Parabolic SAR

The Parabolic SAR (Stop and Reverse) is a popular technical indicator developed by J. Welles Wilder to identify the direction of a trend and potential reversal points in price movements. It's widely used by traders to determine optimal entry and exit points, as well as to set dynamic stop-loss levels.

The indicator is plotted as a series of dots (or markers) above or below the price on a chart:

• When the dots are below the price, it indicates an uptrend.
• When the dots are above the price, it signals a downtrend.

As the trend progresses, the dots move closer to the price. Once the price crosses the SAR level, it often suggests a potential trend reversal — hence the name "Stop and Reverse."

Key characteristics of the Parabolic SAR:

• Best suited for trending markets;
• Can be used as a trailing stop-loss tool, adjusting automatically with the price;
• Less reliable during sideways (ranging) markets, where false signals may occur;
• Adjustable parameters (typically a starting acceleration factor of 0.02 and a maximum of 0.2) allow traders to customize sensitivity.

Traders often use the Parabolic SAR in conjunction with other indicators (such as MACD, RSI, or moving averages) to confirm signals and reduce the risk of whipsaws.

The Parabolic SAR is available by default on all major trading platforms offered by FxPro, including MetaTrader 4, MetaTrader 5, and cTrader, making it accessible for both beginner and advanced traders.