Parabolic SAR Strategy: How the Dots Work, Best Settings and What 48 Real Flips on V75 Showed

Updated 2026-10-20 · H-BOT Africa team

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Quick answer: The Parabolic SAR places a dot below price in an uptrend and above price in a downtrend. When price crosses the dots they flip to the other side, which many traders use as a buy or sell signal. The standard settings are a step of 0.02 and a maximum of 0.2. On 500 real V75 5-minute candles the SAR flipped 48 times (about once every 50 minutes) and the price moved the way of the flip over the next 30 minutes 51% of the time: no better than chance. Its better use is as a trailing stop.

Parabolic SAR dots on real V75 five-minute candles — SAR dots below price (long) and above price (short) on real V75 candles.

How the Parabolic SAR Works

In an uptrend the SAR starts at the recent low and moves up toward price on every candle.
The acceleration factor starts at 0.02 and rises by 0.02 each time price makes a new high, up to the 0.2 maximum, so the dots speed up as the trend runs.
When price touches the dots, the trend is considered over and the SAR flips to the other side.

Settings

Setting	Effect
0.02 / 0.2 (standard)	Balanced
0.01 / 0.1	Slower, fewer flips, later exits
0.04 / 0.4	Faster, many flips, many false signals

Real Test on Volatility 75

Measure	Result
Candles tested	500 (5-minute)
SAR flips	48
Flips followed by a move in that direction over 6 candles	51.1% (24 of 47)

Using the SAR as a Trailing Stop

Where the SAR helps is managing a trade you already took for another reason. With a multiplier position, move your stop loss to the SAR dot after each candle closes. You keep part of the move if the trend runs, and you exit when the dots flip. Compare it with the 2×ATR trailing stop.

Double Parabolic SAR

Some traders add a second, slower SAR (for example 0.01 / 0.1) and only act when both agree. This cuts the number of signals, but it cannot create an edge on a random index; test it on demo first.

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