Parabolic SAR
a.k.a. Parabolic Stop and Reverse, PSAR
A trend indicator that plots dots above or below price, used to trail stops and flag possible reversals.
Parabolic SAR (stop and reverse) was created by J. Welles Wilder, the same developer behind RSI. It draws a trail of dots: below the candles in an uptrend, above them in a downtrend. As the trend continues, the dots speed up and creep closer to price.
When price crosses the dots, they flip to the other side, a signal the trend may be reversing. Many traders use the dots as a ready-made trailing stop. In choppy markets, though, the dots flip constantly and generate a stream of false signals.
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