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Parabolic SAR (Stop and Reverse)

What is Parabolic SAR?​

Parabolic SAR, created by J. Welles Wilder, is a trend-following indicator used to identify trend direction, momentum, and potential reversal points.

The indicator plots dots above or below price:

  • Dots below price → suggest an uptrend.
  • Dots above price → suggest a downtrend.

When SAR dots flip from one side of price to the other, it generates a potential Stop and Reverse (SAR) signal — often used for exits or trailing stop-loss systems.

How to Add Parabolic SAR?​

  1. Click on the "+" button in the Indicators" section.
  2. Select Parabolic SAR.
  3. Choose the data source containing OHLC candle data.
  4. Configure Start, Increment, Maximum, Time Frame.
  5. Click "Add" to save the indicator.

Configurable Parameters in Parabolic SAR​

1. On Data (Source Selection)​

  • Parabolic SAR requires High and Low values from the candle data.
  • If multiple candle sources exist, select the dataset you want to calculate SAR on.
  • If no source is selected, the default Candle Data is used.

2. Time Frame​

  • Defines the timeframe used for SAR calculation.
  • Example: Setting 15 generates Parabolic SAR on 15-minute candles.

3. Start, Increment, Maximum (SAR Acceleration Controls)​

Parabolic SAR uses an internal value called the Acceleration Factor (AF). These three fields control how SAR behaves and how quickly it responds to price.

Start (Initial AF)​

This is the starting acceleration value when a new trend begins.

  • Typical default: 0.02
  • Lower value → SAR moves slowly, producing smoother signals.
  • Higher value → SAR reacts faster from the start.

Think of it as SAR’s initial speed.

Increment (Step Increase)​

Each time a new Extreme Point (EP) forms (highest high in uptrend / lowest low in downtrend), the AF increases by this amount.

  • Typical default: 0.02
  • Higher increment → SAR tightens quickly and flips sooner.
  • Lower increment → SAR stays smoother and avoids noise.

This acts like SAR’s acceleration pedal.

Maximum (Max AF Limit)​

AF is not allowed to grow indefinitely. The Maximum sets the upper limit.

  • Typical default: 0.20
  • Lower max → smoother SAR with fewer false flips.
  • Higher max → more aggressive SAR that hugs price tightly.

This is SAR’s speed limit.

Simple Understanding​

  • Start = how fast SAR begins
  • Increment = how quickly SAR speeds up as trend continues
  • Maximum = the fastest SAR is allowed to move

Together, they shape whether SAR behaves like:

  • A smoother, slower SAR → small Start, small Increment, small Max
  • A tighter, fast-reacting SAR → large Start, large Increment, high Max

Applying Parabolic SAR on Other Candle Types​

Parabolic SAR can be used on any dataset containing High and Low prices.

Example

Apply Parabolic SAR on Heikin-Ashi, Range Bars, or Renko-derived candles for alternative trend visualization.

Element Name​

Each Parabolic SAR instance is assigned a unique Element Name, which you can use inside conditions, comparisons, or strategy rules.

Use Cases for Parabolic SAR​

  • Trend Following
    → Consistent dots on one side confirm trend strength.

  • Exit Signals
    → SAR flips help define stop-loss exits.

  • Trailing Stops
    → SAR dots can be directly used as trailing stop values.

  • Reversal Detection
    → Dot-switching highlights momentum shifts.

Next Steps​

✅ Add Parabolic SAR to your strategy
✅ Use SAR flips for entry or exit confirmation
✅ Combine SAR with EMA, Supertrend, or ATR for enhanced accuracy
✅ Reference SAR direction inside Conditions & Actions