The short answer
The default Parabolic SAR setting is 0.02 step, 0.2 maximum, and traders who want a looser trail use 0.01/0.1 or 0.01/0.2, while scalpers sometimes speed it up to 0.04/0.4. On two years of hourly XAUUSD data with a $0.30 per ounce cost per trade, every setting was positive in both years, and the slower 0.01/0.1 made the most.
On the daily chart since 2015, though, the slow settings lost money heavily and the default only made money after 2020. That split is the real lesson: Parabolic SAR rides strong trends and gives back in sideways markets, and how a setting behaves depends heavily on the timeframe and period.
What Parabolic SAR measures
Parabolic SAR (“stop and reverse”) places a dot below price in an uptrend and above price in a downtrend. Each bar, the dot moves toward price by a fraction of the distance to the most recent extreme. That fraction, the acceleration factor, starts at the step value and increases by one step each time price makes a new extreme, up to the maximum. When price crosses the dot, the SAR flips to the other side.
So the indicator is two things at once: a trend direction (which side the dots are on) and a trailing stop that tightens as a trend matures.
The Parabolic SAR settings gold traders use
| Setting | Typical use | Character |
|---|---|---|
| 0.02 / 0.2 | Default on every platform | Balanced |
| 0.01 / 0.1 | Swing and patient intraday traders | Loose, slow to flip |
| 0.01 / 0.2 | Slow start, tightens later in a trend | Lets trends breathe, then trails tighter |
| 0.04 / 0.4 | Scalpers and short-term traders | Tight, flips often |
Why gold’s volatility changes things
Gold’s average daily range on COMEX futures was about $34 in 2024, $64 in 2025 and around $123 so far in 2026. The hourly ATR(14) averaged $17.49 over our test window. Parabolic SAR does not use ATR at all: its distance from price comes only from the acceleration maths. In a volatile market, a tight setting such as 0.04/0.4 can place the dot inside normal hourly noise, so it flips on random swings. A looser setting keeps the dot further away. That is the main reason slower settings did better on hourly gold in our test.
We tested 5 Parabolic SAR setups on 2 years of hourly gold data
How we tested. COMEX gold futures (GC=F) 1-hour bars from 30 October 2024 to 30 October 2026, 11,445 bars, plus daily bars from January 2015. Rule: always in the market; when the SAR flips below price (a bar’s low or high crosses the dot), go long or reverse to long at the next bar’s open, and the opposite for shorts. We act on the flip at the bar’s close rather than intrabar, so fills can be worse than the dot’s price. The last row only takes longs above the 200 EMA and shorts below it. Each trade is 1 ounce and pays $0.30 per ounce for spread and slippage. Results are in US dollars per ounce; maximum drawdown is the largest fall in closed-trade equity. Year 1 ends on 30 October 2025.
For context, holding gold gained about $1,194 an ounce in year 1 and about $14 in year 2, with a rally to about $5,627 in January 2026 and a steep fall in between.
Hourly (H1) results
| Setting | Trades | Win rate | Avg per trade | Profit factor | Net result | Max drawdown | Year 1 | Year 2 |
|---|---|---|---|---|---|---|---|---|
| PSAR 0.02/0.2 | 986 | 40.4% | +$3.03 | 1.24 | +$2,985 | $759 | +$1,648 | +$1,338 |
| PSAR 0.01/0.1 | 583 | 43.4% | +$8.17 | 1.55 | +$4,762 | $846 | +$1,801 | +$2,961 |
| PSAR 0.01/0.2 | 605 | 42.1% | +$6.19 | 1.42 | +$3,742 | $941 | +$1,743 | +$1,999 |
| PSAR 0.04/0.4 | 1,535 | 38.8% | +$1.41 | 1.14 | +$2,163 | $660 | +$1,116 | +$1,047 |
| PSAR 0.02/0.2 + 200 EMA filter | 110 | 26.4% | +$10.65 | 1.40 | +$1,171 | $992 | +$16 | +$1,155 |
Daily (D1) results since 2015
| Setting | Trades | Win rate | Avg per trade | Profit factor | Net result | Max drawdown | 2015–20 | 2021–26 |
|---|---|---|---|---|---|---|---|---|
| PSAR 0.02/0.2 | 241 | 41.1% | +$4.03 | 1.16 | +$971 | $962 | −$643 | +$1,614 |
| PSAR 0.01/0.1 | 157 | 33.8% | −$8.88 | 0.79 | −$1,394 | $2,671 | −$471 | −$923 |
| PSAR 0.01/0.2 | 161 | 34.2% | −$10.33 | 0.76 | −$1,663 | $2,644 | −$536 | −$1,126 |
| PSAR 0.04/0.4 | 388 | 42.5% | −$0.15 | 0.99 | −$60 | $1,408 | −$822 | +$762 |
| PSAR 0.02/0.2 + 200 EMA filter | 29 | 20.7% | +$72.16 | 3.13 | +$2,093 | $351 | +$219 | +$1,874 |
What the results say, in plain English
- On hourly gold, all four plain settings were positive in both years. The best, 0.01/0.1, made money on both longs (about $2,985) and shorts (about $1,777), which suggests it was catching swings in both directions, not just riding the bull market.
