Parabolic SAR

The Parabolic is an indicator devised by Welles Wilder in 1978. In its original formulation the Parabolic is a stop and reverse system, therefore always in the market, and for this reason it is called Parabolic SAR, where SAR indicates Stop and Reverse.
The Parabolic SAR produces a curve that resembles a section of a parabola and that normally lies below the price bars in a long trend, and vice versa in a short trend. This curve represents a level of trailing stop: when it is touched, the position on the market must be closed and reversed. The peculiarity of the calculation is to contain an acceleration factor that brings the curve ever closer to the price when there are new highs or new lows.