Parabolic SAR – The shadow that guards your profit

Have you ever experienced seeing a nice profit melt away in just a few minutes just because you waited too long "in ambush" hoping for more? Parabolic SAR was invented just for us, those who need a clear signal that tells us: "That's it, it's over, take your money and leave!"

It is #NexusBull and today we are talking about the points that bring order to chaos: #SAR

What is SAR, in our language?

Imagine that the price is a thief trying to escape with a bag of money, and Parabolic SAR is his shadow. As long as the thief runs fast (the price rises), the shadow quietly stays under him and follows him.

But the SAR is an impatient shadow. The longer time passes, the closer it gets to the thief's feet. If the thief gets tired and slows down or takes a wrong step back, he steps on his own shadow. At that moment, the 'points' jump above him and block him.

How do we read it, on Spot?

We are not looking for the adrenaline from Futures, we are looking for the moment to close the stall and go home with the profit.

Points below the candles: It's our calm. As long as the points are low, the trend is alive and pushes you from behind. Stay calm in your position.

Points above the candles: It's the alarm signal. When the first point appears above, it's over with the 'bullish'. On Spot, this means: 'Take the profit and step aside'. There's nothing more for you to look for there.

The impatience of the points: You will notice that as the price rises, the points get closer and closer. That's their job: to force you to exit if the market gives the slightest sign of fatigue.

The trap you must not fall into

The SAR is brilliant when the market moves clearly up or down. But if the price 'lags' and moves sideways (crab market), these points go crazy. They will jump from top to bottom like fleas, giving you false signals every hour. If you try to play according to them when the market is stagnant, you will eat up your capital on fees.

NexusBull's advice: Do not enter the market JUST because a point has appeared below. Use it as a guardian of profit. Enter based on other indicators (RSI or Moving Averages), but exit when the SAR 'cuts your path' and jumps above the price.

My conclusion? Parabolic SAR helps you not to be the last one to turn off the light at the party. It's better to leave with 5% less profit, but with money in your pocket, than to remain 'hanging' at the top.

Do you have the patience to wait for the exit signal or does your finger itch to sell at the first red? 👇#BinanceAcademy