What is Parabolic SAR?
Parabolic SAR draws a dot on every bar, below price in an uptrend and above it in a downtrend. Each bar the dot moves towards the most extreme price of the trend, and the step it takes grows as the trend makes new extremes. When price crosses the dot, the trend is treated as reversed and the dots jump to the other side.
Parabolic SAR gives a trailing level that tightens over time. It assumes the market is always in a trend, so it does not tell you whether a trend exists or how strong it is.
How to use Parabolic SAR
- Dots below or above. Dots under the candles mean the indicator is in an uptrend, dots above mean a downtrend.
- The flip. When price trades through the dots, they switch sides. That is the stop-and-reverse the name refers to.
- Acceleration. The longer a trend keeps making new extremes, the faster the dots close in. A stalling move therefore gets caught sooner than one that keeps extending.
- As a trailing stop. The dots only move in the trend's direction until a flip, which is why they are often used as a trailing stop level.
These are ways to read the dots, not entry signals on their own.
Settings
| Setting | Default | What it changes |
|---|---|---|
| Start | 0.02 | The acceleration factor at the start of each trend. Higher makes the dots close in faster from the outset. Range 0.001 to 1. |
| Increment | 0.02 | How much the acceleration factor grows each time the trend makes a new extreme. Higher tightens sooner. Range 0.001 to 1. |
| Maximum | 0.2 | The cap on the acceleration factor. Lower keeps the dots further back in long trends. Range 0.001 to 10. |
Adjust the acceleration settings in the indicator settings.
Calculation
Each bar, the SAR moves a fraction of the way from its previous value towards the extreme point, the highest high of an uptrend or the lowest low of a downtrend. That fraction is the acceleration factor, af:
SAR = previous SAR + af * (extreme point - previous SAR)
uptrend: SAR is held no higher than the lows of the previous two bars
downtrend: SAR is held no lower than the highs of the previous two bars
new extreme point: af = min(af + 0.02, 0.2)
price crosses SAR: trend reverses, SAR jumps to the extreme point,
af resets to 0.02The two-bar limit keeps the dots out of the recent range, so they cannot sit inside the candles and flip early. On a reversal the new SAR is placed at the prior trend's extreme, or the current bar's extreme if that is further.
The first trend is decided on the second bar by whether its close is above or below the first bar's close, with the first bar's low or high as the starting SAR. So the first bar has no dot.
The values are drawn as dots rather than a line, because consecutive values sit on opposite sides of price across a flip and a joining line would mean nothing.
Limitations
- It is always in a trade. There is no neutral state, so in a sideways market the dots flip back and forth and every flip looks like a signal.
- Acceleration can cut good trends short. In a long trend with a deep pullback, the dots may have closed in far enough that the pullback alone flips them.
- It ignores volatility. The step size depends only on the settings and the trend's length, not on how far the market normally moves.
- History affects it. Each value depends on every earlier bar, so a chart with more history loaded can show different dots until the two versions flip at the same point.
- The live candle can flip. Price crossing the dots during a live bar flips them, and the flip only settles once the bar closes.
Frequently asked questions
Parabolic SAR, short for stop and reverse, is a trend-following indicator that plots dots trailing price. The dots move towards the trend's extreme by an accelerating fraction each bar, and switch sides when price crosses them.
Dots below the candles mean the indicator is in an uptrend, dots above mean a downtrend. A flip to the other side marks a reversal by its rules. Traders often use the dots as a trailing stop, and pair them with an indicator such as [Directional Movement](/library/indicator/directional-movement) that measures whether a trend is present at all.
Yes. The indicator declares three inputs: Start, default 0.02, from 0.001 to 1; Increment, default 0.02, from 0.001 to 1; and Maximum, default 0.2, from 0.001 to 10. Open the indicator's settings on the chart to change them.
Closed bars are not revised. The dot on the live bar moves with price and can flip sides before the bar closes, so a flip is only confirmed at the close. Because each dot depends on all earlier bars, loading older history can also change the dots until the next flip that both versions share.
Both trail price and switch sides on a reversal. Parabolic SAR tightens with time as the trend extends, regardless of volatility. SuperTrend keeps its distance as a multiple of the average true range, so it widens when the market becomes more volatile.
Use the Add to chart button at the top of this page. It opens BTC/USDT on Binance in the Altrady Charts terminal with the built-in Parabolic SAR already applied. On any other market, open the indicator picker on the chart and choose Parabolic SAR from the Trend group.