SAR Stop and Reverse
SAR: Stop and reverse
SAR is nothing but our stop loss for the current trade.
In the flow method there is no profit taking logic or target levels. We try to be on the trade as long as possible. We collect our profit/loss points when we close our current trade. As we start our new trade we are under loss because our Stop loss is below our buying price (assuming long trade). As the trade progresses in the profitable direction (up) we would get a new higher pivot low and that will be our new stop loss or SAR.
Rules for SAR
There are various conditions based on which we reverse our trade.
Pivot High/Low: This is the most simple and frequently used method for reversal. Common during normal trading days where there are no major gaps up/down.
In a Long trade the previous Pivot Low would act as SAR[*]In a Short trade the previous Pivot High would act as SAR
2 bar rule: This rule is applicable when markets are trending strongly in the direction of our trade, but we are not having valid pivots to set our SARs. So to protect our profits we use 2 bar rule. But remember using the pivot to define a SAR has weight than this method. Fallowing conditions should be satisfied to set this type of SAR
There should be atleast 3 WRBs continuously in the direction of our trade.
On completion of last or 3rd bar, we set our SAR at high of the first bar for Short Trade or at Low of first bar for Long Trade.
Sideways bars and reversal: Some times we get formation of pivot low/high but we never get the confirmation of the valid pivot by the next bars. Meaning the price just moves sideways couple of bars. This situation gives us an opportunity to setup SARs based on the low/high of the sideways bars.
Gap Rules
Gaps in the direction of the preexisting trend
We are on long trade, day 1,2,3,4.......big moves on the 60 minutes. One WRB after other and trade gets vertical then the market shuts and opens with a big visual gap up. Allow the 1st bar to form, put your stop below that bar and reverse to short when triggered. Same logic applies for short trade
Nothing to be done for all other gaps in the direction of the trend. Once the day progresses and pivots form, the latest pivot low can become the new recent stop and reverse point.
Gaps in the reverse direction of the preexisting trend
Assuming we are on 'Long trade', Preexisting trend is up. Now market open visual gap down. Check if price below the previous pivot low on the 60? If yes, short at the low of the first bar. If no, hold and see if pivots crack. Exit longs and go short. Vice versa for short trades.
Imp: Under each SAR condition we have specific filters so please check the filters table before setting the SAR
SAR: Stop and reverse
SAR is nothing but our stop loss for the current trade.
In the flow method there is no profit taking logic or target levels. We try to be on the trade as long as possible. We collect our profit/loss points when we close our current trade. As we start our new trade we are under loss because our Stop loss is below our buying price (assuming long trade). As the trade progresses in the profitable direction (up) we would get a new higher pivot low and that will be our new stop loss or SAR.
Rules for SAR
There are various conditions based on which we reverse our trade.
Pivot High/Low: This is the most simple and frequently used method for reversal. Common during normal trading days where there are no major gaps up/down.
In a Long trade the previous Pivot Low would act as SAR[*]In a Short trade the previous Pivot High would act as SAR
2 bar rule: This rule is applicable when markets are trending strongly in the direction of our trade, but we are not having valid pivots to set our SARs. So to protect our profits we use 2 bar rule. But remember using the pivot to define a SAR has weight than this method. Fallowing conditions should be satisfied to set this type of SAR
There should be atleast 3 WRBs continuously in the direction of our trade.
On completion of last or 3rd bar, we set our SAR at high of the first bar for Short Trade or at Low of first bar for Long Trade.
Sideways bars and reversal: Some times we get formation of pivot low/high but we never get the confirmation of the valid pivot by the next bars. Meaning the price just moves sideways couple of bars. This situation gives us an opportunity to setup SARs based on the low/high of the sideways bars.
Gap Rules
Gaps in the direction of the preexisting trend
We are on long trade, day 1,2,3,4.......big moves on the 60 minutes. One WRB after other and trade gets vertical then the market shuts and opens with a big visual gap up. Allow the 1st bar to form, put your stop below that bar and reverse to short when triggered. Same logic applies for short trade
Nothing to be done for all other gaps in the direction of the trend. Once the day progresses and pivots form, the latest pivot low can become the new recent stop and reverse point.
Gaps in the reverse direction of the preexisting trend
Assuming we are on 'Long trade', Preexisting trend is up. Now market open visual gap down. Check if price below the previous pivot low on the 60? If yes, short at the low of the first bar. If no, hold and see if pivots crack. Exit longs and go short. Vice versa for short trades.
Imp: Under each SAR condition we have specific filters so please check the filters table before setting the SAR
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