Who says indicators are worthless? I just generated $3403 using this amazing supertrend indicator trading strategy within 48 hours. This strategy has an over 80% win rate if executed perfectly.
The game plan is super simple and can easily be grasped by anyone with little market experience. To be honest, I also had to face a loss; however, that was all due to my own negligence.
So let’s start by covering all the major details and see how you as a trader can use the same techniques I did on your trading account. Also, do not forget to check out the live Myfxbook records that I have shared at the end of the article. It holds all the details on my wins.
What is the Supertrend Indicator?
The Supertrend Indicator, is a tool built to send traders buy or sell signals in trending markets. This indicator is built for trend-following much like the MACD or Moving Averages.
For you nerds, here is the formula.. (scroll down to get into the strategy!)
The supertrend indicator is composed of three lines: the fast line, the slow line, and the signal line. The fast line is a simple moving average of the security’s closing prices over the last N periods. The slow line is a moving average of the fast line. The signal line is a moving average of the slow line.
The respective calculations are as follows:
Up = (high + low / 2) + multiplier x ATR
Down = (high + low) / 2 – multiplier x ATR
How can I install the Supertrend indicator?
It is quite easy to install the supertrend indicator on your MetaTrader. The steps are simple and summarized as follows:
- Download the supertrend indicator onto your PC
- Copy the ex4/5 files into the expert directory of the MT4/5 platform
- Refresh the Indicators tab in the software
- Scroll down the indicators tab and find the supertrend indicator
- Enable auto trading and attach it to the charts
For the Trading View platform, the overall steps are:
- Log in to your trading account and select an instrument
- Head over to the indicators tab and search “Supertrend.”
- Click on the supertrend indicator, and it will attach itself to the chart automatically
The Supertrend Indicator Strategy Rules
The security is in an uptrend when the fast line is above the slow line, and the signal line is above the fast line. The security is in a downtrend when the fast line is below the slow line, and the signal line is below the fast line.
Confused right? To simplify, if the TV chart shows a red cloud and line, it’s a downtrend and vice versa.
The daily chart on EURCHF shows the supertrend indicator strategy. Can you see the red and green lines and clouds? They all show the respective buy and sell trends.
Who doesn’t want to improve their chances of getting more money in the bag? To increase our odds of winning, we will add another indicator to help with the analysis, i.e., the buy sell signal. The indicator will help us capture the pullbacks.
Switch over to a 1-minute time frame on the Trading View terminal as we will be scalping. Head over to the supertrend settings and unlock the plot’s background to make our charts clean. Select the time frame to 5 minutes. That’s it. We are done with the settings, and now it’s time to discuss the risk management and the implementation of the strategy.
We will be working with a 1:1 risk/reward ratio. The original strategy is practically aimed at a profit factor of 2; however, I found out that would lower your win rate. It is safer to target a 1:1 risk reward. Profit enthusiasts can enable the trailing stop loss to aim for 1:2 or even 1:3 ratios.
So guys, we have finally come over to the strategy implementation. I know you are excited to learn how to make over $3000 like I did. So let’s get into it.
For our sell signals, we will look for a red line or dots above the candles on the supertrend indicator. We will use the buy sell indicator to confirm our entry into the trades. When the price crosses the midline from the bottom and produces three consecutive green candles, we position ourselves for placing the trade. We will take a sell trade as soon as a red candle is imprinted after the successive green bars.
The red arrow on the 1-minute chart on the NZDUSD pair shows us a great setup where we can use our strategy. The supertrend indicator is imprinting the red dots highlighting the bearish trend on the 5 min chart. We wait for a pullback as the instrument moves above the orange line of the buy sell signal. It then prints a bearish candle which is the point of our entry. You can place your trade as soon as the candle closes.
In our NZDUSD setup, we can enable the trailing stop loss to aim for a higher risk-reward of even 1:4. It can be set over to a few pips or prior candle highs.
Let’s go through one more example of an excellent scalp trade on gold.
Gold is one of the volatile instruments that has a huge potential for profits if traded ideally. Here we can see two brilliant setups that occur within an hour. You could’ve done and dusted within a short span. This is the power of the supertrend indicator strategy. The overall criteria for the entry are the same: we wait for a bearish candle above the orange line and confirm our entry via the red supertrend dots.
Remember not to be greedy like the cake eater below and close out your trades when the target is met.
Now, let us move over to the buy setups. The conditions are the same, yet the criteria are reversed. Here we will look for the green supertrend indicator dots or lines and wait for a pullback when the price crosses below the orange line. In this case, it will be a bullish candle after successive red bars.
A trade setup on the 1-minute chart on CHFJPY. The green imprints from the supertrend indicator highlight the uptrend. The three red candle sticks give in to the overall bullish pressure and form a green bar, our entry signal.
Can you see how easy it is to trade with the supertrend indicator? If you couldn’t understand the buy setup above, look over this another amazing entry where you can easily smash the take profit in minutes.
On our initial entry at the first green candle, the market didn’t shoot straight upwards. It decided to range a little bit all within our safe area before deciding to go for the take profit. Our excellent risk management and proper mindset here give an easy risk reward of 1:1 or even more.
Myfxbook Trading Records
This is my real verified trading account on Hanko trade broker. I made over $3400 in just 2 days. You can contrast the drawdown and monthly gain and see that that my overall risk reward is nearly 1:3.
I took 7 trades and won 5, giving a total win rate of 71%. Now for those who don’t know, a 70% win rate is highly appreciated in the forex market, especially when one is trading on a live portfolio and over 10 lots. I have a risk-reward ratio of 2.49, with an average win bagging in $1337.
I had a win, a loss, a win, and then a win 3 consecutive winners to finish my week off in the positive.
Overall, the supertrend indicator trading strategy works well, give it a try, and leave a comment below letting me know how you made out, or if you have any questions.
Does the supertrend strategy work all time?
While the strategy increases the overall winning probability, there will be times when it doesn’t work. The random nature of the market can cause you to hit a stop loss multiple times in a row.
Should I always use a stop loss while trading with a supertrend strategy?
A stop loss is a must to ensure that your losses are contained. Trading without proper risk management can result in a margin call.
Can I test other indicators with the supertrend?
Yes, you can test other indicators to see if they go along with the supertrend indicator. Make sure to use a demo account before proceeding to a live portfolio.
Which broker should I Use?
With tons of options available in the market, it’s quite easy to get confused while selecting a forex broker. Our supertrend indicator strategy requires a brokerage with minimal slippages and the best spreads. After aggressive research, I discovered that Hankotrade (Forex broker list here) meets all my needs with its 0 pips min spread and $4 commission per round lot charges. Furthermore, it also offers negative balance protection, multiple base currencies, and trading platforms to choose from.