SAR - Parabolic Stop and Reverse
The Parabolic Stop and Reverse indicator was developed by J. Welles Wilder and detailed in his book New Concepts in Technical Trading Systems. It provides a trading system based on price and time.
The SAR is shown as a series of dots above and below the price. When the dots are below the price it indicates that the trend is upwards and each subsequent dot will be higher. When the dots are above the price it indicates that the trend is downwards and each subsequent dot will be lower. When a change in direction is determined the dots will switch and the relative sequence will continue.
Since the dots increase or decrease depending on the trend the SAR value can also be used as a trailing stop.
The calculation is too complex to detail in this short article.
There are two parameters: Step and Maximum Step. These are used to control the acceleration factor. The higher the Step the closer to the price action and the quicker the Maximum will be reached. Higher steps will also cause more reversals.
Sufficient Data for Accuracy
SAR is one of several indicators that include an element of prior data. As such a SAR based on 50 days of underlying data will be significantly different to a SAR based on 500 days of data. This site will always include enough data to ensure 'accuracy'.