Parabolic SAR (Stop and Reverse)

What it measures:

Developed by J. Welles Wilder, the Parabolic SAR sets trailing price stops that accelerate as a trend progresses. It tracks price level bounds (`ind_trn_psar`), discrete directional trend regimes (`state_psar`), and momentum reversal signals (`evt_psar_flip`).

How to interpret it:

• PSAR Dots Position (`ind_trn_psar`): Dots trailing below price confirm a bullish trend (acting as dynamic trailing support); dots trailing above price confirm a bearish trend (acting as dynamic trailing resistance).
• Flip Events (`evt_psar_flip`): Triggered when price penetrates the active SAR level, signalling an immediate trend reversal and trailing stop modification.
• Acceleration Factor: The distance between SAR dots widens rapidly during explosive trend extensions as the acceleration factor increases.

Used for:

• Setting strict trailing stop-loss levels during strong directional trends.
• Triggering position exits or reversal trades upon `evt_psar_flip` confirmation.

Limitations:

• Choppy / Sideways Markets: Generates frequent false flip signals and whipsaws during non-trending range bound consolidation.
• Should be paired with trend strength indicators like ADX to filter signals when ADX < 20.