Parabolic indicator

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Parabolic indicator

A Technical Analysis strategy that uses a trailing stop and reverse method or "stop-and-reversal" to determine good exit and entry points. The Parabolic concept draws on the idea that time is an enemy, and unless a security can continue to generate more profits over time, it should be liquidated. [1] Wilders Parabolic may be used as a trailing stop loss based on prices tending to stay within a parabolic curve during a strong trend. [1] He found this when he reached for a straight edge to draw a trendline and grabbed a French curve instead. John Murphy recommends using a filter to complement the Parabolic system. [2]

14c parable, in which something is expressed in terms of something else. [2] The relation of an area to a straight line. [3]

References

  1. J. Welles Wilder, Jr. (June 1978). New Concepts in Technical Trading Systems. Greensboro, NC: Trend Research. ISBN 978-0894590276
  2. Technical Analysis of the Financial Markets: A Comprehensive Guide to Trading Methods and Applications ISBN-10: 0735200661
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