Supertrend Forex Trading Strategy

The supertrend forex trading strategy is based on two indicators:

  • the supertrend indicator (settings: 8, 1.5)
  • and the SAR indicator (settings: 0.2, 0.2)

Here’s the download link for the supertrend indicator mentioned above:SuperTrend_v1.2

WHEN TO ENTER A BUY TRADE

  1. Supertrend must be bullish (blue line)
  2. And SAR must give a buy signal (a green dot must form under a candlestick)
  3. Two types of orders can be placed, a market order or buy stop order 1-2 pips above the high of the candlestick where the SAR dot gives a buy signal.
  4. For stop loss, place it at least 5 pips below the low of the candlestick mentioned in step 3.
  5. Exit the trade when SAR indicator gives a sell signal.

Supertrend Indicator Forex Trading Strategy For buy Setup

WHEN TO ENTER A SELL TRADE

You simply just do the exact opposite of what you did in a buy setup:

  1. supertrend indicator must be red
  2. The SAR indicator must give a sell signal ( a green dot must form above a candlestick)
  3. You can place a sell market order or a sell stop order 1-2 pips below the low the candlestick where the SAR dot gives a sell signal.
  4. Place your stop loss  at least 5 pips above the high of the candlestick mentioned in step 3.
  5. Exit the trade when the SAR indicator gives a buy signal.

Supertrend Forex Trading Strategy

DISADVANTAGES OF THE SUPERTREND FOREX TRADING STRATEGY

  1. stop loss distances can be quite large.
  2. SAR indicator is a lagging indicator which means price travels ahead and the SAR indicator responds late.
  3. in a non trending market, this strategy will perform very badly.

ADVANTAGES OF THE SUPERTREND FOREX TRADING STRATEGY

  1. In a nice trending market, this forex strategy has the potential to make a lot of pips quite easily.
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