SAR

Overview

The Parabolic SAR (Stop and Reverse) is a method to find potential reversals in the market price direction. The indicator is constructed by placing dots above or below the price, depending on the trend.

Interpretation

The Parabolic SAR is interpreted as follows:

• When the dots are below the price, it indicates that the trend is upwards, and it's potentially a good time to buy.

• When the dots are above the price, it indicates that the trend is downwards, and it's potentially a good time to sell.

Indicator Triggers:

SAR indicator triggers

The SAR indicator has a lot of classic triggers, you can find how it works on the General Indicator Triggers description.

Notes

Trend Following: The SAR (Stop and Reverse) indicator is particularly effective when used to follow the dominant trend. When the SAR is located below the prices, it indicates an uptrend, while when the SAR is located above the prices, it indicates a downtrend. Use this information to make decisions in line with the current trend.

Define Stop-Loss level: The SAR indicator can be used to set stop-loss levels to protect your positions in case of a market reversal. When the SAR changes position and gets closer to the prices, it may indicate a trend reversal. Place your stop-loss above or below the SAR depending on the direction of the trend. This will help limit your losses if the market moves against you.

Combine with other indicators: For better analysis, it is often wise to combine the SAR indicator with other technical indicators. For example, you can use it in conjunction with momentum or volume indicators to confirm the signals generated by the SAR. This can give you a more comprehensive view of the market situation and help you make more informed decisions.