Parabolic Sar Calculator
Calculate Parabolic Stop and Reverse levels for trailing stop and trend reversal detection. Enter values for instant results with step-by-step formulas.
Calculator
Adjust values & calculateSAR History (Last 10)
Formula
Where AF is the Acceleration Factor (starts at 0.02, increases by 0.02 each time a new Extreme Point is reached, max 0.20), and EP is the Extreme Point (highest high in uptrend, lowest low in downtrend). When price crosses the SAR level, the indicator reverses direction.
Last reviewed: December 2025
Worked Examples
Example 1: Parabolic SAR Uptrend Calculation
Example 2: SAR Reversal Signal
Background & Theory
The Parabolic Sar Calculator applies the following established principles and formulas. Foreign exchange markets facilitate the conversion of one currency into another and serve as the largest and most liquid financial markets in the world, with daily turnover exceeding seven trillion US dollars. Exchange rates are quoted as currency pairs, expressing the price of one unit of a base currency in terms of a quote currency. For example, a EUR/USD rate of 1.0850 means one euro buys 1.0850 US dollars. The smallest standardized price movement in most pairs is the pip, typically the fourth decimal place, with a value of 0.0001 per unit for USD-denominated pairs. The bid price is the rate at which a dealer will buy the base currency, while the ask price is the rate at which it will sell. The spread between bid and ask represents the dealer's compensation and varies with liquidity and volatility. Leverage amplifies both gains and losses by allowing traders to control positions larger than their deposited margin. A 100:1 leverage ratio means a one-percent adverse move eliminates the entire margin, making position sizing and risk management critical. Two parity conditions from international economics anchor exchange rate theory. Purchasing Power Parity (PPP) holds that exchange rates should adjust over time so that identical goods trade at equivalent prices across countries: S = P_d / P_f, where S is the spot rate and P_d and P_f are domestic and foreign price levels. PPP performs well over long horizons but poorly in the short run due to trade barriers, non-tradable goods, and capital flows. Covered Interest Rate Parity (CIRP) is a near-arbitrage condition stating that forward exchange rate premiums or discounts exactly offset interest rate differentials between two currencies: F/S = (1 + r_d) / (1 + r_f). Deviations from CIRP create riskless arbitrage opportunities that traders rapidly eliminate. Uncovered Interest Rate Parity posits that high-yielding currencies should depreciate to offset their interest advantage, though empirical evidence is mixed and the carry trade — borrowing in low-rate currencies to invest in high-rate ones — has generated persistent returns.
History
The history behind the Parabolic Sar Calculator traces back through the following developments. For much of the nineteenth century and early twentieth century, the international monetary system operated under the classical gold standard, under which each participating currency was fixed to a defined weight of gold, making bilateral exchange rates effectively constant. The system provided price stability and facilitated global trade but constrained governments' ability to respond to economic downturns. World War One shattered the gold standard as nations suspended convertibility to finance wartime expenditures. The interwar period saw attempts to restore gold convertibility, most notably the British return to the gold standard in 1925 at the pre-war parity, a decision criticized by John Maynard Keynes as deflationary. The Great Depression forced widespread currency devaluations and the effective collapse of the international gold standard by the early 1930s. The Bretton Woods Conference of July 1944 established a new order in which member currencies were pegged to the US dollar, while the dollar alone was convertible into gold at 35 dollars per troy ounce. The International Monetary Fund and World Bank were created at the same conference to oversee the system. Bretton Woods delivered exchange rate stability during the postwar growth era but came under strain as US deficits and European dollar accumulation outpaced American gold reserves. On August 15, 1971, President Nixon announced the suspension of dollar-gold convertibility — the so-called Nixon Shock — effectively ending the Bretton Woods system. By 1973, major currencies had transitioned to floating exchange rates determined by market supply and demand, a regime that has persisted. On September 16, 1992, hedge fund manager George Soros shorted the British pound against the European Exchange Rate Mechanism constraints, forcing the UK's withdrawal in what became known as Black Wednesday. Electronic trading platforms emerged in the 1990s and 2000s, replacing voice-brokered interbank markets and dramatically reducing transaction costs for institutional and retail participants alike.
Frequently Asked Questions
Formula
SAR(next) = SAR(current) + AF x (EP - SAR(current))
Where AF is the Acceleration Factor (starts at 0.02, increases by 0.02 each time a new Extreme Point is reached, max 0.20), and EP is the Extreme Point (highest high in uptrend, lowest low in downtrend). When price crosses the SAR level, the indicator reverses direction.
Worked Examples
Example 1: Parabolic SAR Uptrend Calculation
Problem: Current SAR is 152.00, AF is 0.04, EP is 161.00. Calculate the next SAR value.
Solution: SAR(next) = SAR(current) + AF x (EP - SAR(current))\nSAR(next) = 152.00 + 0.04 x (161.00 - 152.00)\nSAR(next) = 152.00 + 0.04 x 9.00\nSAR(next) = 152.00 + 0.36\nSAR(next) = 152.36\nSince this is an uptrend, SAR must be at or below the lowest low of the prior two periods.\nIf prior lows were 155 and 157, SAR stays at 152.36 (below both).
