Description:
The Parabolic SAR (Stop and Reverse) is a technical analysis indicator developed by J. Welles Wilder. The Parabolic SAR aims to determine the direction of an asset’s price movement and identify potential reversals in the market. The indicator is particularly useful in trending markets, helping traders identify entry and exit points while also acting as a risk management tool.
Input Parameters:
- Start: This is the initial value of the acceleration factor. It's the value used for the AF at the beginning of the trend.
- Acc: This is the factor by which the SAR is multiplied each time a new EP (Extreme Point) is made.
- Max: The highest value the acceleration factor can reach.
- Offset: The offset value is used to access the data of any candle or indicator with reference to the current candle, to access the current candle data we will use the offset value of "0", to access previous candle data "-1" offset value will be used.
Use Cases:
- Trend Identification: When the dots are below the price, it signals an uptrend, suggesting it may be a good time to buy. Conversely, when the dots are above the price, it indicates a downtrend, which might be a suitable time to sell.
- Entry/Exit Points: The Parabolic SAR provides straightforward entry and exit signals, making it easy for traders to identify when to enter or exit a trade based on the position of the dots relative to the price.
- Risk Management: The Parabolic SAR can act as a trailing stop loss, helping traders manage their risk by visually representing potential stop loss levels.
This feature can be used in:
- Market Scanner
- Strategy Tester
- Multi-Factor Alerts
- Smart Checklist
Do you want to learn more? Check out our Learning Center Article.