In this video, we will learn about the Parabolic SAR indicator. This is a very popular indicator that does not use lines on the chart. It is used by range traders and trend traders alike, although it is widely used by trend traders. It provides long-term entries by spotting entry and exit signals. The Parabolic SAR starts with a dot underneath the price. The longer the dot remains underneath the price, the dots move exponentially racing up to catch with the individual bar's lows formed in the market. When the low touches the dot formed on the last bar, at the precise moment when the bar's low touches the dot on the last bar, the dot flips. The dot is now above the price. That is a valid sell signal.
The indicator gives you an always in the market reading either long or short. All of the signals alternate purely back and forth between buy signals and sell signals. The way to use this in a trending strategy is as basic as the indicator. Buy when the dot flips below the price, sell when the dot flips above the price. We can edit the parameters of this indicator. The parameters are step and the maximum.