Parabolic SAR on Quotex — Trend Reversal Indicator
How Parabolic SAR Works
Parabolic SAR plots dots above or below price candles. Dots below price = uptrend signal; dots above = downtrend. The calculation uses an 'acceleration factor' that increases as the trend extends, drawing the dots closer to price over time. When price crosses the dots, SAR 'reverses' — flipping from above to below or vice versa. This generates clear binary trend signals. Wilder designed SAR specifically as a stop-loss mechanism for trend trading (hence 'Stop and Reverse'); the reversal points serve as both exits for old trades and entries for new opposite-direction trades.
Default Settings
| Parameter | Default Value | Effect |
|---|---|---|
| Initial acceleration factor | 0.02 | Starting sensitivity |
| Acceleration step | 0.02 | How fast SAR catches up to price |
| Maximum acceleration | 0.20 | Cap on sensitivity |
Parabolic SAR Signals
- Signal 1 — SAR flip from above to below price = bullish reversal (CALL signal)
- Signal 2 — SAR flip from below to above price = bearish reversal (PUT signal)
- Signal 3 — SAR dots staying consistently below price = strong uptrend confirmation
- Signal 4 — SAR dots staying consistently above price = strong downtrend confirmation
- Signal 5 — Rapidly accelerating SAR = trend strength building
Best Use Cases
- Trending markets — SAR excels in clear trends; produces few false reversals
- Entry timing — use SAR flip as confirmation of other strategy signals
- Trend exits — when SAR flips, the trend may be ending; useful for exit signals
- Combining with EMA — use SAR to confirm EMA crossover direction
When Parabolic SAR Fails
- Ranging markets — SAR generates many false flips in sideways action
- Choppy markets — small whipsaws produce too many reversal signals
- After news events — SAR flips reactively but doesn't predict
- Low-volatility periods — small price movements trigger excessive SAR adjustments
Parabolic SAR FAQ
Is Parabolic SAR a leading or lagging indicator?
Lagging — SAR reacts to price movement after it occurs. The 'reversal' signal lags the actual reversal by 1-3 candles typically. Don't expect SAR to predict tops or bottoms; it confirms trend continuation/exhaustion.
Can I use Parabolic SAR alone?
Possible but not optimal. SAR signals are too frequent in choppy conditions. Best results combining SAR with: (1) an ATR filter to skip low-volatility periods; (2) EMA(50) as trend direction confirmation; (3) horizontal S/R levels for entry quality.
What's the win rate for Parabolic SAR signals?
Alone: 50-55% win rate (marginal). With ATR filter and trend confirmation: 60-65%. Like most single indicators, Parabolic SAR is best as one input among several, not a standalone strategy.
Does SAR work on crypto?
Yes — especially on trending crypto. BTC during strong directional moves shows clean SAR signals. During crypto consolidation (sideways), SAR produces too many false signals like any trend indicator in a range.
Should I adjust the acceleration factor?
Defaults work for most cases. More aggressive (higher acceleration) produces more signals with more false ones; more conservative (lower) produces fewer but more reliable. Test on demo before changing defaults.
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