Purpose of the Parabolic SAR
The Parabolic SAR (Stop And Reverse), developed by J. Welles Wilder, places a dot below price in an uptrend and above price in a downtrend. The dots move closer to price as the trend continues. When price crosses the dot, the SAR flips to the other side, signalling a possible reversal.
How It Works
When you select Parabolic SAR in the Trade Rule block, you can configure it with the following settings:
Step of Parabolic SAR
How fast the SAR speeds up as the trend continues (standard: 0.02).
Higher values make the SAR follow price more closely.
Maximum of Parabolic SAR
The maximum speed the SAR can reach (standard: 0.2).
Time Frame of Parabolic SAR
Sets the chart time frame for the Parabolic SAR calculation.
Can be replaced with a variable or input for quick testing and optimization.
Candle ID of Parabolic SAR
Defines which candle the calculation starts from.
0: Current candle (still forming).
1: Most recently closed candle.
Higher IDs refer to older candles.
Adjust of Parabolic SAR (Modify the Result)
Apply an adjustment to the calculated value by adding, subtracting, multiplying, or dividing by a number.
Example
If you set:
Step: 0.02
Maximum: 0.2
Candle ID: 1
You get the Parabolic SAR value of the most recently closed candle. If it is below the close, the SAR indicates an uptrend.
Use Cases
Detect the trend direction: SAR below price is bullish, above price is bearish.
Use the SAR as a trailing stop-loss that moves with the trend.
Combine with the ADX to use SAR signals only in trending markets.
Can also be used as a Custom level stop-loss or take-profit, as a pending-order price, and as the Modify SL/TP reference price.
⚠ Tip: The Parabolic SAR works best in trending markets. In sideways markets it flips often, so combine it with a trend-strength filter.