pattern on bar charts resembling a cup with a handle. The cup ...
  6. Dead Cat Bounce

    A temporary recovery from a prolonged decline or bear market, ...
Related Articles
  1. Active Trading Fundamentals

    Trailing-Stop Techniques

    The important decision to exit a position must be based on more than emotion if you want to be a disciplined trader.
  2. Active Trading

    Candle Sheds More Light Than The MACD

    Read the case against this well-established indicator.
  3. Technical Indicators

    Introduction To The Parabolic SAR

    Take a closer look at this indicator, which during a trending period, is a very useful and accurate tool.
  4. Investing

    What Investors Need to Know About Returns in 2016

    Last year wasn’t a great one for investors seeking solid returns, so here are three things we believe all investors need to know about returns in 2016.
  5. Chart Advisor

    3 Charts That Suggest Now Is The Time To Invest In Real Estate (VNQ, SPG,PSA)

    Real estate assets have some of the strongest uptrends around. We'll take a look at three candidates poised for a move higher.
  6. Chart Advisor

    Stocks With More Upside Due to Bear Traps (TAP, SPY)

    A bear trap is a pattern that typically leads to at least a short-term rise in prices. Here are stocks exhibiting the pattern.
  7. Stock Analysis

    3 Risks U.S. Equities Face in 2016

    Find out why the probability of a U.S. stock bear market is increasing in 2016 and what the greatest risks are to the bull market that is almost 7 years old.
  8. Active Trading Fundamentals

    New Traders: Trade the Market in 5 Steps

    New traders shouldn’t throw money at securities without knowing why prices move. Follow these five steps to tilt the odds in your favor.
  9. Chart Advisor

    Watch For a Bounce in These Emerging Markets (BRF, PEK)

    While downtrends are clearly in control of the direction of many emerging market ETFs, short-term indicators suggest a bounce higher could be in the cards.
  10. Investing Basics

    Valuation Models: Apple’s Stock Analysis With CAPM

    The capital asset pricing model, or the CAPM, estimates the expected return of an asset based on the systematic risk of the asset’s return.
RELATED FAQS
  1. How do I use a Parabolic Indicator to create a forex trading strategy?

    The parabolic indicator generates stop points, from which existing positions should be closed and potential trend reversals ... Read Full Answer >>
  2. What is a common strategy traders implement when using the Parabolic Indicator?

    A common strategy implemented with the parabolic stop and reverse indicator is simply to follow the indicator as it moves ... Read Full Answer >>
  3. What are the best technical indicators to complement the Parabolic Indicator?

    The best technical indicators to complement the parabolic stop and reverse indicator are the average directional index (ADX) ... Read Full Answer >>
  4. Why is the Parabolic Indicator important for traders and analysts?

    Another creation from famous technical innovator J. Welles Wilder Jr., the parabolic indicator signals exit and entry points ... Read Full Answer >>
  5. How is the Parabolic SAR used in trading?

    The parabolic SAR is a popular indicator that is mainly used by traders to determine the future short-term momentum of a ... Read Full Answer >>
  6. What is Fibonacci retracement, and where do the ratios that are used come from?

    Fibonacci retracement is a very popular tool among technical traders and is based on the key numbers identified by mathematician ... Read Full Answer >>
Hot Definitions
  1. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  2. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
  3. Ponzimonium

    After Bernard Madoff's $65 billion Ponzi scheme was revealed, many new (smaller-scale) Ponzi schemers became exposed. Ponzimonium ...
  4. Quarterly Earnings Report

    A quarterly filing made by public companies to report their performance. Included in earnings reports are items such as net ...
  5. Dark Pool Liquidity

    The trading volume created by institutional orders that are unavailable to the public. The bulk of dark pool liquidity is ...
Trading Center