Designing a Parabolic SAR Trend-Following System
Summary
The article explains Parabolic SAR as a trend-following tool primarily used to set trailing stops. It outlines rising and falling calculations using the prior SAR, an extreme point (the trend’s high or low), and an acceleration factor that increases when new extremes occur, subject to a stated maximum. Worked price examples illustrate the calculation, and the article describes selecting the indicator and its parameters in MetaTrader 5.
The strategy section uses market direction and price relative to the SAR to generate buy or sell signals, then presents a blueprint and an MQL5 expert advisor that reports signals and the trailing stop. The material is instructional rather than evidence of profitability: it offers no performance study or risk-adjusted results, and it advises testing before live use. The excerpt is also incomplete in the middle of the strategy and code discussion, so some operational details cannot be assessed.
Key ideas
- Parabolic SAR is presented as a trend-following indicator whose main role is to provide a moving stop level.
- Its calculation uses the prior SAR, an extreme point, and an acceleration factor that rises when the trend makes new extremes.
- The article separates rising-market and declining-market calculations and gives worked examples for each.
- A simple automated strategy compares price with the SAR to generate directional signals and report a trailing stop.
- The article provides implementation guidance but no evidence that the strategy is profitable; it recommends testing before live trading.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.