Parabolic SAR
Original schematic showing the guide's principal visual relationships.
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.
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.