Parabolic SAR
Parabolic SAR (Stop and Reverse) is a technical indicator used to identify potential reversals in the price of a security. It is a trend-following indicator that is used to determine the direction of a security’s price movement. The indicator is based on the idea that when the price of a security is trending, it will tend to remain in that trend until a reversal occurs. The Parabolic SAR is used to identify potential reversals in the price of a security by plotting a series of dots on a chart. The dots are placed above or below the price depending on the direction of the trend. When the dots are above the price, it indicates a bearish trend, and when the dots are below the price, it indicates a bullish trend.
History of Parabolic SAR
The Parabolic SAR was developed by J. Welles Wilder Jr. in 1978 and is one of the most popular technical indicators used by traders. Wilder was a mechanical engineer and a commodities trader who developed a number of technical indicators, including the Relative Strength Index (RSI) and Average Directional Index (ADX). The Parabolic SAR is one of his most popular indicators and is used by traders to identify potential reversals in the price of a security.
Comparison Table
| Indicator | Description |
|---|---|
| Parabolic SAR | A trend-following indicator used to identify potential reversals in the price of a security. |
| Relative Strength Index (RSI) | A momentum indicator used to measure the speed and change of price movements. |
| Average Directional Index (ADX) | A trend-following indicator used to measure the strength of a trend. |
Summary
The Parabolic SAR is a popular technical indicator used by traders to identify potential reversals in the price of a security. It is based on the idea that when the price of a security is trending, it will tend to remain in that trend until a reversal occurs. The indicator is used to plot a series of dots on a chart, which are placed above or below the price depending on the direction of the trend. For more information about the Parabolic SAR, traders can visit websites such as Investopedia, TradingView, and StockCharts.
See Also
- Relative Strength Index (RSI)
- Average Directional Index (ADX)
- Moving Average Convergence Divergence (MACD)
- Bollinger Bands
- Stochastic Oscillator
- On Balance Volume (OBV)
- Commodity Channel Index (CCI)
- Fibonacci Retracement
- Price Channel
- Relative Vigor Index (RVI)
