The Parabolic SAR or Parabolic Stop and Reverse, not only helps you identify trends, but it also tells you when to close out your trade and reverse the direction, as the full name implies. Doesn't that sound very useful?

J. Welles Wilder, a commodities trader, and a hugely influential technical analyst developed a number of trading techniques, including the Parabolic SAR.

On a price chart, the indicator draws a curved pattern that describes potential stop and reverse levels. The pattern's shape reminded Wilder of the parabolic curve found in classical geometry and mechanics, hence the indicator's name.

The Parabolic SAR (Stop and Reverse) is a technical indicator used in trading to identify potential trend reversals and entry/exit points. Developed by J. Welles Wilder, it is plotted as dots above or below price action on a chart. When the dots are below the price, it suggests an uptrend; when they're above, it indicates a downtrend. As prices move, the dots follow, acting as a dynamic stop-loss.

Traders use Parabolic SAR to confirm trend direction and determine when to exit or reverse positions. However, it works best in trending markets and can produce false signals in sideways or choppy conditions. Combining it with other indicators, like moving averages, can improve reliability in making trading decisions.