Parabolic SAR: a trailing stop that accelerates
How Parabolic SAR is calculated, why the acceleration factor is the whole indicator, and where it fails badly.
Parabolic SAR is free on Basis — the button opens a live crypto chart with it already applied. No account, no trial and no limit on how many indicators you add.
Open the chartWhat it measures
Parabolic SAR places a dot on the opposite side of price from the trend and moves it closer every bar. When price reaches the dot, the position is considered stopped and the indicator flips.
It is a stop-and-reverse system: it is always in the market, on one side or the other, which is both its discipline and its main weakness.
How it is calculated
These are the steps Basis performs, verified against the published definition.
- 1
Start with a direction, an extreme point — the highest high of the current up-move or the lowest low of a down-move — and an acceleration factor.
- 2
Each bar, move the SAR toward the extreme point by the acceleration factor times the distance between them.
- 3
Each time a new extreme is made, increase the acceleration factor by the step, up to its maximum.
- 4
Clamp the SAR so it never lands inside the previous two bars’ range, then flip direction and reset the factor when price crosses it.
Settings
| Setting | Default | Range |
|---|---|---|
| Step | 0.02 | 0.001 – 1 |
| Max | 0.2 | 0.01 – 1 |
A step of 0.02 with a maximum of 0.2 is the original. Lowering the step slows the tightening and keeps you in trends longer, at the cost of giving back more when they end.
How to read it
- The dots tightening rapidly means the trend has been making new extremes and the stop is closing in — a strong move is about to be given very little room.
- A flip is an exit, not necessarily an entry in the other direction, despite the system’s design.
- In a sideways market SAR flips constantly and loses on nearly every flip. It has no filter for that condition and needs one supplied externally.
Where it misleads
The acceleration factor is what makes SAR useful and what makes it dangerous. Because it increases on every new extreme, a fast trend tightens the stop far faster than volatility falls, so the indicator often exits a healthy trend early. Raising the maximum makes this worse, not better. The clamp against the previous two bars is also frequently omitted, which lets the SAR appear inside the current bar’s range — a stop at a price the bar already traded through.
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Updated 2026-08-22 · Educational reference, not financial advice.