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Parabolic SAR Analysis & Parabolic SAR Signals

Created by J. Welles Wilder.

The Parabolic SAR technical indicator is used to set trailing price stop losses. This indicator is usually and generally referred to as the "SAR" (stop-and-reversal) and it is used to follow the price action closely.

  • In an Uptrend, the stop and reversal will trail below the market trading price
  • In a downward trend, the stop and reversal will trail above market price

Parabolic SAR Technical Indicator Analysis - XAUUUSD Trading Parabolic SAR Technical Indicator MT4

Analysis and Generating Trade Signals

This indicator calculates and provides excellent exit points.

Exit Trading Signal for Buy trade transactions

Traders should close long trades when the price drops below the technical indicator.

If you are trading long i.e. The price is above the stop and reversal, the SAR trading indicator will move up each day, regardless of the direction which the price action is going. The movement of technical indicator depends on number of pips that the prices move. When the Parabolic SAR trading indicator changes the direction then the price trend also changes to down. This generates the exit trade signal for the long trade transactions.

Exit Trade Signal for Sell trades

Traders should close short trades when the price rises above the technical indicator.

If you are trading short i.e. The price is below the stop and reversal, the SAR will move down every day, regardless of the direction which the price action is moving. The movement of technical indicator depends on number of pips that the prices move. When the Parabolic SAR indicator changes the direction then the price trend also changes to up. This generates the exit trade signal for the short trades.

Parabolic SAR Indicator Analysis - XAUUUSD Trading Parabolic SAR Indicator MetaTrader 4

Exit Trade Signal for Buy & Sell trades

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