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an anyone in a nutshell explain the use of the Parabolic SAR? Would I use it to set my stops once in a trade?
Any feedback would be much appreciated....
Thanks..
Marc
Quote:
Overview
The Parabolic Time/Price System, developed by Welles Wilder,
is used to set trailing price stops and is usually referred
to as the "SAR" (stop-and-reversal).
This indicator is explained thoroughly in Wilder's book,
New Concepts in Technical Trading Systems.
Interpretation
The Parabolic SAR provides excellent exit points.
You should close long positions when the price
falls below the SAR and close short positions
when the price rises above the SAR.
If you are long (i.e., the price is above the SAR),
the SAR will move up every day, regardless of
the direction the price is moving. The amount
the SAR moves up depends on the amount
that prices move.
The Parabolic SAR is plotted as shown in Wilder's book.
Each SAR stop level point is displayed on the day
in which it is in effect. Note that the SAR value
is today's, not tomorrow's stop level.
Wilder, J. Welles. New Concepts in Technical Trading Systems. Greensboro, NC: Trend Research, 1978.
Last edited by newdigital; 06-23-2007 at 02:52 PM.
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