In stock trading, a parabolic indicator is a technical analysis strategy that uses a trailing stop and reverse method, called stop-and-reversal (SAR), to recognize profitable entry and exit points. It was developed by J. Wells Wilder.
Parabolic SAR is represented on the chart below via the purple dots. When prices are below PSAR (orange ovals) it indicates it's a good time to sell. When prices are above PSAR (green ovals) it indicates it's a good time to buy.
Here's an example of PSAR taken straight from our Live Trading Room, aka The Tank:
Related terms: Target, Arms Index (TRIN), Market Breadth, Bollinger Bands, Fibonacci Retracements, RSI, Geometric vs. Functional Indicators, Volatility, Penny Stock