I have covered multiple indicators like RSI, Stochastic, and more and in most of them, one thing was common that they used a moving average line. But today, In this article, I am going to cover a very unique indicator that uses a series of dots which helps traders to analyze security trends and reversals.
What is Parabolic SAR?
Parabolic SAR, or Parabolic Stop and Reverse, is a technical indicator developed by J. Welles Wilder Jr. He is also the father of other popular indicators like RSI, ADX, and more. this indicator helps to determine the direction of an asset’s price. Parabolic SAR helps traders to determine when to enter and exit trades by displaying dots on the price chart.
The Parabolic SAR indicator consists of a series of dots placed either above or below the price of an underlying security. The dots are placed in such a way that they form parabolas, indicating the direction of the trend (upward or downward) and when it is likely to reverse.
How to add a Parabolic SAR indicator on the IQ Option chart?
Parabolic SAR is a useful indicator for traders because it can help them to identify trends and entry/exit points. To add Parabolic SAR to a chart on IQ Option, first, open the chart of the asset you want to trade.
Then select the Parabolic SAR option from the Indicators tab on the right side of the screen.
You can surely, change the colour of the dots and the period of the same. once, you are done with the final touch click apply.
How to trade with Parabolic SAR on IQ Option?
Trading with Parabolic SAR is very easy you just need to remember the golden rule of the indicator which is as follows:
When the Parabolic SAR dots are above the price go for a sell trade. As you can see above, the Parabolic dots are above the price which signals an upcoming bearish trend. however, the best time to place a sell trade is when there is a big gap between the price and the dots.
Similarly, when the Parabolic SAR dots are below the price go for the buy rate. As you can see above, Parabolic SAR dots are below the price which signals an upcoming bullish trend, however, the best time to place a buy trade is when we see a big gap between the price and the dots.
Try this trading indicator on the IQ Option demo account.