Super Trend Plus is a trading system that uses four Supertrends set with different parameters.
The idea behind this system is that when three Supertrends move in the same direction, there is a strong trend confirmation, but entry occurs only when the fourth Supertrend also moves in the same direction as the other three.
For example, the first Supertrend could be used with a volatility multiplier of 3 and a period of 10, the second Supertrend with a volatility multiplier of 3 and a period of 12, the third Supertrend with a volatility multiplier of 2 and a period of 11, and the fourth Supertrend with a volatility multiplier of 1 and a period of 10. This trading system allows for filtering out false signals and identifying entry points with greater precision.
When transitioning from four Supertrends in the same direction to three Supertrends in the same direction and then back to four Supertrends in the same direction, this can be considered a continuation signal of the trend after a small pullback. This signal occurs when all four Supertrends are moving in the same direction and then one of the Supertrends temporarily moves in the opposite direction, bringing the number of Supertrends in the same direction to three. This may indicate a temporary correction or pullback in the main trend. However, when the Supertrend that moved in the opposite direction returns to the same direction as the other three Supertrends, this can be considered a signal of the continuation of the main trend. In practice, this signal may indicate that the price has undergone a temporary correction, but the main trend is still in effect. If this signal occurs, it could be a good time to enter a long or short position depending on the current trend.
It is important to set the right stop loss and take profit levels to limit losses and maximize profits, as with any other trading system. It is also recommended to test this signal on historical data to evaluate its effectiveness before using it with real money.
By observing the inclinations of the Supertrends, the angle at which they move relative to the price, traders can get an idea of the strength of the trend and its direction. It is important to consider other factors such as support and resistance levels, volume, and fundamental market analysis.
Stop loss management involves putting the stop loss when entering a position on the Supertrend farthest from the price at an adequate distance from the entry point.
Once the position reaches breakeven plus a certain margin, it may be considered to move the stop loss to breakeven, a level that no longer incurs losses.
Subsequently, the stop loss could be moved to the Supertrend closest to the price or to the intermediate position between the two closest Supertrends, depending on personal preferences.
In general, stop loss management should be based on risk management and one's trading strategy. It is important to set appropriate stop loss levels and manage them actively based on market developments.
