parabolic

[dsinvestmentllc]

In the parabolic sar study what does the start setting, increment and max settings each do? Or how do they affect the chart?
Is the GET version with its fine tuning any better?

[eSignal_JasonK]

Hello dsinvestmentllc,

To get the best understanding of the inputs and calculation for this study, I would suggest purchasing Welles Wilder's book, New Concepts in Technical Trading Systems.

However, I did find some information about the inputs written by a Doug Schaff at FXstreet.com. Aside from the specific details of the calculations, this is the best description of the inputs I've found.

Parabolic was developed by Welles Wilder Jr. initially as a “Stop And Reverse” indicator and suggested that trades were implied by the parabolic moving above or below price. However, it is probably better utilized as a trailing stop in a trending move.

The Parabolic takes into account the relationship between a price and time, using this relationship to determine acceleration of the parabolic. This is determined by an acceleration factor that starts at 0.02 (or the input acceleration factor as inserted by the user) and increases by the same amount every time a new price extreme is reached (a new high in an uptrend or a new low in a downtrend). The difference between price and the previous parabolic is then used to calculate the parabolic for the next bar. The acceleration factor increases until it reaches a “maximum step” defaulted to 0.20. Once price touches the parabolic, the position of the parabolic reverses and begins at the extreme of the previous move. (the highest high in a reversal from a move higher or the lowest low in a reversal after a move lower. - Doug Schaff

As for the GET version, I think it is up to the individual to determine which better suits your personal preferences.