Up until now we have been talking about the stuff that can seem a little too difficult for some.
Imagine a candle chart. Imagine that we see the price moving down. And now, put the dots right above the down movement, you can pretty much do the same thing with the up-movement of the chart. Just put dots right below – if the chart is going up, or above – if the chart is going down. And voila – there you have it. A parabolic SAR.
But, of course, just like with any other indicators and trading tools there is a downside to it.
It can’t be used in the jumpy market, as SARs are mostly used for determining the trends. If used in the markets without long down- and up-trends this chart can ring any trader to a loss, as it is going to identify the trend that is not really there.
So, better used in the markets with really long trends, you hear?
It is indeed extremely simple to use and see.