- Slower was better on H1. The 0.04/0.4 setting traded 1,535 times and paid about $460 an ounce in costs alone. At $0.60 an ounce instead of $0.30, its net result would fall from about $2,163 to about $1,703.
- The daily chart reversed the ranking. The two slow settings were the worst daily performers, losing in both halves with drawdowns above $2,600 an ounce. On daily bars, a loose SAR sits so far from price that each reversal gives back a large chunk of the move.
- The default 0.02/0.2 was the most consistent across timeframes, positive on H1 in both years and positive on D1 overall, though it lost from 2015 to 2020.
- The trend filter changed the character, not the quality. On H1 it cut trades by about 90% and made almost nothing in year 1. On D1 it looked excellent, but on only 29 trades.
If anything here is a finding, it is that a setting tuned on one timeframe should not be assumed to work on another.
How to use Parabolic SAR on different timeframes
Scalping (M1 to M5). Tight settings flip constantly on gold’s lower timeframes. If you use SAR here, use it as a trailing stop once a trade is already in profit, not as an entry signal. Check what the spread costs you per trade with the gold pip calculator.
Intraday (M15 to H1). This is where our test was most positive. The default or a slower 0.01/0.1 gives a usable trail. Many traders only take SAR flips in the direction of the higher-timeframe trend.
Swing (H4 to D1). On daily gold, SAR performance swung from losses before 2020 to gains after. Use it to trail an existing swing position rather than to open and reverse positions mechanically.
A combination idea: enter with structure, trail with SAR
- Find the trend with a slower tool, such as the 200 EMA or a 20/50 cross.
- Enter on a pullback that holds a support level, with the initial stop below the level.
- Once the trade is in profit and the SAR dots are below price, move the stop to the dot at each bar close.
- Exit when price closes through the dot. Size the original stop with the position size calculator.
This uses SAR for what it does best, trailing a trend, without forcing it to pick every reversal. For a volatility-based alternative trail, compare our Supertrend test and the ATR methods in the ATR and Bollinger Bands lesson.
Common mistakes with Parabolic SAR on gold
- Reversing on every flip in a range. Sideways weeks turn SAR into a string of small losses.
- Using a tight setting on a volatile day. On news days, gold can swing through the dots several times in an hour.
- Assuming the hourly winner works on daily charts. Our data showed the opposite.
- Ignoring costs. Stop-and-reverse systems trade often; the fastest setting paid about $460 an ounce in costs over two years.
- Treating the dot as a guaranteed fill. In fast markets, stops fill beyond the dot.
These results come from simple mechanical rules on past data and are not recommendations. A stop-and-reverse system is always exposed to the market, including over weekends and news releases.
Test it yourself
SAR is easy to test because it has only two inputs. Run the default and one alternative on your own XAUUSD data, on the timeframe you actually trade, with your real spread. Compare both halves of your test period. Then try the “trail only” version: enter with your normal method and exit on the SAR flip, and see whether it beats your current exit. Our backtesting lesson explains how to record results, and the gold indicator settings hub compares SAR with 11 other indicators.
Test it with other traders
A trailing stop is personal: it has to match how much give-back you can tolerate. In the XAUUSD Global community, traders compare exit methods like SAR, Supertrend and ATR trails on the same trades. The first month is free, then $19.99 a month.
Educational content only, not financial advice. Trading gold with leverage carries a high risk of loss.
Frequently asked questions
What is the best Parabolic SAR setting for gold?
On two years of hourly gold data, the slower 0.01/0.1 setting made the most: plus $4,762 per ounce over 583 trades after a $0.30 per ounce cost, positive in both years. But the same setting lost $1,394 on the daily chart since 2015. There is no setting that worked best everywhere.
Is the default 0.02/0.2 Parabolic SAR good for XAUUSD?
On hourly gold it was positive in both years, plus $2,985 per ounce over 986 trades. On the daily chart since 2015 it made $971 in total, but lost $643 from 2015 to 2020 and made all its money after 2020.
What do the Parabolic SAR numbers mean?
The first number is the acceleration step and the second is the maximum. With 0.02/0.2, the SAR starts 2% of the distance toward price per bar and speeds up by 0.02 each time a new extreme is made, up to 20%. Smaller numbers give a slower, looser trailing stop.
Can Parabolic SAR be used as a trailing stop on gold?
Yes, that is what it was designed for. Many traders enter with another method and use the SAR dots only to trail the stop. On gold, check that the dot is not inside normal hourly noise; the hourly ATR(14) averaged about $17.49 in our test period.
Why does Parabolic SAR lose in ranges?
Because it is always in the market. When gold moves sideways, price keeps touching the dots, and every touch reverses the position for a small loss. Many traders add a trend filter, such as a 200 EMA, to avoid this.
Does adding a 200 EMA filter help Parabolic SAR?
It cut hourly trades from 986 to 110 and raised the average per trade to $10.65, but the total was lower (plus $1,171) and almost all of it came in year 2. On daily data the filtered version made $2,093 over just 29 trades.
Sources and further reading
- CME Group — Gold futures overview — Contract specifications and trading hours for COMEX gold
- CFTC — Commitments of Traders — Weekly futures positioning, including gold
- Investor.gov — Stop order — How stop orders work, and their limits in fast markets
External sites are independent of XAUUSD Global. Check dates and data yourself.