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Strategies & Market Trends : Systems, Strategies and Resources for Trading Futures

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To: Jerry Olson who wrote (3506)	9/9/1998 9:06:00 AM
From: Patrick Slevin	Read Replies (1) of 44573

SAR stands for Stop-and-Reverse. So, ...well first of all you cannot do this with options and it would be tough with stock.... Lets say you are long one contract in the S&P September series.. You bought at 1020 You place a stop at, say 1016 to sell 2. As the contract moves up and slows you also trail your stop....hopefully tightening it as you go so, let's say it hits 1028 and your sell stop is now at 1026 but still for 2 contracts. And, again hypothetically, the market declines through the 26 level. You now have locked in 6 points on the long side and closed it out and simultaneously opened a short from the 26 level. As the market declines you now make money on the downside. You have reversed the position. The beauty of the trade is that it keeps one from being a Perma-Bull or Perma-Bear. It forces you into a pure focus, not caring if the market goes up or down, as you try to stay fluid with changes in trend. Of course, whipsaws are possible so you have to be very flexible and aware of what's transpiring at any given point.

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