Parabolic SAR
A trailing stop with reversal: it switches when price crosses the SAR value. Parabolic SAR (Stop and Reverse) plots dots above price in a downtrend and below it in an uptrend. When price crosses the SAR dots, it signals a possible trend change. The acceleration factor (AF) starts at 0.02 and increases as new extremes are made.
Formula:
SAR_next = SAR + AF * (EP - SAR)AF starts at 0.02, increases by 0.02 with each new EP, maximum 0.20EP = extreme point (the high in an uptrend, the low in a downtrend)Reversal: when price crosses SARTriggers
Section titled “Triggers”| Trigger | Direction | Condition | Description |
|---|---|---|---|
| Parabolic reversal up | 🟢 Buy | Parabolic SAR changed direction upward — the start of an uptrend. | Parabolic SAR switched from bearish mode (dots above price) to bullish (dots below price). Signals the start of an uptrend. |
| Parabolic reversal down | 🔴 Sell | Parabolic SAR changed direction downward — the start of a downtrend. | Parabolic SAR switched from bullish mode (dots below price) to bearish (dots above price). Signals the start of a downtrend. |
| Price crosses line up | 🟢 Buy | Price crossed the indicator line from below to above. | The closing price crossed the indicator line from below to above. |
| Price crosses line down | 🔴 Sell | Price crossed the indicator line from above to below. | The closing price crossed an arbitrary indicator line (MA, Supertrend, etc.) from above to below. |
| Price above line | 🟢 Buy | The closing price is above the indicator line. | The closing price is above the indicator line (MA, Supertrend, etc.). Reflects the current position of price relative to the trend line. |
| Price below line | 🔴 Sell | The closing price is below the indicator line. | The closing price is below the indicator line. |
