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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 0.20
EP = extreme point (the high in an uptrend, the low in a downtrend)
Reversal: when price crosses SAR
TriggerDirectionConditionDescription
Parabolic reversal up🟢 BuyParabolic 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🔴 SellParabolic 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🟢 BuyPrice crossed the indicator line from below to above.The closing price crossed the indicator line from below to above.
Price crosses line down🔴 SellPrice 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🟢 BuyThe 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🔴 SellThe closing price is below the indicator line.The closing price is below the indicator line.