Concept
Stop-and-reverse
Stop-and-reverse is a Risk, Sizing & Exits concept. The Library holds 1 implementations, each one a working definition you can pull into Quant.
SAR
Top Stop-and-reverse indicators
1 total
What is Stop-and-reverse?
Stop-and-reverse (SAR) is an exit style in which the stop is also the next entry: when price hits the level that invalidates a long, the system closes the long and opens a short in the same act, and vice versa. A pure stop-and-reverse system is therefore always in the market, alternating long and short with no flat state. The idea is baked into several classic tools: Wilder's Parabolic SAR is named for it, moving average crossovers reverse at every cross by construction, and flip-style trailing overlays such as Supertrend mark a reversal point each time price crosses the trailing band.
The always-in property is the whole trade-off. In persistently trending markets it means the system cannot miss the turn: the losing side closes exactly when the winning side begins. In choppy regimes it roughly doubles the cost of every whipsaw, since each false flip books a loss and immediately exposes the account in the new, equally wrong direction. That is why many modern implementations demote the reversal side to an alert or exit-only signal, gating actual reversals behind a regime filter.
How traders use it
- As the skeleton of always-in trend systems: channel-breakout and crossover strategies that reverse on the opposite signal, accepting whipsaw costs in exchange for never sitting out a major trend leg.
- As exit-plus-alert logic: the reversal level closes the position, while the would-be reverse entry is downgraded to an alert that requires separate confirmation, such as a higher-timeframe trend filter, before real size goes on.
- As a benchmark in system design: running a strategy's exit logic against a simple stop-and-reverse variant on the same entries shows whether the added exit complexity actually earns its keep versus always-in behavior.
Stop-and-reverse vs related concepts
Parabolic SAR: Parabolic SAR is one specific indicator built on the stop-and-reverse idea: Wilder's dotted trail accelerates toward price and flips sides when touched. Stop-and-reverse is the general exit taxonomy; the parabolic version adds a particular acceleration formula, and many traders use its dots as a trailing stop without ever taking the reverse trade.
Chandelier Stop: A chandelier stop is a trailing exit hung from the highest high (or lowest low) at an ATR multiple; when hit, the position closes and the system goes flat. Stop-and-reverse never goes flat: the same touch that ends one position starts the opposite one.
Related concepts · Exit taxonomy
Concept family
Risk, Sizing & Exits
37 concepts mapped · 19 in the Library
Stop-and-reverse FAQ
Is a stop-and-reverse system better than exiting to flat?
Neither dominates. Always-in systems catch every major reversal by construction but pay for every whipsaw twice, so their relative performance depends on how often the market trends versus chops. Exit-to-flat systems skip the second loss in chop but can sit out the start of real trends. Testing both exit styles on the same entry signals is the only honest way to decide for a given market.
Does SAR mean Parabolic SAR?
Not necessarily. SAR abbreviates stop-and-reverse, the general concept of a stop that simultaneously opens the opposite position. Wilder used the acronym for a specific indicator whose trailing dots accelerate toward price, and that indicator's popularity made the abbreviation ambiguous. Context usually resolves it: a 'SAR system' means always-in reversal logic, while 'the SAR indicator' almost always means the parabolic one.
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