Parabolic (SAR) a trend following system

BY Chris Andreou

|January 26, 2021

A time/price reversal system that is always in the market.

  • It is a trend following system
  • SAR stands for Stop and Reverse
  • Works well in trending markets – useless in trading ranges

Notice as prices trend higher, the rising dots below the price action tend to start out slower and accelerate

In a downtrend the same thing happens, but in the opposite direction.

Parabolic SAR looks like dots on a chart.

  • Buy signals given when upper SAR was hit (arrows 1 and 2).
  • Whipsaw at arrows 3 – 4 indicated trading range with Buy signal acceleration as price advanced in new uptrend.

Parabolic SAR on monthly charts can be used to track the primary long-term trends.


  • The SAR is a delayed system since the SAR number is available only on the next period.
  • Each day/period the stop moves in the direction of the new trend.
  • At first, movement is slow but accelerates as the trend becomes more established.


A time / price reversal system that is always in the market.

  1. Prices trend higher, rising dots below price
  2. Prices trend lower, falling dots above price

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Chris Andreou

Experienced independent trader

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