Back to LibraryApplied by 2.4k+ traders
Trend Indicators
Parabolic SAR
The Parabolic SAR (Stop and Reverse) is a time and price-based technical analysis tool. It appears as a series of dots placed either above or below the price bars on a chart.
Dynamic Chart Demo
Indicator Line Price
* This chart uses synthetic data to demonstrate the indicator's behavior in typical market conditions.
Core Usage
Trailing Stop-Loss: Used to set exit points as the trend progresses.
Trend Identification: Dots below price indicate uptrend, above indicate downtrend.
Reversal Signals: When price crosses the dots, it signals a potential trend change.
Advantages
- Excellent for trailing stops
- Clear entry/exit signals
- Works well in strong trends
Limitations
- Generates false signals in sideways markets
- Prone to whipsaws
- Lagging nature
Calculation Logic
SAR_{n+1} = SAR_n + α (EP - SAR_n)
Understanding the mathematical logic behind indicators helps you interpret signals more accurately and avoid misuse in unsuitable market environments.
Common Trading Strategies
Strategy 1
PSAR & ADX
Using ADX to filter out low-volatility periods and only trade PSAR signals in strong trends.
S1
S2
S3
BUY
SELL
Signal simulation for: PSAR & ADX
Buy
Sell
Best For
「Strongly trending markets.」
Note: Technical indicators are mathematical calculations based on historical price and volume. They should be used as part of a comprehensive trading system, not as a standalone entry signal.