TAILIEUCHUNG - Technical Analysis from A to Z Part 6

The Parabolic Time/Price System, developed by Welles Wilder, is used to set trailing price stops and is usually referred to as the "SAR" (stop-and-reversal). This indicator is explained thoroughly in Wilder's book, New Concepts in Technical Trading Systems. | OQUIS A REUTERS Company Your shopping cart is empty Purchase Equis Products Online Products Support Events Partners Company Search Tips Search for Go Technical Analysis from A to Z Preface Acknowledgments Terminology To Learn More PART ONE Introduction to Technical Analysis PART TWO Reference A-C D-L M-O P-S Parabolic SAR Patterns Percent Retracement Performance Point Figure Positive Volume Index Price and Volume Trend Price Oscillator Price Rate-of-Change Public Short Ratio Puts Calls Ratio Quadrant Lines Relative Strength Comparative Relative Strength Index Renko Speed Resistance Lines Spreads Standard Deviation STIX Stochastic Oscillator Swing Index T-Z Bibliography About the Author Technical Analysis from A to Z by Steven B. Achelis PARABOLIC SAR Overview The Parabolic Time Price System developed by Welles Wilder is used to set trailing price stops and is usually referred to as the SAR stop-and-reversal . This indicator is explained thoroughly in Wilder s book New Concepts in Technical Trading Systems. Interpretation The Parabolic SAR provides excellent exit points. You should close long positions when the price falls below the SAR and close short positions when the price rises above the SAR. If you are long . the price is above the SAR the SAR will move up every day regardless of the direction the price is moving. The amount the SAR moves up depends on the amount that prices move. Example The following chart shows Compaq and its Parabolic SAR. Formula Primer User Groups Educational Products Training Partners Related Link Traders Library Investment Bookstore You should be long when the SAR is below prices and short when it is above prices. The Parabolic SAR is plotted as shown in Wilder s book. Each SAR stop level point is displayed on the day in which it is in effect. Note that the SAR value is today s not tomorrow s stop level. Calculation It is beyond the scope of this book to explain the calculation of the Parabolic SAR. Refer to Wilder s book

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