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Welles Wilder's Parabolic Time/Price System, (Parabolic SAR) is used to set trailing stops where you can exit or reverse your position. Usually, a trader would close a long position when price falls below the SAR, and close a short position if price rose above the SAR. If your position is long, the SAR rises every day, whatever direction price moves. The SAR move up depends on how far price moved. Day trading systems using this indicator tend to be highly automated, making their running costs high. The calculation for parabolic SAR is far too complicated for this brief introduction. |
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