What Is Parabolic SAR (PSAR)?
Parabolic SAR plots dots above or below price to indicate trend direction and potential trailing stop levels.
Quick Answer
Parabolic SAR plots dots above or below price to indicate trend direction and potential trailing stop levels.
What Does PSAR Measure?
The Parabolic Stop and Reverse (SAR) was developed by J. Welles Wilder Jr. It places a series of dots on the chart — below price in uptrends and above price in downtrends. The dots accelerate toward price over time, making PSAR useful as a trailing stop mechanism. When price crosses the SAR dots, the indicator flips to the opposite side, signaling a potential trend reversal. PSAR works best in trending markets and produces whipsaws in sideways conditions. VaultCharts renders Parabolic SAR as a free overlay on desktop charts with adjustable acceleration settings.
SAR(t) = SAR(t-1) + AF × (EP - SAR(t-1)), where AF accelerates each time a new extreme point is reachedHow to Read PSAR
- 1Dots below price indicate an uptrend (bullish)
- 2Dots above price indicate a downtrend (bearish)
- 3Dot flip from below to above signals potential bearish reversal
- 4Dot flip from above to below signals potential bullish reversal
How to Use PSAR in Trading
PSAR Settings
| Setting | Default | Description |
|---|---|---|
| Step | 0.02 | Acceleration factor increment on each new extreme |
| Max | 0.2 | Maximum acceleration factor cap |
Common Mistakes to Avoid
Use PSAR in VaultCharts
VaultCharts includes Parabolic SAR with customizable settings. Combine it with our automated pattern detection and trade signals for better analysis.