This is another technical trading indicator that works similarly to the moving average. It is the type of tool that emphasizes both price and time of the price movement. For example, with this indicator, you can learn the short-term and mid-term price trends. In this indicator, the prices move in an arc, and therefore it is also known as a parabolic indicator.
How to use
- If the prices lie above the SAR curve, it means the prices are in the range of the bull market.
- If the prices lie below the SAR curve, it indicates the prices are in bear market conditions.
- When the prices move from top to bottom or fall below the SAR curve, it is a strong sell signal, and you should short your position.
- If the prices break through the SAR curve and move from bottom to top, it is a buy signal, you can cover your short position and create a long position.
This indicator is very helpful in day trading. By only using this indicator, you can judge the overall asset positions and not require other trading indicators. In addition, after using this indicator, it is not necessary to perform other type of trading analyses. By just following this indicator, you can make better decisions. What you can only do is to follow the indicator judgment, buy when it breaks through, and sell when it falls below.
Moreover, SAR is the type of indicator that not force you to buy at the lowest price or at the highest price. SAR is helpful to focus on the absolute profit rate over a period of time. Remember, never use SAR when the market is in a consolidation state.
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