SAR (Stop and Reverse) indicator, also known as Parabolic SAR, is a technical analysis tool used in trading to determine the direction of an asset's momentum and the point at which this momentum has a higher-than-normal probability of switching direction.
In Tamil, here is an explanation of the SAR indicator:
The SAR (or Parabolic SAR) indicator is a technical analysis tool. It is used in trading to identify where an asset's momentum is excessive and where its momentum is likely to reverse.
How it works:
1. Stop and Reverse: SAR confirms when a reverse is expected.
2. Dots: This indicator is displayed as dots on the price chart of the market.
- If the points are below the price, it indicates an uptrend.
- If the points are above the price, it indicates a downtrend.
3. Reversal of Direction: When the market price moves above or below the SAR points, it indicates a trend reversal.
Calculation:
SAR = Average (AF) * (Recent Highest or Lowest Price - Previous SAR)
AF (error modifier) ââis initially 0.02 and then it goes up to a maximum of 0.20.
Application:
- Can be used in short term trading.
- Helps detect bullish and bearish trends.
SAR notifier is useful as it helps in timely buying and selling. However, sometimes there is a possibility of wrong indication in the market tension, so it should be used in conjunction with other strategies (indicators) and stock market evaluations (market analysis).
Here is the image showing the price and the Parabolic SAR indicator. The red dots represent the SAR values, which help indicate potential points where the trend might reverse.
