V.13:4 (152-158): Sidebar: The Parabolic Trading System
Product Description
Sidebar: The Parabolic Trading System by Dennis Meyers
The parabolic time/price system was introduced by J. Welles Wilder in New Concepts in Technical Trading Systems. The trading concept itself is an automatic reversal system, in which the system always has a position that is either long the market or short the market. For example, the first entry for a long position occurs when the recent extreme high is violated, at which point the trailing stop and reverse (SAR) order is placed at the recent extreme low price. Each day, the SAR order will advance higher in price, slow at first and then more each day. If you were to chart the SAR order price level, it would resemble a parabola. If the sell SAR order were to be executed, then the buy SAR would be placed at the most recent extreme high, and each day the buy SAR is lowered, again slow at first but increasingly lower each day until the market moves above the buy SAR. Then the system is back long, with the new SAR trailing from the most recent extreme low price.
The parabolic time/price system was introduced by J. Welles Wilder in New Concepts in Technical Trading Systems. The trading concept itself is an automatic reversal system, in which the system always has a position that is either long the market or short the market. For example, the first entry for a long position occurs when the recent extreme high is violated, at which point the trailing stop and reverse (SAR) order is placed at the recent extreme low price. Each day, the SAR order will advance higher in price, slow at first and then more each day. If you were to chart the SAR order price level, it would resemble a parabola. If the sell SAR order were to be executed, then the buy SAR would be placed at the most recent extreme high, and each day the buy SAR is lowered, again slow at first but increasingly lower each day until the market moves above the buy SAR. Then the system is back long, with the new SAR trailing from the most recent extreme low price.
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