Stop And Reverse — a mechanical trailing stop that follows a trend from behind and flips position the moment it ends. A row of dots that closes the window for hesitation.
Parabolic SAR (Stop And Reverse) was introduced by J. Welles Wilder in New Concepts in Technical Trading Systems (1978) — the same volume that brought us RSI and ADX. It is the third corner of Wilder's 1978 trio, and the most ruthlessly mechanical of the three.
The name says everything. While a trend persists, a dot trails behind price; when price touches the dot, the position is to be stopped out and immediately reversed. The system never sits flat. From entry to exit, the indicator was designed to remove judgement from the act of riding a trend.
On a chart, as long as the trend continues, dots appear one by one above or below the candles. Their trajectory traces a parabola — the source of the name.
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