What is the technique of following a PSAR indicator?

<p>Reading Parabolic SAR is simple and straightforward. When the parabolas (dots) are below price candlesticks, it denotes a bull market and traders should seek opportunities to place buy orders; whereas when the parabolas are above price candlesticks, it implies a bear market and traders should seek opportunities to place short sale orders. As a rule of thumb, a trend reversal can be confirmed when three consecutive parabolas form on the opposite side. For instance, during an uptrend, a trend reversal would be confirmed after three consecutive parabolas print on top of the price action.</p>

<p id="isPasted">The technique of following the Parabolic SAR (PSAR) indicator involves using the position of its dots relative to the price to determine trend direction, identify potential reversals, and set dynamic stop-loss levels. This trend-following indicator is most effective in strongly trending markets and should be used with caution in sideways or choppy markets, where it can produce unreliable signals.&nbsp;</p><p><strong>Interpreting PSAR signals</strong></p><p><em>Identify the trend: The position of the PSAR dots directly indicates the trend direction.</em></p><ul><li>Bullish signal: When the PSAR dots are below the price bars, it signals an uptrend. Traders should look for opportunities to buy or hold a long position.</li><li>Bearish signal: When the PSAR dots are above the price bars, it indicates a downtrend. This is a signal to sell or hold a short position.</li></ul><p><em>Spot a reversal: A potential trend reversal occurs when the dots "flip" from one side of the price to the other.</em></p><ul><li>If the price falls below the PSAR dots during an uptrend, the dots will move above the price, indicating a potential reversal to a downtrend.</li><li>If the price rises above the PSAR dots during a downtrend, the dots will move below the price, signaling a potential reversal to an uptrend. </li></ul>