Forex technical analysis indicator: Parabolic indicator SAR

The SAR indicator is also called the parabolic indicator or the stop loss steering operating point indicator. Its full name is “Stop and Reveres, abbreviated SAR”. It was created by the American technical analysis master Wells Wilder and is a kind of Simple and easy-to-learn, relatively accurate medium- and short-term technical analysis tools.

Principles of SAR indicators

We know from the full English name of the SAR indicator that it has two meanings. The first is “stop”, which means stop loss and stop loss. This requires investors to set a stop loss price before buying or selling a certain currency to reduce investment risk. And this stop loss price is not always the same, it is to adjust the stop loss level with the price fluctuations. How to effectively control potential risks without losing the opportunity to earn greater returns is the goal pursued by every investor. However, the situation in the foreign exchange market is unpredictable, and the different currencies have different trends in the same period. If the stop loss is set too high, it may happen that the price will be sold when its adjustment falls, and the short position established will start a round from then on. The new uptrend misses the opportunity to make greater profits. On the contrary, if the stop loss is set too low, it will not play a role in controlling risks at all.

Therefore, how to accurately set the stop loss level is the purpose of various technical analysis theories and indicators, and the SAR indicator has its own unique function in this regard.
The second meaning of the full English name of the SAR indicator is “Reverse”, which means the reverse and reverse operation. This requires investors to set a stop loss level before deciding to buy or sell orders. When the price reaches the stop loss price, Investors not only have to close the long positions bought in the previous period, but also can perform reverse short operations while closing the positions in order to maximize the return.