It is a predictive algorithm that is calculated before a day's trading starts. It takes into account the extreme high or low value of an asset from previous day's trading and a parabolic plot is charted above or below the price line.When the SAR points cross below the price line long positions should be closed and when the SAR cross above the price line ,short positions should be closed.Since SAR is calculated pre-trade,it allows traders to set stop/loss positions.