The Supertrend indicator is popular among beginner traders for its ease of use, but using it alone can lead to losses. Combining it with a 200-period EMA or multiple Supertrend indicators can lead to profitable strategies. Wait for all indicators to turn the same color before opening a trade.

How to Use the Supertrend Indicator: 2 Profitable Trading Strategies

Introduction: Why the Supertrend Indicator Alone is Not Enough

The Supertrend Indicator is a popular tool among new traders because it is easy to use and gives entry signals. However, if you rely on this indicator alone, you are likely to lose money in the long run. In this article, we will show you two profitable strategies that you can use with the Supertrend Indicator to increase your chances of success.

The Basic Trading Strategy of the Supertrend Indicator

Before we reveal the two highly profitable strategies, let’s look at the basic trading strategy of the Supertrend Indicator. To use this indicator, you need to add it to your charting software. The Supertrend Indicator has two zones: the green zone represents an uptrend and the red zone represents a downtrend. You should go long when the zone turns green and go short when the zone turns red.

Strategy 1: Supertrend Indicator and 200-period E.M.A.

The main issue with the Supertrend Indicator is that it gives lots of entry signals, and it doesn’t work well when the market is moving sideways. To filter out these range markets, we will use moving averages. We will add the 200-period E.M.A. to our chart and use it in combination with the Supertrend Indicator.

Our strategy is to only open a position if the short-term trend is in the same direction as the long-term trend. If the price is above the moving average, we will only take buy signals and skip the sell signals. If the price is below the moving average, we will do the opposite. This way, we will try to skip the false signals that the Supertrend Indicator often gives.

We will put our stop-loss at the Supertrend line and move it while following the trend. We will close our position when the price touches our stop-loss or when the Supertrend Indicator changes color. This strategy is simple yet effective and has a higher winning rate compared to using the Supertrend Indicator alone.

Strategy 2: Triple Supertrend Indicators

This strategy is a bit more complicated but has been more profitable in our experience. We will add three Supertrend Indicators to our chart and get rid of the E.M.A. We will make some adjustments before starting to trade.

We need to adjust the settings before trading. We will change the inputs of each indicator. The first indicator’s period will be 12, and the multiplier will be 3. The second indicator’s period will be 11, and the multiplier will be 2. The third indicator’s period will be 10, and the multiplier will be 1.

The main goal of this strategy is to only open positions when all of the lines turn the same color. We will wait until all of the lines turn the same color before opening a position. For example, if all of the lines turn red, we will open a short position.

The Supertrend line in the middle will be our stop-loss point. We can exit the trade by aiming for two times higher than our stop-loss as a take profit target. This strategy is more advanced but has the potential to be more profitable.

Conclusion: Supertrend Indicator with Moving Averages

In conclusion, the Supertrend Indicator is a valuable tool for new traders. However, to increase your success rate, we recommend using the Supertrend Indicator in combination with moving averages. You can use the Supertrend Indicator with the 200-period E.M.A. or the triple Supertrend Indicators strategy. Remember to always use proper risk management techniques and adjust your strategies as needed.