Result: Next SAR: 152.36 | Trend: Uptrend | AF: 0.04 | Trailing stop moves up by 0.36
Example 2: SAR Reversal Signal
Problem: In an uptrend, SAR is at 159.50 and the current period low is 158.00. AF was 0.08, EP was 162.00. What happens?
Solution: Price low (158.00) < SAR (159.50) = Reversal triggered\nThe SAR flips from below to above price\nNew SAR = Previous EP = 162.00 (placed above price)\nNew EP = Current low = 158.00\nAF resets to initial value = 0.02\nNew trend direction: Downtrend\nNext SAR = 162.00 + 0.02 x (158.00 - 162.00) = 162.00 - 0.08 = 161.92
Result: Reversal! SAR flips to 162.00 | New downtrend | AF reset to 0.02 | Sell signal generated
Frequently Asked Questions
How is the Parabolic SAR formula calculated?
The Parabolic SAR formula is SAR(next) = SAR(current) + AF x (EP - SAR(current)), where AF is the Acceleration Factor starting at 0.02 and increasing by 0.02 each time a new Extreme Point is made, up to a maximum of 0.20. The EP (Extreme Point) is the highest high in an uptrend or the lowest low in a downtrend during the current SAR direction. When price crosses the SAR level, a reversal occurs and the SAR resets to the opposite side of price, using the previous EP as the new starting SAR and resetting the AF back to 0.02. The acceleration factor causes the SAR to move closer to price over time, making the trailing stop progressively tighter as the trend matures.
When should you use the Parabolic SAR indicator?
The Parabolic SAR works best in trending markets where price moves consistently in one direction. It excels at capturing the majority of a trend move and providing clear exit points through its trailing stop mechanism. The indicator is particularly useful for setting dynamic stop losses that automatically adjust as the trend progresses. However, it performs poorly in ranging or choppy sideways markets, where it generates frequent reversal signals that result in whipsaw losses. For this reason, traders should first identify whether the market is trending using indicators like ADX before relying on Parabolic SAR signals. Combining it with a trend filter that confirms directional movement significantly improves results.
How do you use Parabolic SAR as a trailing stop loss?
The Parabolic SAR is one of the most natural trailing stop indicators because it automatically adjusts its level based on price action and time. For a long position, the SAR dots below price represent your stop loss level, and as the trend continues, the SAR accelerates upward toward price, locking in progressively more profit. You simply move your stop loss to the current SAR level at the end of each period. When the SAR eventually flips above price, you close the position and potentially reverse to short. The acceleration factor ensures that longer trends produce tighter stops, which is appropriate because older trends are more likely to reverse. This eliminates the emotional difficulty of deciding when to tighten stops manually.
What are the best Parabolic SAR settings for different markets?
The default settings of AF start at 0.02, step of 0.02, and maximum of 0.20 work well for most markets and timeframes as a starting point. For highly volatile markets like cryptocurrencies, consider using a lower initial AF of 0.01 and step of 0.01 to keep the SAR further from price and reduce false reversals. For smooth-trending markets like major forex pairs, the default settings are usually effective. For short-term trading on lower timeframes, some traders increase the step to 0.03 or 0.04 for faster signal generation. Reducing the maximum AF to 0.10 keeps the trailing stop wider throughout the trend. It is important to backtest different settings on your specific instrument and timeframe to find the optimal balance between staying in trends and limiting drawdowns.
How do you combine Parabolic SAR with other indicators?
The most effective combination is Parabolic SAR with the ADX indicator, where you only take SAR signals when ADX is above 25, confirming a trending environment. This single filter eliminates most whipsaw signals that occur in ranging markets. Another popular combination is Parabolic SAR with moving averages, where you only trade in the direction of the moving average trend and use SAR for entry timing and stop placement. Combining SAR with RSI adds momentum confirmation, where RSI above 50 confirms bullish SAR signals and below 50 confirms bearish signals. Volume indicators help confirm SAR reversals, as genuine trend changes typically occur with volume expansion. Using Keltner Channels or Bollinger Bands alongside SAR provides additional context about volatility and price extremes.
What causes Parabolic SAR whipsaw signals and how do you avoid them?
Whipsaw signals occur when the Parabolic SAR frequently reverses direction in a short period, generating alternating buy and sell signals that result in small losses on each trade. This happens most commonly during sideways or range-bound market conditions where price oscillates without establishing a clear trend. The primary way to avoid whipsaws is to only trade SAR signals when a trend is confirmed by other indicators like ADX above 25 or price above a key moving average. Increasing the acceleration factor step makes the SAR less sensitive and reduces reversal frequency, though this comes at the cost of wider stops. Some traders also require a minimum number of SAR dots in one direction before taking a signal, filtering out quick reversals.
References
Reviewed by Daniel Agrici, Founder & Lead Developer · Editorial policy