P
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Key Takeaways

Difficulty:Beginner
Reliability:Moderate
Category:trend
Timeframes:1H, 4H, Daily

Parabolic SAR

trendšŸ“Š 1H, 4H, Daily

Stop and Reverse indicator that provides potential entry/exit points and trailing stop levels.

Formula

Code
SAR(n+1) = SAR(n) + AF Ɨ (EP - SAR(n))
AF = Acceleration Factor (0.02-0.20)
EP = Extreme Point

Detailed Explanation

Parabolic SAR (Stop and Reverse) was developed by J. Welles Wilder to identify trend reversals and provide trailing stop levels.

**Key Features:** - Dots appear below price in uptrends - Dots appear above price in downtrends - Dots accelerate as trend continues - Flip in dots signals potential reversal

Parameters

AF Start
Default: 0.02
Initial acceleration factor
AF Max
Default: 0.20
Maximum acceleration factor

šŸ“ˆ Bullish Signals

SAR flips from above to below price

šŸ“‰ Bearish Signals

SAR flips from below to above price

Python Implementation

Parabolic SAR calculation

Python
import pandas_ta as ta
df['PSAR'] = ta.psar(df['high'], df['low'], df['close'])['PSARl_0.02_0.2']

TradingView Pine Script

Try on TradingView
JavaScript
//@version=5
indicator("Parabolic SAR", overlay=true)
psar = ta.sar(0.02, 0.02, 0.2)
plot(psar, "PSAR", style=plot.style_circles, color=color.blue)
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MT5 MQL5 Code

C++
int psar_handle = iSAR(_Symbol, _Period, 0.02, 0.2);
double psar[];
CopyBuffer(psar_handle, 0, 0, 3, psar);

Python Libraries

pandas-ta
Technical analysis
pip install pandas-ta

Common Mistakes

āœ—Using in ranging/choppy markets
āœ—Ignoring other trend confirmations

Confirmation Signals

ADX above 25
Price action
Volume

Best For

Trailing stopsTrend reversal signalsEntry/exit timing

šŸ’” Pro Tips

  • ā€¢Works best in trending markets
  • ā€¢Generates many false signals in ranging markets
  • ā€¢Use as trailing stop rather than sole entry signal
Last updated: December 29, 2024

Educational Disclaimer

This content is for educational purposes only and does not constitute financial or investment advice. Trading involves significant risk and you may lose your capital. Always consult a licensed financial advisor before making investment decisions.

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Investopedia - Technical IndicatorsBabyPips - Technical IndicatorsMetaTrader 5 Docs

Frequently Asked Questions

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