#CreatorPad

Parabolic SAR: Your Guide to Reading Market Trends

Parabolic SAR (Stop And Reverse) is a technical analysis tool that helps traders identify market trends and spot entry or exit points. It appears on charts as small dots above or below candlesticks.

Dots below price → bullish trend.

Dots above price → bearish trend.

The indicator tracks price movement in an accelerating manner. As a trend lasts longer, the dots move closer to price until a breakout or reversal occurs.

Key uses include:

1. Identifying the overall trend.

2. Setting a trailing stop-loss to protect profits.

3. Signaling potential trend reversals.

Caution is needed as the indicator may give false signals in sideways markets. Combining it with other tools like RSI or MACD is recommended for better accuracy.