Well, I examined supertrend indicator 100 occasions, and the outcomes I discovered have been fairly attention-grabbing. In this video, you will learn concerning the supertrend buying and selling technique, it is real win price, and some disadvantages I discovered after testing it 100 occasions. But first of all, if you haven’t watched my ATR indicator video, maybe thought-about watching it earlier than this video, since Supertrend indicator depends on the ATR values to calculate its values. And maybe checkout different videos the place i tested other trading indicators one hundred times to search out their real winrates. You can watch them on the official Trading Rush Website.
If you’re new to trading, and have by no means heard of this indicator earlier than, this is how the popular Super Trend Indicator appears like. Now, on some trading platforms, tremendous trend indicator can look somewhat bit different. But the essential indicator will look something like this. A simple line that adjustments its colour from time to time. These colours are usually purple and green. The supertrend indicator is similar to a moving common. and identical to a moving common plotted on a chart, supertrend indicator may even give crossovers time to time. When the Supertrend line is below the worth, the color of the indicator will flip inexperienced.
Similarly, When the Supertrend indicator is above the value, the color of the indicator will turn pink. But what do these altering colors mean? Well, because the name of the indicator suggests, the Supertrend indicator is making an attempt to point out the present Price Trend. It is making an attempt to level out the direction of the pattern. When the supertrend indicator is inexperienced in color, and is beneath the value, the value is considered to be in an uptrend. Similarly, if the supertrend indicator is above the worth, and is red in colour, there is a downtrend occurring. Now to maintain it simple, that is all supertrend actually is. An indicator to search out the direction of the pattern.
But folks have figured out a means to use it as an entry sign generator. That’s proper. The simple supertrend entry technique goes one thing like this. You purchase, when the supertrend indicator flips beneath the value, and the color of the indicator modifications to inexperienced. Set your stoploss, at or beneath the supertrend indicator. And you promote, when the supertrend indicator flips above the value, and the color of the supertrend changes to red. Set the stoploss, at or above the supertrend line. Now after you have entered the trade, how can you exit utilizing the identical indicator? Well, in case you are not the trader that uses a exhausting and fast cease loss and revenue goal, you ought to use the supertrend line to trail your cease loss.
When the supertrend indicator turns inexperienced and flips under the worth, you can enter the long trade, and path the stoploss slightly below the supertrend line. The line will eventually flip over the worth, after which you’ll have the ability to completely shut your lengthy place. If you might have entered a short place when the supertrend flipped to pink colour, you’ll find a way to trail your stop loss utilizing the supertrend line. Now if you have been buying and selling for a while, you understand we will not take every commerce at every entry signal given by the supertrend indicator. Using the indicator just to find the pattern direction is okay, but using it as a entry signal generator by itself could be unhealthy thought.
If you’re taking each entry signal given by the supertrend, you’ll find yourself taking short positions in a strong long run uptrend, and long positions in a robust long term down development. So to filter out the false alerts given by the supertrend indicator, we are going to use the 200 period exponential moving average. 200 period moving common is widely used to find the direction of the long run pattern. If the price is above it, there is an uptrend occurring, and if the worth is below it, there’s a downtrend going on. So this is how the modified supertrend indicator trading strategy goes. And I have also examined the supertrend indicator one hundred occasions in the same way, and the results had been pretty spectacular.
In the long setup, solely buy when the supertrend line turns inexperienced and goes below the candles, and the worth remains to be above the 200 interval moving common. Set your stop loss, at or beneath the supertrend line. In the quick setup, solely sell when the supertrend indicator turns red and flips above the candles, and the price continues to be below the 200 period shifting average. In this quick arrange, you possibly can set your stoploss at or above the supertrend line. So using the Trading Rush App to track my trades, I tested the supertrend technique one hundred instances on the Euro JPY pair. But I shortly ran out of market knowledge and needed to change to the Euro USD pair.
When I examined different indicator strategies one hundred occasions, I used a set cease loss and revenue goal. So to maintain things similar, I really have used a onerous and fast revenue target and stoploss as well. In the Trading Rush App, you’ll find a way to see the winrate and the profit graph altering as I take extra trades. If you have not already, you probably can download the Trading Rush App from the Play Store, or utilizing the hyperlink in the description. You can use it to keep monitor of your trades while backtesting your trading technique. While the backtesting clip is working, listed right here are some necessary things and drawbacks I found concerning the Supertrend indicator.
Number 1. Supertrend Indicator, only exhibits the present direction of the development. It cannot predict the development path. This is why it’s higher to use the 200 period moving common with the supertrend indicator if you are using it as an entry sign generator. Number 2. You cannot blindly take every trades given by the supertrend. If you do, you will find yourself taking trades in the opposite direction of the long run trend as worth provides many pullbacks in a long term development. Number three. While testing this strategy a hundred instances, I found that I was dropping trades, and was not getting a good danger to reward ratio, because the stoploss i was setting utilizing the supertrend line was generally too removed from the entry.
Since value doesn’t move infinitely in the same path, more typically than not, my stoploss was hit as worth reversed before hitting the profit targets. So perhaps contemplate setting your own stoploss using easy price motion levels, when the Supertrend stoploss is method too huge. So after testing the supertrend indicator 100 occasions, I found that the win rate of the supertrend strategy is approximately forty six %. Since I used the 1.5 to 1 reward danger ratio with other trading methods in my earlier backtesting movies, I truly have used the identical 1.5 to 1 ratio with this technique as nicely. And due to that, even with a win rate of 46 p.c, I was able to make a profit.
During this backtest, I was capable of win 7 trades in a row. but in addition misplaced 7 in a row. Even although the supertrend did not produce a very good winrate like another indicator strategies I really have tested before, the Supertrend Trading Strategy continues to be a worthwhile technique. That’s all. Now you know extra concerning the super trend indicator. Like the video should you appreciated it. Subscribe for more movies. Check out the Trading Rush App and Trading Rush Website for more again testing videos. Thanks for watching, and due to all of the patrons who make these movies possible by supporting the channel on Patreon. You are Awesome.