Glossary · Indicators

Parabolic SAR

A trend-following indicator that plots dots below price in uptrends and above it in downtrends, flipping sides when price touches them.

By Sky Trade editorial teamUpdated November 5, 2026

Parabolic SAR (“stop and reverse”), designed by J. Welles Wilder, places a dot for each candle. In an uptrend the dots sit below price and rise; in a downtrend they sit above and fall. The dots accelerate towards price as the trend extends, governed by an acceleration factor that typically starts at 0.02 and grows by 0.02 to a maximum of 0.20. When price touches the dots, they flip to the other side.

Wilder intended it as a trailing stop for open positions: the dot shows where a trend follower would exit. Many traders now use the flip as an entry signal, which works well in smooth trends and badly in ranges, where the dots flip every few candles and generate a series of losses.

As with every trend tool, the remedy is a filter: use Parabolic SAR only when another measure, such as ADX, suggests a trend exists.

In Higher/Lower trading there is no stop to trail, so the indicator's role is to show the trend's direction and how mature it is. The Sky Trade terminal offers Parabolic SAR among its trend indicators. See Parabolic SAR explained.

Example

On M15, EUR/USD rises with SAR dots trailing at 1.0861, 1.0866 and 1.0872. A candle drops to 1.0870 and touches the dot, so SAR flips above price at the recent high of 1.0895.

Learn more in the academy

Parabolic SAR: dots, acceleration factor and trailing logic
How Parabolic SAR places its dots, what the 0.02 and 0.2 acceleration settings do, how it trails a trend, and why it whipsaws in sideways markets.

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