In the modern industry, most of the equipment use semiconductor devices and microprocessors which are sensitive against power disturbances. Among all power disturbances, voltage sags are considered as the most frequent type of disturbances and their impact on sensitive loads is severe. To monitor these disturbances, voltage sag recorders (VSR) must be installed. However, installation of VSRs at all buses in the system is not economical and it needs to be minimized. This paper presents a sag monitor positioning algorithm which finds the optimal number and location of VSRs in the power distribution system. The IEEE 34-node test system was modeled in DIgSILENT software in obtaining monitor reach area matrix for various types of faults. Then, an optimization problem is formulated and performed using genetic algorithm to guarantee the observability of the whole system with minimum number of VSRs. A new index has been used to find the best location to install monitor in the distribution system.