Parabolic SAR stop-and-reverse
This is the textbook Parabolic SAR system applied to NIFTY futures on 30-minute candles. The SAR is a trailing dot that follows price and speeds up as a trend extends. When price crosses it, the strategy closes its position and opens the opposite one at the same moment, so it is always either long or short one lot and never sits flat.How it trades
Results
PRE-BUILT · DEFAULTSWhere it made and lost money
This is a pure trend follower, and the evidence shows it. Trades opened on trend days, sessions that closed near their high or low, made ₹4,38,846 over 64 trades, almost the whole year's profit. Trades opened on quiet sessions with a range under 0.75% made only ₹4,460 over 115, because the SAR flips back and forth without a move to ride. India VIX mattered too: entries with VIX above 14.5 made ₹3,50,362 over 69 trades against ₹34,142 over 79 when VIX was below 11.5. Trades opened on NIFTY weekly expiry days lost ₹5,184 over 62. Figures are before costs.
About this strategy
- Build 30-minute candles from the near-month NIFTY futures, starting at 09:15 and running continuously across days, overnight gaps included.
- Compute Wilder's Parabolic SAR with an acceleration factor that starts at 0.02, rises by 0.02 with each new extreme and is capped at 0.20.
- Take the SAR's current direction on the first tick of the test: long if it is below price, short if above.
- Treat the SAR level as a resting stop. The first futures tick that trades through it closes the position and opens the reverse one at that price.
- If price gaps through the SAR, the reversal happens at the first tick of the new candle.
- On each monthly futures expiry day, close at 15:15 and reopen the same side in the next month's contract at the next session's first tick.
Why traders use it
Parabolic SAR gives a mechanical answer to two questions at once: which side to be on and where the stop is. Because the acceleration factor grows as a move extends, the stop tightens on long trends and locks in more of the run. It needs no discretion, works on any chart and suits futures, where going from long to short is a single order. Trend followers like that it rides big moves fully, accepting many small losses in between.
The year in plain words
With default settings on NIFTY from 1 Oct 2025 to 30 Sep 2026, the system made 267 trades and won only 42% of them, yet earned ₹4,70,058 before costs and ₹3,97,474 after ₹20 per order and bid-ask slippage (statutory charges excluded). Average wins of ₹12,970 were twice the average loss of ₹6,256, the trend-following pattern. February and March alone added over ₹3.6 lakh, while December lost ₹25,026 and the last three months were all negative. The maximum drawdown before costs was ₹95,336, so the path was far from smooth.
What the settings do
Risks
- The strategy is always in the market with a full futures lot, including overnight, so gaps hit the position directly.
- Fewer than half the trades win, and losing streaks of several reversals in a row are normal.
- The ₹95,336 drawdown before costs means a trader needs capital well beyond the futures margin to sit through bad spells.
- Most of the year's profit came from two months; without such trends the result would look very different.
Who it suits
Traders who are comfortable holding NIFTY futures overnight, have capital for large drawdowns, and can tolerate many small losing trades while waiting for a few big trends to pay for them.
Questions traders ask
What is Parabolic SAR stop and reverse?
Parabolic SAR is a trailing stop that sits below price in an uptrend and above it in a downtrend, moving closer as the trend extends. Stop and reverse means that when price hits the SAR, the trader not only exits but immediately takes the opposite position, so they are always in the market.
Is Parabolic SAR profitable on NIFTY futures?
In this backtest from 1 Oct 2025 to 30 Sep 2026 on 30-minute bars it made ₹4,70,058 before costs and ₹3,97,474 after ₹20 per order and bid-ask slippage, with a ₹95,336 drawdown before costs. Most gains came in February and March. Past results do not guarantee future ones, especially for a trend system in a choppy year.
What are the standard Parabolic SAR settings?
The common default is an acceleration factor starting at 0.02, stepping up by 0.02 and capped at 0.20. This backtest uses those values. Changing them trades responsiveness against the number of false reversals.
How are futures rollovers handled?
A futures contract can't be held past its monthly expiry, so on expiry day the position is closed at 15:15 and the same side is reopened in the next month's contract at the next session's first tick. Twelve trades ended this way during the year.