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.
Reviewed for accuracy by Daniel Agrici, Founder & Lead Developer
Parabolic Sar Calculator
Calculator
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Formula: SAR(next) = SAR(current) + AF x (EP - SAR(current))
Worked example — Next SAR: 152.36 | Trend: Uptrend | AF: 0.04 | Trailing stop moves up by 0.36
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)) SAR(next) = 152.00 + 0.04 x (161.00 - 152.00) SAR(next) = 152.00 + 0.04 x 9.00 SAR(next) = 152.00 + 0.36 SAR(next) = 152.36 Since this is an uptrend, SAR must be at or below the lowest low of the prior two periods. If 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 The SAR flips from below to above price New SAR = Previous EP = 162.00 (placed above price) New EP = Current low = 158.00 AF resets to initial value = 0.02 New trend direction: Downtrend Next 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
What is the Parabolic SAR indicator and how does it work?
The Parabolic SAR (Stop and Reverse) is a technical analysis indicator developed by J. Welles Wilder Jr. that provides potential entry and exit points by placing dots above or below the price chart. When dots appear below price, the trend is considered bullish and the SAR serves as a trailing stop loss for long positions. When dots appear above price, the trend is bearish and the SAR acts as a trailing stop for short positions. The indicator accelerates toward the price as the trend continues, which is why it is called parabolic. It reverses (flips from above to below or vice versa) when price touches the SAR level, generating a new signal in the opposite direction.
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.
What do the acceleration factor settings control?
The acceleration factor (AF) settings control how quickly the Parabolic SAR converges toward the price, directly affecting the sensitivity and timing of signals. The initial AF (default 0.02) sets how fast the SAR begins approaching price at the start of a new trend. The step value (default 0.02) determines how much the AF increases each time the trend makes a new extreme point. The maximum AF (default 0.20) caps the acceleration to prevent the SAR from getting too close too quickly. Lower initial AF and step values create wider stops that stay further from price, reducing whipsaws but potentially giving back more profit. Higher values create tighter stops with more frequent reversals.
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.
How does the Extreme Point (EP) affect Parabolic SAR behavior?
The Extreme Point is the highest high reached during an uptrend or the lowest low during a downtrend, and it serves as the target that the SAR accelerates toward. Each time a new EP is set, the acceleration factor increases by one step, causing the SAR to approach price more aggressively. In a strong uptrend with consistently higher highs, the EP keeps rising and the AF keeps increasing, making the SAR climb faster and faster in a parabolic curve. When the trend stalls and no new EP is made for several periods, the AF stops increasing and the SAR approaches price more gradually. Upon reversal, the previous EP becomes the starting point for the new SAR on the opposite side, ensuring the new trailing stop starts at a meaningful price level.
Is Parabolic SAR suitable for all timeframes?
Parabolic SAR can be applied to any timeframe from 1-minute charts to monthly charts, but its effectiveness varies significantly. On very short timeframes like 1-minute or 5-minute charts, the indicator tends to produce excessive whipsaw signals due to market noise, making it difficult to trade profitably without additional filters. The indicator works best on daily and 4-hour charts where price trends are more established and noise is reduced. Weekly charts produce fewer but more reliable signals suitable for position trading. For intraday trading, the 15-minute and 30-minute timeframes offer a reasonable balance between signal frequency and reliability. Regardless of timeframe, always use a trend filter to avoid range-bound conditions, and adjust the acceleration factor settings to match the typical volatility of your chosen timeframe.
References
Reviewed for accuracy by Daniel Agrici, Founder & Lead Developer · Editorial policy
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