Parabolic SAR - MetaTrader 4 Script | Forex Indicator Download - MT4/MT5 Resources

The Parabolic SAR technical indicator was developed for analyzing trending markets. This indicator is constructed on a price chart. This indicator is similar to the Moving Average, the only difference is that the Parabolic SAR moves with a higher acceleration and may change its position in terms of price. The indicator is below the price when the market is bullish (uptrending) and above the price when the market is bearish (downtrending).

If the price crosses the Parabolic SAR line, the indicator reverses and its further values ​​are on the other side of the price. In the case of such indicator reversals, the reference point is the previous period's high or low. A reversal of the indicator signals the end of the trend (turning to correction or flat) or its reversal.

The Parabolic SAR is an excellent indicator for providing exit points. When the price falls below the SAR line, long positions should be closed; when the price rises above the SAR line, short positions should be closed. This indicator is often used as a trailing stop.

If a long position is opened (i.e. the price is above the Parabolic SAR), the indicator line will move upward regardless of the price movement. The amount of movement of the Parabolic SAR line depends on the value of the price movement.

For long positions:

SAR (i) = acceleration* (HIGH (i - 1) - SAR (i - 1)) + SAR (i - 1)

For short positions:

SAR (i) = acceleration* (low(i - 1) - SAR (i - 1)) - SAR (i - 1)

Where:
SAR (i - 1) — parabolic SAR value on the previous bar;
ACCELERATION——Acceleration coefficient;
HIGH (i - 1) — the highest price of the previous period;
LOW (i - 1) — the lowest price in the previous period.

If the price of the current bar is higher than the previous bullish price, the indicator value increases and vice versa. The ACCELERATION factor will double at the same time, which will cause the Parabolic SAR and price to come together. In other words, the faster the price rises or falls, the faster the indicator moves closer to the price.

Technical specifications

A complete description of Parabolic SAR can be found in the Technical Analysis: Parabolic SAR section

Attachment download

📎 parabolic.mq4 (7.24 KB)

Source: MQL5 #7787