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
- Supertrend must be bullish (blue line)
- And SAR must give a buy signal (a green dot must form under a candlestick)
- 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.
- For stop loss, place it at least 5 pips below the low of the candlestick mentioned in step 3.
- Exit the trade when SAR indicator gives a sell signal.
WHEN TO ENTER A SELL TRADE
You simply just do the exact opposite of what you did in a buy setup:
- supertrend indicator must be red
- The SAR indicator must give a sell signal ( a green dot must form above a candlestick)
- 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.
- Place your stop loss at least 5 pips above the high of the candlestick mentioned in step 3.
- Exit the trade when the SAR indicator gives a buy signal.
DISADVANTAGES OF THE SUPERTREND FOREX TRADING STRATEGY
- stop loss distances can be quite large.
- SAR indicator is a lagging indicator which means price travels ahead and the SAR indicator responds late.
- in a non trending market, this strategy will perform very badly.
ADVANTAGES OF THE SUPERTREND FOREX TRADING STRATEGY
- In a nice trending market, this forex strategy has the potential to make a lot of pips quite easily.
Don’t forget to share this supertrend forex trading strategy with your fans and friends. Thanks.