馃攳
Supertrend Indicator Tested 100 Times so you don't have to... - Forex Day Trading - YouTube
Channel: TRADING RUSH
[0]
Well, I tested supertrend indicator 100 times,
and the results I found were pretty interesting.
[6]
In this video, you will learn about the supertrend
trading strategy, it's real win rate, and
[11]
some disadvantages I found after testing it
100 times.
[16]
But first of all, if you haven't watched my
ATR indicator video, maybe considered watching
[21]
it before this video, since Supertrend indicator
relies on the ATR values to calculate its
[27]
values.
[28]
And maybe checkout other videos where i tested
other trading indicators 100 times to find
[34]
their real winrates.
[36]
You can watch them on the official Trading
Rush Website.
[39]
If you are new to trading, and have never
heard of this indicator before, here's how
[44]
the popular Super Trend Indicator looks like.
[47]
Now, on some trading platforms, super trend
indicator can look a little bit different.
[53]
But the basic indicator will look something
like this.
[56]
A simple line that changes its color now and
then.
[60]
These colors are usually red and green.
[62]
The supertrend indicator is very similar to
a moving average.
[67]
and just like a moving average plotted on
a chart, supertrend indicator will also give
[72]
crossovers time to time.
[74]
When the Supertrend line is below the price,
the color of the indicator will turn green.
[80]
Similarly, When the Supertrend indicator is
above the price, the color of the indicator
[86]
will turn red.
[88]
But what do these changing colors mean?
[90]
Well, as the name of the indicator suggests,
the Supertrend indicator is trying to show
[95]
the current Price Trend.
[96]
It is trying to show the direction of the
trend.
[99]
When the supertrend indicator is green in
color, and is below the price, the price is
[104]
considered to be in an uptrend.
[106]
Similarly, if the supertrend indicator is
above the price, and is red in color, there
[112]
is a downtrend going on.
[114]
Now to keep it simple, that's all supertrend
really is.
[118]
An indicator to find the direction of the
trend.
[121]
But people have figured out a way to use it
as an entry signal generator.
[126]
That's right.
[127]
The simple supertrend entry strategy goes
something like this.
[130]
You buy, when the supertrend indicator flips
below the price, and the color of the indicator
[136]
changes to green.
[138]
Set your stoploss, at or below the supertrend
indicator.
[142]
And you sell, when the supertrend indicator
flips above the price, and the color of the
[148]
supertrend changes to red.
[150]
Set the stoploss, at or above the supertrend
line.
[154]
Now once you have entered the trade, how can
you exit using the same indicator?
[158]
Well, if you are not the trader that uses
a fixed stop loss and profit target, you can
[164]
use the supertrend line to trail your stop
loss.
[167]
When the supertrend indicator turns green
and flips below the price, you can enter the
[172]
long trade, and trail the stoploss just below
the supertrend line.
[176]
The line will eventually flip over the price,
and then you can completely close your long
[181]
position.
[182]
If you have entered a short position when
the supertrend flipped to red color, you can
[186]
trail your stop loss using the supertrend
line.
[190]
Now if you have been trading for a while,
you know we can't take every trade at every
[194]
entry signal given by the supertrend indicator.
[198]
Using the indicator just to find the trend
direction is fine, but using it as a entry
[203]
signal generator on its own can be bad idea.
[207]
If you take every entry signal given by the
supertrend, you will end up taking short positions
[212]
in a strong long term uptrend, and long positions
in a strong long term down trend.
[218]
So to filter out the false signals given by
the supertrend indicator, we will use the
[223]
200 period exponential moving average.
[225]
200 period moving average is widely used to
find the direction of the long term trend.
[231]
If the price is above it, there is an uptrend
going on, and if the price is below it, there
[236]
is a downtrend going on.
[239]
So here's how the modified supertrend indicator
trading strategy goes.
[243]
And I have also tested the supertrend indicator
100 times in the same way, and the results
[249]
were pretty impressive.
[251]
In the long setup, only buy when the supertrend
line turns green and goes below the candles,
[256]
and the price is still above the 200 period
moving average.
[261]
Set your stop loss, at or below the supertrend
line.
[264]
In the short setup, only sell when the supertrend
indicator turns red and flips above the candles,
[270]
and the price is still below the 200 period
moving average.
[274]
In this short set up, you can set your stoploss
at or above the supertrend line.
[279]
So using the Trading Rush App to track my
trades, I tested the supertrend strategy 100
[285]
times on the Euro JPY pair.
[287]
But I quickly ran out of market data and had
to switch to the Euro USD pair.
[293]
When I tested other indicator strategies 100
times, I used a fixed stop loss and profit
[298]
target.
[299]
So to keep things similar, I have used a fixed
profit target and stoploss as well.
[305]
In the Trading Rush App, you can see the winrate
and the profit graph changing as I take more
[310]
trades.
[311]
If you haven't already, you can download the
Trading Rush App from the Play Store, or using
[316]
the link in the description.
[318]
You can use it to keep track of your trades
while backtesting your trading strategy.
[323]
While the backtesting clip is running, here
are some important things and disadvantages
[327]
I found about the Supertrend indicator.
[330]
Number 1.
[332]
Supertrend Indicator, only shows the current
direction of the trend.
[336]
It cannot predict the trend direction.
[338]
This is why it is better to use the 200 period
moving average with the supertrend indicator
[343]
if you are using it as an entry signal generator.
[347]
Number 2.
[348]
You cannot blindly take every trades given
by the supertrend.
[352]
If you do, you will end up taking trades in
the opposite direction of the long term trend
[357]
as price gives many pullbacks in a long term
trend.
[360]
Number 3.
[362]
While testing this strategy 100 times, I found
that I was losing trades, and was not getting
[367]
a good risk to reward ratio, because the stoploss
i was setting using the supertrend line was
[373]
sometimes too far from the entry.
[375]
Since price does not move infinitely in the
same direction, most of the time, my stoploss
[380]
was hit as price reversed before hitting the
profit targets.
[384]
So maybe consider setting your own stoploss
using simple price action levels, when the
[389]
Supertrend stoploss is way too big.
[392]
So after testing the supertrend indicator
100 times, I found that the win rate of the
[397]
supertrend strategy is approximately 46 percent.
[401]
Since I used the 1.5 to 1 reward risk ratio
with other trading strategies in my previous
[407]
backtesting videos, I have used the same 1.5
to 1 ratio with this strategy as well.
[413]
And because of that, even with a win rate
of 46 percent, I was able to make a profit.
[419]
During this backtest, I was able to win 7
trades in a row.
[422]
but also lost 7 in a row.
[425]
Even though the supertrend didn't produce
a very good winrate like some other indicator
[429]
strategies I have tested before, the Supertrend
Trading Strategy is still a profitable strategy.
[436]
That's all.
[437]
Now you know more about the super trend indicator.
[440]
Like the video if you liked it.
[442]
Subscribe for more videos.
[444]
Check out the Trading Rush App and Trading
Rush Website for more back testing videos.
[449]
Thanks for watching, and thanks to all the
patrons who make these videos possible by
[453]
supporting the channel on Patreon.
[455]
You are Awesome.
Most Recent Videos:
You can go back to the homepage right here: Homepage