Trends/Volatility and bands

Parabolic SAR

A series of dots that sit under price in a rise and over price in a fall, closing in faster the longer a move lasts.

Volatility and bandsBest on 3M, 6M, 1YAlso called PSAR, stop and reverse

Illustration of the parabolic SAR shape. It is a sketch, not real price data.

What it shows

J. Welles Wilder designed the Parabolic SAR (stop and reverse). A dot is plotted for each bar. In a rise the dots sit below price and step up. In a fall they sit above and step down.

The dots accelerate toward price as the move continues. When price touches a dot, the dots flip to the other side and start again.

How we find it

The same code that draws it on your chart follows these steps, with the same result every time.

Start with the extreme point (EP): the highest high in a rise or the lowest low in a fall.
Next dot = previous dot + AF × (EP − previous dot).
AF starts at 0.02 and increases by 0.02 each time EP makes a new extreme, up to 0.20.
When price crosses the dot, flip sides and reset AF to 0.02.

Starting values: AF start 0.02; AF step 0.02; AF max 0.20. These are proposed and will be tuned on real price data before launch.

How to read it

Dots below price: the dots are under a rise.
Dots above price: the dots are over a fall.
The gap between dots and price shows how far the move has run.

Status labels you may see

Label	What it means
Dots below price	The last dot is below the close.
Dots above price	The last dot is above the close.
Just flipped	The dots switched sides in the last 3 bars.

What cancels it

Price crossing a dot flips it.

What traders check next

How many bars the current side has lasted.
The size of the gap between dots and price.
Whether the market is trending or choppy.

Limits

It works poorly in sideways markets, flipping often.
Settings are conventions.
It lags.

Try it in forecastviz

Open any ticker and choose Volatility and bands → Parabolic SAR in the left menu.
Switch between 3M, 6M, 1Y to see how the picture changes.
Compare with SuperTrend and Chandelier exit on the same chart.

Open on a ticker

Questions

Why 'parabolic'?

The path of the dots curves like a parabola as they speed up.

Is it a stop loss?

It was designed as a trailing stop. We show it as a calculation.