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Parabolic SAR Indicator
The Parabolic SAR (SAR stands for "Stop and Reverse") is a trend-following indicator that plots a series of dots trailing the price. When the dots sit below the price, the trend is up. When they sit above it, the trend is down. When price crosses the dots, the indicator "stops and reverses," the dots jump to the other side of the price, marking a potential change of trend. You can read more about it on its Wikipedia page.
In Samurai, SAR gives you two values:
In Samurai, SAR gives you two values:
- SAR $: the dollar level of the dot for the current bar. This is the stop-and-reverse price.
- SAR %: how far today's price sits from that dot, as a signed percentage: SAR % = (Price − SAR $) / Price. Positive means price is above the dot (bullish), negative means below (bearish).
SAR % is the field the filter works on, because a percentage is comparable across a $30 stock and a $600 one in a way that a raw dollar level is not.
Why use it?
SAR answers two questions at once: which way is this stock trending, and how close is that trend to breaking?
The first is useful because SAR never sits on the fence. Every stock is either bullish or bearish at any moment, which makes it a clean way to pick a side for a directional trade or to check that a stock isn't fighting the position you were planning.
The second is where SAR earns its place for options traders. Because SAR % measures the gap between price and the reversal level, a small reading means price is hugging the dots and a modest move would flip the trend, while a large reading means the trend has room behind it. That distinction changes what you do:
The first is useful because SAR never sits on the fence. Every stock is either bullish or bearish at any moment, which makes it a clean way to pick a side for a directional trade or to check that a stock isn't fighting the position you were planning.
The second is where SAR earns its place for options traders. Because SAR % measures the gap between price and the reversal level, a small reading means price is hugging the dots and a modest move would flip the trend, while a large reading means the trend has room behind it. That distinction changes what you do:
- Price far from the SAR: an established trend with cushion. Reasonable conditions for trading with the trend, or for selling premium on the far side of it.
- Price hugging the SAR: a trend on thin ice. Worth avoiding if you were about to sell premium against that trend continuing, and worth watching if you trade reversals.
And because SAR $ is an actual price level, it doubles as a practical reference point: it is the level the market would have to reach to invalidate the current trend, which makes it a natural anchor for choosing a short strike or setting a mental stop.
How to use the Parabolic SAR indicator in Samurai
You can use the Parabolic SAR indicator to:
- Find stocks in an established uptrend or downtrend and trade with the trend.
- Catch fresh reversals (stocks that flipped bullish or bearish in the last bar) to get into a new directional trade early.
- Find stocks trading close to their SAR level, where a small move would flip the trend.
- Separate brand-new trends from mature ones using the number of bars since the last flip.
- Add SAR as a column and sort by SAR % to rank your trade opportunities (Pro tip: you can also save the scan).
The Filter
The Parabolic SAR filter has two views.
Basic view gives you ready-made conditions in one click:
- Any: no SAR condition.
- Bullish (SAR % > 0): price is above the dots. The stock is in an uptrend.
- Bearish (SAR % < 0): price is below the dots. The stock is in a downtrend.
- Flipped to Bullish: the SAR reversed from above the price to below it within the last bar. A fresh bullish signal.
- Flipped to Bearish: the SAR reversed from below the price to above it within the last bar. A fresh bearish signal.
All presets use the default settings (Acceleration Factor 0.02, Maximum 0.2).
Advanced view lets you build the condition yourself, and adds two things the presets can't express: how far price is from the SAR, and how long the current trend has been running:
Advanced view lets you build the condition yourself, and adds two things the presets can't express: how far price is from the SAR, and how long the current trend has been running:
- Distance: the From (SAR %) and To (SAR %) range.
- Direction: Any, Bullish (price above SAR), or Bearish (price below SAR).
- Sensitivity: the Accel. Factor and Max. Accel. Factor.
- Trend age: the Flip From (bars) and Flip To (bars) range.
Settings
Accel. Factor (AF): default 0.020. This controls how quickly the dots accelerate toward price as a trend develops. A higher factor pulls the SAR in tighter, so it reacts faster and flips more often; a lower factor keeps it looser, so trends survive longer but reversals are confirmed later.
Max. Accel. Factor: default 0.20. The ceiling on that acceleration, it caps how tight the SAR is allowed to get, no matter how long the trend runs. Lowering both values together is the usual way to make SAR less twitchy on choppy stocks.
From (SAR %) and To (SAR %): the signed distance between price and the SAR dot, in percent. Because the value carries its own sign, this range also sets direction:
From (SAR %) and To (SAR %): the signed distance between price and the SAR dot, in percent. Because the value carries its own sign, this range also sets direction:
- A positive range (for example 0 to 2): price above the dots, bullish, and close to flipping.
- A negative range (for example −2 to 0): price below the dots, bearish, and close to flipping.
- A wide range on one side (for example 5 and above): a trend with real distance behind it.
Leave both fields blank to ignore distance and filter on direction alone.
Direction: the regime on its own, for when you care that a stock is bullish or bearish but not how far it has travelled.
Flip From (bars) and Flip To (bars): how many bars have passed since the SAR last flipped. Set 0 to 1 for reversals that just happened; set a higher From value to find trends that have already proven themselves. This is the natural companion to the "Flipped" presets, it lets you widen or narrow the definition of "fresh".
Direction: the regime on its own, for when you care that a stock is bullish or bearish but not how far it has travelled.
Flip From (bars) and Flip To (bars): how many bars have passed since the SAR last flipped. Set 0 to 1 for reversals that just happened; set a higher From value to find trends that have already proven themselves. This is the natural companion to the "Flipped" presets, it lets you widen or narrow the definition of "fresh".
Common use cases
- An established uptrend: Direction: Bullish. (Or the "Bullish" preset.)
- A fresh bullish reversal: Direction: Bullish, Flip From (bars): 0, Flip To (bars): 1. (Or the "Flipped to Bullish" preset.)
- A mature trend: Direction: Bullish, Flip From (bars): 20, the trend has held for at least twenty bars without reversing.
- A less twitchy SAR: Accel. Factor: 0.01, Max. Accel. Factor: 0.10, fewer flips, better suited to stocks that whipsaw.
- A bearish reversal: the "Flipped to Bearish" preset, or Direction: Bearish with Flip To (bars): 1.
Read more
About Technical analysis Engine - KB
About RSI - KB
About Bollinger Bands - KB
About MA indicator - KB
About MA Crossover indicator - KB
About MACD indicator - KB
About Stochastic Oscillator - KB
About the ADX indicator - KB
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