Suppose you are still a new trader and want to find a different indicator.
That tells you the direction of the trend and gives the specific buy or sell signals.
You can follow immediately, and then the super trend is a perfect indicator for everyone.
A good thing about the indicator is that it is simple to use and has a perfect hand.
Because the super trend strategy is based on the ATR, this indicator generates the signals based not only on the momentum but also on the market’s volatility.
If you open the super trend indicator, this is what it looks like as in the image.
A single line stretches from green to red and vice versa.
How To Use SuperTrend Strategy ?
If the line turns green, meaning to take a buy position, if the bar turns red, meaning to close a new buy position and open a new sell position.
But by using this supertrend strategy this way, you may get many trades on super trend signals, and you may be at a considerable loss.
By using this indicator, in this way, there will be no open trade till the end of the, and you will be trading continuously, either buying position or sell position.
It will be a huge problem.
If you are a trader, you will be aware that the market is not always trending.
It can also be a ranging market.
Because the supertrend strategy constantly shows nonstop signals, it will also show the signals in a range market.
If a market is in an uptrend, the super trend will show the buy signal.
If the market is in a downtrend, the super trend shows the sell signal.
After the trend ends, the market went flat, but the problem is that the super-trend is always giving signals.
It also gives the signal on the range market; that signal is fake.
How To Avoid These Fake Signals In SuperTrend Strategy ?
It’s simple, filter out these range markets, so we can only take the signals from the super trend on the trending markets.
How To Filter Range Markets In SuperTrend Strategy ?
First, you need to apply three super trend indicators, and the first indicator value would be 3 and 12.
The next indicator value would be 1 and 10.
The third one would be 2 and 11.
We use the supertrend strategy by setting all these indicators by only taking positions if all the lines are the same color.
For example, in this chart, we can see that the bottom line is green, and the other two lines are red, so we do not execute any trade.
After turning all the lines into green, we will execute a buying position.
We do not execute any trade if the bottom line is red and the other two green lines.
After turning all the lines into red, we will execute a selling position.
How to exit the trade, or what is the exit signal In SuperTrend Strategy?
There are many ways to exit the trade; my favorite tracks are,
Exit according to our risk-reward ratio in supertrend strategy.
If the color of the line no longer matches.
If the line, among those three lines, will switch to the opposite color, we can exit the trade.
Another strategy I use to trade the super trend indicator is,
Adding 200 EMA to the super trend strategy.
SUPER-TREND + 200 EMA
because the super tend is used to detect short-to-medium-term trends, and 200 EMA lines can see longer-term trends.
By combining these two indicators, will be the perfect strategy.
For this strategy, I am using the default settings of the super trend indicator.
No need to use three types of super-trends for this strategy
We only take the buy signals from the super-trend when the price is above the 200 EMA line.
We only accept the sell signals from the super-trend when the price is below the 200 EMA line.
If the super trend has given the buy signal, if the price is below the20 EMA line, we do not enter the trade; still, the price breaks the 200 EMA line, or the price wants to be traded above the 200 EMA line.
If the super trend has given the sell signal, if the price is above the 200 EMA line, we do not enter the trade; still, the price breaks below the 200 EMA line, or the price wants to be traded below the 200 EMA line.
We want to be clear about the signal of super trend,
For example, even though the price fluctuates above the 200 EMA in an uptrend market, the super-trend indicator would not give the buying signal.
We should not enter the buying position.
Even though the price fluctuates below the 200 EMA in a downtrend market, the super-trend indicator would not give the selling signal.
We should not enter the selling position.
using supertrend will not get the accurate and probable trade.
by addition of following indicators, the probability of the trade increases.
How To Trade In Stock With The Help Of Bollinger band : Supertrend Strategy
Bollinger band will give the early signal, whether the market is moving towards the bullish side or bearish side.
If the Bollinger band is in a narrow position, that means contracting, and the signal is that market is in consolidation mode, so do not enter any trade while the market is in consolidation mode; wait for the scrip for picking movement.
The signal of whether the market is picking movement is, our indicator Bollinger band will expand, or it will show some expansion moment.
You can enter the trade after the expansion of the Bollinger band.
Remember Bollinger band will show whether the market is in bullish mode, consolidation mode, or bearish mode.
When the 5-minute candle has opened outside the Bollinger band, that trade will not be much effective.
Trade will be effective when the candle stays on the inner side of the Bollinger band.
I will trade when the candle is on the inner side of the Bollinger band.
I will avoid trading when the candle opens outside the Bollinger band.
How To Trade In Stock With The Help Of Moving Average: Supertrend strategy
Trading by using the moving average will be accurate
Enter the long trade, when a cross-over of moving average takes place towards the bullish side.
And your stop loss should be the day low.
And your target would be according to your risk-reward ratio.
Enter the short trade when a cross-over of moving average takes place towards the bearish side.
And your stop loss should be the day high.
And your target would be according to your risk-reward ratio.
I suggest the 5 minute time frame for the intraday traders.
Remember one thing supertrend strategy will work more effectively on the combination of moving average and Bollinger band.
All the above cases discussed are all probabilities; there are no sure shot points in the stock market.
I may confidently say that if you follow the above rules, you can get the most accurate trade on supertrend strategy.
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