Parabolic SAR: acceleration, reversals and trailing-level limits
Parabolic SAR draws a recursive trailing reference on one side of price and switches sides when its reversal condition is met.
Before this lesson
These lessons provide background; you can still read this page now.
What the indicator measures
Parabolic SAR draws a recursive trailing reference on one side of price and switches sides when its reversal condition is met. It is an indicator drawing, not an order already resting on an exchange. A dot cannot guarantee an exit price or show whether an account could survive until that level.
Calculation and units
The provisional update is prior SAR + acceleration factor × (extreme point − prior SAR). The extreme tracks new highs or lows in the current direction. Acceleration increases by a step up to a maximum. Previous highs/lows constrain the reference, and a reversal resets the direction, extreme and acceleration.
Worked educational example
For prior SAR 90, extreme 110 and acceleration 0.02, the provisional update is 90.4. This is not necessarily the final dot: prior-bar constraints and the current reversal test must still be applied. Showing only that multiplication would omit essential parts of the calculation.
Reading it without overclaiming
A stronger acceleration makes the reference approach the extreme faster, but can also increase reversals in noisy ranges. Repeated flips do not prove repeated opportunities. The initial direction and starting extreme influence the early sequence, so short histories can differ materially between implementations.
How TradingHub implements it
TradingHub defaults to step 0.02 and maximum 0.2. Direction starts from the first two closes; the native routine then constrains dots with prior highs or lows. The source is the supplied visible bars. Marker size changes presentation only, while acceleration settings change the values.
Comparisons that matter
SuperTrend also draws a directional trailing reference but uses ATR-based bands rather than an accelerating extreme-point recurrence. Compare the mechanics rather than treating agreement as a guarantee. An exchange stop needs separately chosen trigger, order type and execution conditions.
A reproducible chart review
Open the existing Trading chart and choose the same market, interval and closed observation time as your comparison. Record every calculation parameter before changing one at a time. Match source fields, history length and the bar window. Native indicators calculate from the supplied visible slice; Indicator Studio calculates from its available chart snapshot. A difference after panning may therefore be a window or warmup effect rather than a new market event.
Limits and next lesson
The illustration uses constructed candles, not a dated market observation or a backtest. A live candle can change until it closes. Missing history, volume units and implementation conventions limit comparisons. No indicator guarantees a direction, an execution price or protection from loss. Use the related lessons to separate definitions, observed values and possible explanations; a correct quiz records learning progress, not trading competence.
Knowledge check
Is the provisional SAR recurrence always the final plotted value?
- Yes; it is also a guaranteed exchange fill
- No; constraints and reversal logic still apply
- Yes; all other rules only change the color
Show explanation
The recursive proposal is subsequently constrained and may be replaced during a reversal.
Interactive checking needs JavaScript; the lesson and explanation remain readable.
Primary sources and scope
Educational scenarios are not execution guarantees, forecasts or personal recommendations. Check current product rules at their source.
Content revised: . Editorial responsibility: TradingHub. No independent professional certification is claimed.