Opinion and Answers about SAR and Trading.

Piyush has some questions about SAR trading from the previous post 

hi anuj,
ur sar and volatility is interesting. i actually use sar. but what i know abt ur sar is that it is discretionary where u use certain ingredients (disclosed) in a secret way :-) to bring sar.
for jio sar users which is use of 10 ema as sar. how will volatility be relevant. suppose the example u gave. the short call was closer to top so u increase position size as compared to long call which was far frm bottom. suppose the long call turns more profitable then? can u give any example how sar users can make use of volatility
in skipping trades/position sizing. volatility can be measuerd in vix/atr. how can j 10 sar (10 ema sar)/psar/5sma sar users use vix to position size?
My reply

Piyush (Sharda Saheb!)
Nice to receive a comment from a "hawk eyed" critic and a learner.
First of all there is no secret about my trading levels. I rely on classical trading techniques like Trend following and observing price patterns (higher/lower highs and higher/lower lows)not fancy chart patterns. I also use moving averages, RSI, Price pivots (not to be confused with pivot points).ATR is one of my favorites. I am a big time follower of J. Welles Wilder, Jr techniques and really admire his contribution to technical analysis. Very simple and effective approach to trading has been highlighted in his book, New Concepts in Technical Trading Systems.

Agreed...that I don't specifically recommend the use of a particular moving average, or say that this parameter is better than the default setting, or this trend line is more relevant than that one. That’s simply because there are infinite possibilities that exits in a market. There are all sorts of people involved in the market with different objectives like value, swing, day, spread traders etc.There can't be a single formula for everyone.

"The biggest secret of the success in the markets is that there is no secret."

One has to find her/his place in the trading arena and stay committed to the system and the plan. There is no holy grail system or parameter available. Trading is all about probabilities, there will be whipsaws and losses.
This is just my "written trading plan”. I made this keeping in mind that it will be useful for an "office going person" (who can't afford to sit at the system during the intra day trades).One just, has to put a stop loss order in system and forget the intraday price movement.

Regarding J10SAR (10 day EMA)
It will have the advantage and disadvantage of a moving average system i.e. giving excellent returns in trends and poor returns in sideway and volatile conditions. If I am right you and others from OJN have conducted extensive research regarding 10EMA.Check the performance in July and August and compare it with performance in September 2010.There will be huge difference in performance and profit per trade during this time.
We need to have a method that tells us a low risk entry price. One should skip the SAR trades when volatility is high and rising as it will give bad entries.SAR is a breakout trading method. It works excellently when there is a range breakout after a low volatile market condition. For example taking the J10 SAR signal when Nifty ATR is 60 will be better than taking the same trade when ATR is 120.That's applicable for any stop and reverse (SAR) system which is essentially a breakout trading technique.Breakout trade works well when markets move from range contraction to range expansion state.Trends should also last for a sufficient time as well, otherwise we will be chopped out.

I hope it will give you some ideas to work on regarding Stop and reverse trading.

Related Post
Should you take all the SAR trades?
How do I calculate SAR ?


  1. sir , on 10th aug can i go long @5320 in nifty

    1. Hi Arun,
      Yes you can because trend is up. More details in the post for tomorrow.




    1. Happy Janmashtami to you and your family as well :)

  3. Replies
    1. Hi Soumen,
      Thanks and Happy Janmashtami you and all :)