SAR dots below price suggest:

Uptrend. Dots below price show an uptrend.

Parabolic SAR fails mostly in:

Ranges. Ranges cause false flips.

Trailing stop. It trails price.

Parabolic SAR

A trailing stop-and-reverse system plotted as dots.

Parabolic SAR places dots above price in a downtrend and below in an uptrend. The dots accelerate toward price as the trend extends. When price touches a dot the indicator flips.

It works as a trailing stop in clean trends and gives many false flips in ranges. Pair it with ADX to avoid trading it when the market is flat.

Settings can be adjusted. Smaller steps give tighter trailing.

Key takeaways

Dots trail price and flip on contact
Good trailing stop in trends
Many false flips in ranges

Quiz

SAR dots below price suggest: Answer: Uptrend. Dots below price show an uptrend.
Parabolic SAR fails mostly in: Answer: Ranges. Ranges cause false flips.
A good use is as a: Answer: Trailing stop. It trails price.

Educational content, not financial advice.