Parabolic SAR
Original schematic showing the guide's principal visual relationships.
SAR(next) = SAR(current) + acceleration factor × [extreme point − SAR(current)].
Formula and components
Trailing stop points that accelerate toward price as a directional move persists.
SAR(next) = SAR(current) + acceleration factor × [extreme point − SAR(current)].
How it works
The indicator transforms price, range, or volume observations over a selected lookback. Shorter settings react faster but create more noise; longer settings respond more slowly and emphasize the underlying regime. Always compare the reading with price structure and timeframe.
How to read it
Dots below price indicate an upward state and dots above indicate a downward state. A side switch marks a stop-and-reverse event.
Practical example
During an orderly advance, SAR dots remain below price and accelerate upward. A dot switching above price marks a stop-and-reverse event, but repeated switches in a narrow range show why SAR needs a trend filter.
Confirmation checklist
Use slope, price position, and agreement across more than one lookback. A trend reading is more reliable when price structure and directional strength point the same way.
Limitations and false signals
The accelerating design performs poorly in ranges, where frequent side changes create whipsaws.
Limitations and false signals
Frequently asked questions
What does this pattern or indicator describe?
Trailing stop points that accelerate toward price as a directional move persists.
How should the signal be confirmed?
Dots below price indicate an upward state and dots above indicate a downward state. A side switch marks a stop-and-reverse event. Use slope, price position, and agreement across more than one lookback. A trend reading is more reliable when price structure and directional strength point the same way.
What can cause a false signal?
The accelerating design performs poorly in ranges, where frequent side changes create whipsaws.