Parabolic SAR

25 August 2009 @ 11:49 am EDT

The Parabolic SAR, developed by Welles Wilder, is used to set trailing price stops. SAR refers to "Stop-And-Reversal". It is designed to create exit points for both long and short positions in such a way that it allows for reactions or fluctuations at the beginning of the position, but accelerates upward (for long positions) or downward (for short positions) as the movement tops out. Parabolic SAR is plotted around the price chart similar to a moving average.

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