The Parabolic SAR or you can call it Parabolic Stop and Reverse is a trend-following indicator that helps traders to identify the upcoming possible trends and reversal points. You can easily find this indicator on the oscillator section of Binomo.
About Parabolic SAR ( Parabolic Stop & Reverse)
- J. Welles Wilder developed the Parabolic SAR indicator in the 70s. Wilder is also known for his contribution in developing the Relative Strength Index, and Average Directional Index.
- The Parabolic SAR appears in the technical chart as a series of dots that ribbons around the price.
- This indicator is a lagging indicator as it uses historical data to analyze the market.
- The indicator is calculated using an algorithm that factors in the asset’s price and time.
- The Parabolic SAR can be used to set stop-loss orders or to trail stops as the price moves in favor of a trader’s position.
- The Parabolic SAR is most effective in trending markets and may generate false signals in range-bound markets.
Parabolic SAR Formula
Uptrend PSAR = Prior PSAR + Prior AF ( Prior EP – Prior PSAR )
Downtrend PSAR = Prior PSAR – Prior AF ( Prior EP + Prior PSAR )
EP = Highest high for an uptrend and lowest low for a downtrend.
AF = AF or Acceleration factor which is default set to 0.02.
The Parabolic SAR uses the highest and lowest price of the security as well as AF ( Acceleration Factor ) to determine where the dots will appear.
How to Configure Parabolic SAR on Binomo
Then click on the trading tool icon which is on the left-hand side of the trading dashboard.
In the drop-down menu, select “Parabolic SAR” from the list of available indicators.
Once the Parabolic SAR dialogue box opens you can set the maximum AF and minimum AF based on your requirement. If you don’t like the colour of the indicator you can surely change it on your own and at last hit the apply button.
Well, now I hope you have understood how to set the Parabolic SAR on Binomo. As I have told you earlier configuring Parabolic SAR on Binomo is straightforward what you need to do is to follow the above steps in this article.
How to trade with Parabolic SAR on Binomo?
Traders can use the Parabolic SAR to determine their entry and exit points. when the dots are below the price, traders may look to buy or hold the asset, and when the dots are above the price, traders may consider selling or shorting the asset. The indicator can also be used to set stop-loss orders or to trail
Place buy trade with dots below
- When the dots are moving below the price, it signals an upcoming bullish trend and you can place a buy trade.
- However, you should place the buy trade when the distance between the dots and the price is good.
Place sell trade with dots above
- When the dots are moving above the price, it signals an upcoming bearish trend and you can place a sell trade.
- However, you should place the sell trade when the distance between the dots and the price is less.
Try the above indicator for free on the Binomo trading platform.