Trend-following indicator
Parabolic SAR
Dots that trail price and flip to signal trend reversals.
What is Parabolic SAR?
The Parabolic SAR (Stop and Reverse), from J. Welles Wilder, plots dots above or below price that trail the trend and flip to the other side when the trend reverses. It's used both for direction and as a built-in trailing stop.
How it works
In an uptrend the SAR sits below price and rises, accelerating as the trend extends; when price touches it, the SAR flips above price and the trend is considered reversed. The acceleration factor controls how quickly it tightens. Like all trend tools it whipsaws in ranges.
How traders use it
- ▸Direction: SAR below price = bullish, above = bearish.
- ▸Trailing stop: exit when price hits the SAR.
- ▸Entries: trade the flip, ideally with a trend filter.
- ▸Combine with ADX to avoid range-bound whipsaws.
Build Parabolic SAR without code in Algovex
Parabolic SAR is a node in Algovex with its flip events exposed, use it for entries or as a trailing stop, backtest, and export.
Key parameters
| Parameter | What it does |
|---|---|
| step | Acceleration factor step (commonly 0.02). |
| max | Maximum acceleration factor (commonly 0.2). |
Frequently asked questions
Is Parabolic SAR good for trailing stops?
Yes, because the dots trail price and tighten as a trend extends, many traders use the SAR as a dynamic trailing stop, exiting when price touches it. Algovex exposes the SAR flips so you can both enter and trail with it.