The calculation principle of SAR index, simply put, SAR is the data source based on the highest price and the lowest price, and the index is obtained through multiple operations. In a word, SAR is the moving average of prices. Its application principle is: the timing of buying and selling is when the price crosses SAR, that is, when it falls below SAR, it is sold and when it crosses SAR, it is bought.
Practical use of Sar indicator:
1. If the stock is in a volatile trend, the trading signal of the stock in the sar indicator will appear very frequently, but at this time, the trading space of investors is very limited.
2. If the sar indicator appears below the K-line, it is time for investors to stop loss; Conversely, when the sar indicator appears above the K-line, it is the opportunity to take profits.
3. The distance between 3.sar index and K line can be used to measure the strength of market fluctuation trend.
4. Before the breakthrough pattern appears, the longer the stock price runs under the sar indicator, the stronger the bullish signal of this pattern.
5. When the stock price breaks through the sar index curve, the bullish signal will be more reliable if the trading volume increases gradually.
6. After the breakthrough, the longer the distance between the stock price and the sar curve, the greater the room for the future stock price to rise.
7. After the stock rises for a period of time, if the support above the sar curve is in a consolidation state, it is a signal of continuous rise. If the volume is enlarged in this process, the rising signal will be stronger.
How to use SAR indicators: When the stock price curve is above the SAR curve, it is a bull market; When the stock price curve is lower than SAR curve, it is a short market; When the stock price curve falls below the SAR curve from top to bottom, it is a selling signal; When the stock price curve breaks through the SAR curve from bottom to top, it is a buy signal.
Skills of using SAR indicators:
Once the stock is bought, it is all handed over to SAR for management. The selling signal of SAR can be regarded as a profit point or a stop loss point to deal with emergencies.
Calculation method of SAR index;
1. Before drawing SAR, you must first decide the first day to start drawing SAR. If the first day belongs to bulls, then the SAR of the first day must be the lowest point in four days. After finding the SAR of the first day, calculate the SAR of the second day: SAR of the second day = SAR of the first day+(0.02 * XP). XP= the highest point of the first day-SAR of the first day.
2. The next day's closing can be regarded as the third day's SAR. If the highest price is the next day >; The highest price on the first day, then the SAR on the third day = SAR+the second day (0.04 * XP). XP= the highest point of the next day-the SAR of the next day. As long as the highest price is higher than the previous day's highest price, the multiplier factor will increase by 0.02. If it keeps increasing, the highest price can only be increased to 0.2 and then used as a multiplier.
3. If the lowest point of the second day after inversion is ≥ the lowest point of the previous day, the SAR is the same as the previous day.
4. If the closing price of the second day after the reversal breaks through SAR at the lowest point, it means that the market is bullish and you should buy stocks. On the day when the market turns bull, set SAR immediately according to step 2.