Nifty SAR Trading System
SAR is acronym for STOP AND REVERSE. One of the best positional trading system. As a style(like turtle trading), it requires a particular mindset, as you will suffer a great number of small losses, and only a few large wins.
MySAR is the price level which guides us for the trend of the market for that particular scrip and for that particular period. Price has the tendency to go up if it crossed MySAR level with conviction and has tendency to go down if it breaches MySAR level with conviction.`
Hence once can take a buy call if price crosses MySAR from below with conviction and remain in buy mode so long as price remains above MySAR level. Similarly one can take a sell call if price breaches MySAR from above with conviction and remain in short mode so long as price sustains below MySAR level.
MySAR simply guides us for the trend, but remains silent for target and stop loss. Hence we have to take the help of other tools such as daily – weekly pivots, daily – weekly high/low ema, high/low made today and in last two days etc to decide the level of target and stop loss. The stop loss should be put at such a level that it is not eaten away by the market easily and then bounce again.
For trades of Nifty future, generally 20/25 points stop loss is advisable, while for trades of BankNifty 60-70 points stop is recommanded.
MySAR technique is more advantageous when at least 2 or more lots are traded so as to facilitate partial booking of profit and riding the trend. Due to partial booking of profit, one
- can easily ride the trend,
- can keep his funds released to re-enter the trade,
- can protect the employed funds easily.
Profit should be booked at 40-50 points of price movement in case of Nifty future trades and 70-80 points in case of BankNifty future trades. Once profit is booked the stop loss should be trailed to the entry price.
Watch higher time frame price movements and trade in lower time frame.
Take each trade with self confidence and without any fear of loss. Even if you have to incur any loss due to stop loss or gap up/down opening etc, accept it with smiling face and try to recover it in the next trades, but step by step….never intends to recover it wholly at once in the next trade.
Keep habit of transferring profit to your personal a/c and do not keep it with broker’s account so that you are not tempted to trade for more quantity. Keep only required funds in broker’s account and not too much.
Keep habit of transferring every month some parts of profit earned into safe investment like gold/silver, bank fixed deposits, any good sip schemes etc.
SAR Vs TSL
Most of the traders know about it, But let me re-iterate again for my new trader Friends:
SAR – Stop and Reverse – It means that if a particular level of nifty is violated, Not only we have to stop(exit) our current trade, but also need to open a reverse trade. e.g – We have a long position, and SAR is 5097, and nifty is currently trading at 5120. So as soon as Nifty breaks 5097, not only we will exit from our long position but also we will initiate Short trade from 5097.
TSL – Trailing Stop Loss – It means that we want to lock profits in a particular trade, if a particular level is violated. Lets take 11 June real example, I posted to move TSL to 5097, and when the level was broken my long was just booked without opening a new short trade.TSL is just to protect profits, there is no Trend change sign. But SAR also signifies the Trend reversal.