The Parabolic SAR (Stop and Reverse) is a built-in MT4 trend indicator that plots a trail of dots directly on the price chart. Dots below price signal an uptrend; dots above price signal a downtrend. Because the dots step toward price each bar, traders use the Parabolic SAR both to read trend direction and as a ready-made trailing stop. It was developed by J. Welles Wilder, the same trader behind the RSI.
How to add the Parabolic SAR in MT4
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Open the indicator
In MT4, click
Insert ▸ Indicators ▸ Trend ▸ Parabolic SAR. -
Set the step and maximum
Leave the defaults — Step 0.02 and Maximum 0.2 — or adjust them. A larger Step makes the dots accelerate and tighten toward price faster.
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Click OK
Parabolic SAR plots directly on the price chart as a series of dots — below price in an uptrend, above price in a downtrend.
How to read the Parabolic SAR
- Dots below price — an uptrend; the dots act as a rising support / trailing stop beneath price.
- Dots above price — a downtrend; the dots act as a falling resistance / trailing stop above price.
- The flip ("stop and reverse") — when price crosses the dots, they jump to the other side, marking a potential trend reversal (not a guaranteed one).
- As a trailing stop — many traders ratchet their stop to the latest dot as the trend runs; see the MT4 trailing stop guide to automate it.
Limitations
The Parabolic SAR is built for trends. In a ranging, sideways market it whipsaws badly — flipping above and below price over and over and firing false reversals that bleed an account through repeated small losses. Treat it as one input among several (pairing it with a moving average to confirm a trend is common), always with a stop loss, and test it on a demo. No indicator or setting guarantees a profit — nothing here is financial advice, and most retail traders lose money.
Test the Parabolic SAR on a free demo
Add the Parabolic SAR and other indicators to a free MT4 demo and watch how the dots behave in trending versus ranging markets before going live.
⚠ Trading forex and CFDs is high-risk and most retail traders lose money. This is not financial advice.
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Related
See the best MT4 indicators guide. Related reading: the MT4 trailing stop and the MT4 Moving Average.
Frequently asked questions
What is the Parabolic SAR?
Parabolic SAR (Stop and Reverse) is a trend-following indicator developed by J. Welles Wilder. It plots a series of dots above or below price: dots below price indicate an uptrend, dots above indicate a downtrend. When price crosses the dots, the indicator 'stops and reverses' to the other side.
How do I add the Parabolic SAR in MT4?
Click Insert ▸ Indicators ▸ Trend ▸ Parabolic SAR, leave the Step at 0.02 and Maximum at 0.2 (or adjust them), and click OK. The dots plot directly on the price chart, not in a separate window.
What are the default Parabolic SAR settings in MT4?
MT4 defaults the Step (the acceleration factor) to 0.02 and the Maximum to 0.2. The Step controls how quickly the dots accelerate toward price; the Maximum caps that acceleration. There is no single best setting — test changes on a demo for your instrument and timeframe.
How do traders use the Parabolic SAR as a trailing stop?
Because the dot sits on the opposite side of price and moves toward it each bar, many traders use the dot level as a trailing stop, ratcheting their stop loss to the latest dot as the trend continues. See our guide to the MT4 trailing stop for how to manage that automatically.
Is the Parabolic SAR a reliable buy/sell signal?
No indicator is a reliable signal on its own. Parabolic SAR follows trends well but whipsaws badly in ranging, sideways markets, flipping back and forth and triggering false reversals. It describes the trend, it does not predict it — use it with other tools and risk management. Most retail traders lose money.
Trading foreign exchange and contracts for difference (CFDs) carries a high level of risk and may not be suitable for all investors. Leverage can work against you as well as for you. You could lose some or all of your deposited funds; do not trade with money you cannot afford to lose. Past performance is not indicative of future results. Nothing on MT4Download.com is financial, investment, or trading advice. Consider your circumstances and seek independent advice if needed.