Parabolic Stop and Reverse


Parabolic Stop and Reverse indicator more commonly known as PSAR was developed by Welles Wilder and introduced in 1978.

It comprises of three main components:

  1. The previous SAR value
  2. Extreme point, which is the highest point of the current trend
  3. Acceleration factor, which is 0.02 and increases by 0.02 each time the extreme point moves to a new high in an uptrend or a new low in a downtrend.

When the price is rising in an uptrend, the PSAR appears below the price and it trails the price in time and when the price is in a downtrend, the PSAR appears above the price and it trails the price in time.

PSAR indicator is a trending indicator and can be used effectively in any time frame to identify a change in trend. It is also used by many to trail a stop loss.

PSAR is a very popular indicator and is used by many traders to successfully execute trades.

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