Trading is easy, however, consistently profitable trading is where the difficulty lies. Traders since the beginning of time have tried to come up with a strategy that they could use in order to increase their win rates while minimizing their risk. In this article, we go over one of the ways in which you could do so. We discuss the different indicators, the settings used, and also go over the results. Read on to find out more.
There are 3 main indicators used in this trading setup, and each of these indicators has been explained below in detail.
The SuperTrend indicator is mainly used by traders in order to understand the trend of the stock price – it indicates whether the market is currently bullish or bearish on the stock. They work in a way very similar to the Moving Average indicators. Traders normally opt for using 2 or more SuperTrend indicators in conjunction with different periods to increase the reliability of this indicator. The two parameters that can you can tweak are the ATR period and the multipliers. While the SuperTrend indicator also provides buy and sell signals, they have been disabled for this strategy.
The RSI is a momentum indicator that is used to analyse the stock and identify if it is overbought or oversold at any point in time. It does this by monitoring the magnitude of recent price changes. The RSI is presented as a number between 0 and 100, wherein a number below 20 represents an oversold stock (ripe for a long position) and a number above 80 represents an overbought stock (ripe for a short).
The EMA is simply the exponential moving average of the stock’s closing price over a given number of trading sessions. It works in a very similar way to the SMA (Simple Moving Average), except it gives more priority to more recent data as this is considered to be more relevant than old data. The parameter that you have to enter for the EMA is the time period. Usually, traders only go long when the current price is above the EMA, and short when prices go below the EMA.
For this particular trading setup, the following settings were used on the indicators:
- Triple SuperTrend: For each of the three SuperTrends, the settings used were:
- SuperTrend 1: ATR Period = 10, ATR Multiplier = 1
- SuperTrend 2: ATR Period = 11, ATR Multiplier = 2
- SuperTrend 3: ATR Period = 12, ATR Multiplier = 3
- RSI: The default settings were used.
- EMA: Period = 200
A long was initiated when the price was above the 200EMA, and there was a crossover in the RSI below the 20 mark. In addition to this, at least 2 of the SuperTrends should be green.
A short was initiated when the price was below the 200EMA, and there was a crossover in the RSI above the 80 mark. In addition to this, at least 2 of the SuperTrends should be red.
The risk-reward ratio was fixed at 1:2.
Results and Adjustments
After a scalping session, the overall results were:
Profitability: 100.72% net profit
Number of Trades: 343
% of trades profitable: 56.85%
Profit factor: 1.194
Some additional indicators and settings that could be added in order to increase the win rate and reduce the risk employed are:
- You can adjust the stop-loss and take-profit levels to boost profitability.
- You can also try and adjust the risk-reward ratios in order to increase the riskiness and potentially increase the profitability of the strategy.
There are several highly profitable trading strategies that you can use in order to trade the markets and profit, but there are few that are as highly effective as the one discussed above. By implementing it even in its current form, you can make significant profits. You can also tweak the settings and alter the parameters on your own, resulting in a higher win rate and/or profitability.
- HIGHEST PROFIT Triple Supertrend Trading Strategy CODED & BACKTESTED Trade Results – YouTube
- TradingView Strategy
- Settings Used in the Video
- SuperTrend Indicator – Nifty Trading Academy
- Exponential Moving Average – Investopedia
- Relative Strength Index – Investopedia