Technical Analysis 101

[4Godnwv]

Susie re: Parabolic SAR -

The simple explaination is found in the acronymn.

SAR stands for stop-and-reversal

Have you ever used trailing stops?
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Rather than a fixed point "sell at $2.35", they use a moving number "sell at .15 below the point at which this stock stops going up".

Before trailing stops if you owned a stock that had a pps of $2.00 and wanted to protect against a loss, you had to pick a sell point - let's say a .15 loss or $1.85 - even if that stock ran to $2.50 it would have to then fall back to $1.85 before triggering your sell order.

With a trailing stop if you have a stock that the current pps is at $2.00 you could put in a trailing stop @ .15 and as long as the pps continued to run it would NOT be triggered. It could run to $2.50 and then fall off - when it reached $2.35 it would trigger your .15 trailing stop order.

You can also do this with a percentage - "sell anytime this stock falls 7%"
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The Parabolic SAR is an indicator that acts as a visual trailing stop for long or short positions.

If the trend is up, buy when the indicator moves below the price.

If the trend is down, sell when the indicator moves above the price.