In 1978 in his book "New Concepts in Technical Trading", J Welles Wilder introduced the Parabolic SAR (commonly abbreviated reference to only the SAR only) along with RSI as one of the main indicators in the trade. SAR itself is short for Stop And Reverse roughly interpreted as an indicator defining Stop Loss points in trading. In future development, Parabolic SAR becomes effective one indicator in determining the current market condition trends (trending market) together with facilities Distance named Trailing provided a lot of different forex trading platforms.

 Parabolic SAR calculation
This part I least liked. But to meet the forex learner questions that ask where the SAR points obtained so what could I do I put Parabolic SAR calculations in this article.

Well Parabolic SAR formula like this, hopefully we all do not get giddy:

Ket: Sarn = SAR point from the previous bar
α = akselarasi factor, usually set in until 0:02 price 0.2
EP = highest or lowest price on the previous bar

Well this is forex learner, the SAR point always in the opposite direction to the movement of prices, when prices were rising trend, the SAR point will be below, and vice versa when moving down the price point is above the SAR. So therefore very dependent EP point to the direction of price movement at this time. If the point under the previous SAR stem the price is highest price taken and vice versa.

Yes yes, I know this is tedious and confusing for most people. I also was not moved to develop it with some sample calculations because in my opinion more headache than benefit. Mentracknya own you are welcome to find out more.


Interpretation Parabolic SAR Parabolic SAR uses exactly the same as Moving Average, or any other indicator trends. It's just that Wilder created this indicator to eliminate the shortcomings of its MA curve so often happens eg interpretation. With a SAR point, the trend up or down to look more certain and no longer cause misinterpretation.

In the SAR, when prices are rising trend, the SAR point under the price movement. Conversely when the market was in a down trend then the point is above the SAR from the price movement. Consider the following picture: 

 In the picture above seems to be above the SAR point bar that indicates that the price trend is in the image below become down.now consider this:

As mentioned above, the excess Parabolic SAR is the appearance of a point and thus facilitate a person in the reading market conditions. Trader enough to see where the position of the SAR point is below or above the bar to see trends that are happening.

More than that, the farther the distance between the point of the SAR with the highest or lowest price of the bar, it indicates the stronger the trend up / down is happening.

Use of Parabolic SARSetelah you know how to read the Parabolic SAR, I think it has become easier to use for action buy, sell or hold. Need to be addressed here, that it is advisable to use the SAR with other indicators (personally I recommend adding it to indicators such as Stochastic oscillator is or RSI).

This caused a trend similar to other indicators, indicators of this type often slow to accommodate the price changes. Similarly with SAR. That is why recommended to add the oscillator which tend to more quickly so they can offset each other. SAR can reduce the speed while Oscillator Oscillator can be otherwise.

Let us consider the following picture:

 In the area I circled with purple color is the second confirmation point indicator shows the same direction. Stochastic signals that prices were rising and the trend points in the SAR was also under the means also showed the price moves up. Action buy can be done in two ini.Lingkaran purple on the right also shows the same case, but even better results because it seems to point the SAR and Stochastic showing uptrend but the conditions under which the uptrend has just begun. Thus, profits could be much larger than the first purple circle.

Simple is not it? You can combine SAR with other indicators like the MACD or RSI indicator depends where the best and fits your trading style everyday. Please note here that each trader has his favorite indicators respectively.


Parabolic SAR and Stop Loss

Now we enter into discussion SAR uses a fairly unique here. Even only SAR has the ability to use this as a defining point SAR Stop Loss. Remember that the SAR is an abbreviation of the Stop and Reverse the more or less means stop and then reverse direction.

SAR point not only can be used as penentungan Stop Loss (highly recommended to trade using a stop), then the SAR point of good news you can use Stop Loss sebabagi your point.

Some of the most beginner traders hate this one facility that is Stop Loss. The reason is because if they put the Stop Loss is often a point where they touch the meaning Stop loss is a loss for them. Finally, they prefer to let terfloating price casually while waiting for "the night is over" and "bright morning" aka the price reverses direction so that their negative positions with a positive change.

The bad news for those who trade in this way is that going to come a time when maybe tonight will never end and the morning did not come alias margin call occurs. This is not just one or two times I have seen, but most of those who trade without a stop loss always leads to the same abyss. Something that I've explained a thousand times for every time investors are surprisingly very rarely observed.

Remember Brother, Stop Loss is not there to make you lose money. He is to limit your losses and distance yourself from the nightmare called a margin call. Of course you do not want to not trade only once or twice and then destroyed just because of a wrong position. There is no single trader who was never wrong in determining the position. Even I who wrote this article too often mired position due to errors. No matter how many times you are wrong in determining the important positions in the aggregate are you still profit! Now let us return to the discussion and Stop Loss SAR us. Have strayed too far this ...

Note the image below:

 I've put the blue line and pulled horizontally on pricing scale. Red circle is the initial action we do buy. But more than that, you can place Stop Loss point corresponding to the point that the price of the SAR 1.8834. Thus if the price someday move down to 1.8834 then your position will be automatically closed to avoid loss berlebihan.Anda can also use this facility to integrate SAR facilities on the platform trailing distance. Stop Loss is different premises that are static and can not be moved automatically, trailing Stop Loss is a dynamic or moving to follow the price movement.
For example in the picture above, if you open a Buy position at 1.9000 price range that means there are 166 points with the point of first Stop You (1.9000 -1.8834. That means you can specify that you stop distance must not exceed 166 points if you use Traling Distance as your Stop facility. If at any time the price moves up to 1.9200 then automatically your Stop Loss will shift to stay within 1.9034 aka 166 points if you use a Trailing Stop Loss Distance.
Most forex trading platform provides this facility to its customers trailing. If you are a SAR user, you may need to use this facility.

Restrictions on the Parabolic SAR
We have studied various aspects of this indicator. SAR is very effective used in trending market conditions. But there are times where the SAR becomes ineffective and can not be used as the primary indicator.
When was that?
Exactly when market is moving sideways in a situation or trend of price movement. Sideways condition characterized by meeting the distance between the SAR with the highest point / lowest price available. Conditions worse Sideways marked by emigration move-SAR point above and below the bar which has hindered us in the open position. That's why from the beginning I suggest using the SAR along with other indicators as the lack of SAR cover.
Consider the following picture:

 If you use a trend indicator such as the curved Moving Average MA is shown to move intertwined between 2 different periods. So is the Stochastic.
This sideways situation typically occurs when markets are closed or market participants were waiting for important news will appear soon. Opening positions are advised not to do at the time sideways. Unless you're willing to wait long enough and mentally strong enough to see terfloating position for so long.