What is the 'Parabolic Indicator'

The parabolic indicator is 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. Stock Appreciation Right - SAR

    A right, usually granted to an employee, to receive a bonus equal ...
  2. Trailing Stop

    A stop order that can be set at a defined percentage away from ...
  3. Suspicious Activity Report - SAR

    One of the tools provided under the Bank Secrecy Act (BSA) as ...
  4. Risk Reversal

    1. In commodities trading, it is a hedge strategy that consists ...
  5. SAR (Saudi Riyal)

    The currency abbreviation the Saudi riyal (SAR), the currency ...
  6. Chart Formation

    A graphical depiction of a stock's price movements over time. ...
Related Articles
  1. Trading

    Parabolic SAR Buy Signals

    The Parabolic SAR indicator is flashing "buy" in these four diverse stocks. Not simply relying on one indicator though, I take a look at the overall technical outlook and determine which ones ...
  2. Trading

    Parabolic SAR Buy Signals in Beaten Down Stocks (ABBV, CVX)

    These four stocks recently flashed a Parabolic SAR buy signal after declining for some time. Should you be looking for more upside?
  3. Trading

    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. Trading

    Parabolic SAR Sell Signals

    Strong selling on October 8 sent major indexes below support indicating the downward correction is continuing. Parabolic SAR signals occured in these four stocks recently, signaling to take profits ...
  5. Personal Finance

    Introduction To Phantom Stock And SARs

    Phantom stock and stock appreciation rights reward employees with compensation tied to stock performance.
  6. Trading

    A Logical Method Of Stop Placement

    If holding on to losing trades is human nature, this tool will help protect you from yourself.
  7. Trading

    Trailing-Stop/Stop-Loss Combo Leads to Winning Trades

    Combine trailing stops with stop-loss orders to reduce risk and protect portfolio value.
  8. Trading

    FX Exit Strategies: Keeping Your Profits

    There are several useful methods for exiting a position, all which are easy to execute and can be implemented into a trading plan.
  9. Investing

    Three Types Of Profit Protection Stops

    Three types of profit protection stops lock in profits at different stages in the progression of a successful trade.
  10. Trading

    The Stages Of A Forex Trend

    Learn how to identify the stages of the many types of trends that occur in the forex market.
RELATED FAQS
  1. Why is the Parabolic Indicator important for traders and analysts?

    Discover the rationale behind the parabolic indicator, or parabolic SAR, and why J. Welles Wilder Jr. created it to protect ... Read Answer >>
  2. How do I use a Parabolic Indicator to create a forex trading strategy?

    Learn more about how the parabolic indicator, also known as the parabolic SAR, can be used by forex traders to create trailing ... Read Answer >>
  3. What are the best technical indicators to complement the Parabolic Indicator?

    Learn about two of the best technical indicators recommended for traders to use to refine a trading strategy based on the ... Read Answer >>
  4. How autonomous are special administrative regions?

    Read about the unique independence and governing laws concerning the two Chinese special administrative regions, or SARs: ... Read Answer >>
  5. What is the difference between a buy limit and a stop order?

    Learn the difference between buy limit orders and stop orders, including stop loss orders, and understand the risks of the ... Read Answer >>
  6. How do I build a profitable strategy when spotting a Hammer pattern?

    Understand how analysts use the hammer candlestick pattern to establish trading strategy to enter and exit the trade and ... Read Answer >>
Hot Definitions
  1. Private Placement

    The sale of securities to a relatively small number of select investors as a way of raising capital.
  2. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  3. Backward Integration

    A form of vertical integration that involves the purchase of suppliers. Companies will pursue backward integration when it ...
  4. Pari-passu

    A Latin phrase meaning "equal footing" that describes situations where two or more assets, securities, creditors or obligations ...
  5. Interest Rate Swap

    An agreement between two parties (known as counterparties) where one stream of future interest payments is exchanged for ...
  6. Custodian

    A financial institution that holds customers' securities for safekeeping so as to minimize the risk of their theft or loss. ...
Trading Center