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Forex indicators How do you use the parabolic sar indicator?
avatar stepped_deer
Question by: stepped_deer - 05 Dec 2017, 07:27:59
How do you use the parabolic sar indicator?
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Answers (1)
avatar user 12880
Answer by: Gesha - 15 Feb 2018, 15:44:07

The Parabolic SAR indicator identifies possible points of a trend reversal. The outstanding feature of this indicator is that it shows the exit point but not the entry points. The indicator is added to a price chart and looks like a parabola. Besides, it has some similarities to a moving average, but differs in that it moves faster and changes its position relating to the price. If the Parabolic values are below the price level, then the trend is bullish, while the Parabolic values above the price level indicate the bearish trend. For example, if the euro-dollar pair is in the upward trend, the price goes below the Parabolic line, the indicator reverses, and its following values are found above the price line. Thus, the indicator provides a signal about deceleration of a trend, suggesting that traders fix profits on their buy trades. When the trend is downwards, the price moves above the Parabolic line, the indicator reverses, and the trend slows down, signaling that it is time to fix profits on sell trades. This technical indicator can also be used as a trailing stop. For example, a trader opens a buy deal, and both prices and profits rise along with the Parabolic. At that moment, the indicator shows at what distance a stop loss should be shifted. With the buy deals it works in the same way.

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