trend indicator
Parabolic SAR backtesting — Parabolic SAR
Parabolic SAR (Stop and Reverse) plots a series of dots that trail price and flip from one side to the other when a trend reverses, functioning as both a trend-direction signal and a built-in trailing stop. It is a pure trend-following tool — its dots will flip repeatedly and lose money in a sideways market, which is exactly the behavior a backtest exposes.
How Parabolic SAR works
While in an uptrend, the SAR dot sits below price and steps up each candle toward the most recent extreme high, accelerating as the trend extends; while in a downtrend, it sits above price and steps down toward the most recent extreme low. If price crosses the dot, the system reverses — the dot flips to the other side of price and the acceleration resets. CandleTest computes Parabolic SAR with TradingView-parity math. Because it always sits on one side of price or the other, the natural no-code rule is simply which side the dot is currently on, or the flip itself as an entry trigger.
Parabolic SAR settings
The initial acceleration factor applied right after a flip. Higher values make the dot move toward price faster from the start of a new trend.
How much the acceleration factor increases each time price makes a new extreme in the trend’s direction. Higher values make the dot accelerate toward price more aggressively as a trend extends.
The ceiling on the acceleration factor. Lower caps keep the dot from ever tightening too aggressively, even in a long-running trend.
Example Parabolic SAR strategies to backtest
Enter long when price crosses above the SAR dot (a flip from downtrend to uptrend). Exit when price crosses back below the dot (a flip the other way).
Combine with a separate entry signal, such as an EMA crossover, and exit the position whenever price crosses back to the SAR dot’s side — using SAR purely as a trailing stop rather than the entry trigger.
Every rule above is buildable in the no-code strategy builder — pick conditions, press run, and get win rate, drawdown and equity curve on real exchange data with fees and leverage modeled.
Parabolic SAR FAQ
Does Parabolic SAR work in sideways markets?
Not well — it is designed to always be in a trade, on one side or the other, which means it flips back and forth repeatedly and generates losing trades when there is no real trend. Backtesting over a ranging period shows exactly how much this costs on a given market.
Can Parabolic SAR be used to exit a position opened by another signal?
Yes — pair PSAR’s flip condition (price crossing back to the dot’s other side) as the exit rule for a position entered by a different signal, such as an EMA cross. That is a condition-based exit built in the strategy builder; CandleTest has no separate stop order feature, so every exit — PSAR-based or otherwise — is a condition list.
What do the acceleration settings control?
The start value sets how aggressively the dot moves right after a flip, the increment sets how much faster it accelerates as the trend extends, and the max caps how tight it can ultimately get. Together they trade off giving a trend room to breathe against locking in gains sooner — an empirical balance best tuned with a backtest.
Is CandleTest’s Parabolic SAR the same as TradingView’s?
Yes — the acceleration and flip logic follow TradingView conventions and are unit-tested for parity against known values.