Parabolic SAR
The Parabolic SAR (Stop and Reverse) is a time and price-based technical analysis tool. It appears as a series of dots placed either above or below the price bars on a chart.
Dynamic Chart Demo
* This chart uses synthetic data to demonstrate the indicator's behavior in typical market conditions.
Core Usage
Advantages
- Excellent for trailing stops
- Clear entry/exit signals
- Works well in strong trends
Limitations
- Generates false signals in sideways markets
- Prone to whipsaws
- Lagging nature
Calculation Logic
Understanding the mathematical logic behind indicators helps you interpret signals more accurately and avoid misuse in unsuitable market environments.
Common Trading Strategies
PSAR & ADX
Using ADX to filter out low-volatility periods and only trade PSAR signals in strong trends.
PSAR Trailing Exit
Once you are in a trade, move your stop to the PSAR dot on every bar and exit when price closes through it. Because SAR accelerates as the trend matures, the stop tightens automatically and lets winners run.
Best For
"Strongly trending markets."
Note: Technical indicators are mathematical calculations based on historical price and volume. They should be used as part of a comprehensive trading system, not as a standalone entry signal.