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Parabolic SAR Oscillator

By LuxAlgoJul 11, 2022

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Parabolic SAR Oscillator re-expresses the Parabolic SAR trailing stop as a detrended, bounded oscillator. Price is detrended by subtracting the close from the SAR value, and the result is normalized into a fixed -100 to 100 range, a smooth, noise-free series that makes the SAR's leading, trend-anticipating character easier to read than dots on price.

Note the polarity: because the SAR trails beneath price while a market rises, the bullish extreme sits at -100, the reverse of most overbought and oversold scales.

How to Trade the Parabolic SAR Oscillator?

  • Reading pinned at -100: strong confirmation of an up-trending market.
  • Reading pinned at 100: the mirror case: the SAR is tracking above price in a downtrend.
  • Cross of the 0 line: an early cue that the trend may be reversing, arriving before the opposite extreme is reached.

Because the output is bounded, the same -100, 0, and 100 reading rules apply on any symbol or timeframe, and the detrended series sits naturally alongside other oscillator work.

Parabolic SAR Oscillator Settings

  • Start: initial value of the convergence factor when a new trend is detected: how early the SAR engages.
  • Increment: growth of the convergence factor, controlling sensitivity to trend development.
  • Maximum: cap on the convergence factor, preventing over-extension in fast markets.

Frequently Asked Questions

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Also works on

TradingView
NinjaTrader
MetaTrader 4/5
Original indicatorBuilt in-house by LuxAlgo

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