The CCI-SUPERTREND Trading Strategy – Supertrend Indicator is one of the best indicators that is noted to be an effective trend following technical indicator. So, by the time you finish this tutorial, you’ll know exactly when to enter high probability trade using the Supertrend Indicator.
A SuperTrend is a trend following indicator similar to moving averages.
It is plotted on price and the current trend can simply be determined by its placement vis-a-vis price. It is a very simple indicator and is constructed with the help of just two parameters- period and multiplier.
When we construct the Supertrend indicator strategy, the default parameters are 10 for Average True Range (ATR) and 3 for its multiplier.
The average true range (ATR) plays a key role in ‘SuperTrend’ as the indicator uses ATR to compute its value and it signals the degree of price volatility.
In order to open a position, you have to identify the trend first and then find the good point to open a transaction. Today I will present a method of doing it which combines two indicators, the Supertrend and the Commodity Channel Index.
The Supertrend indicator is used for trend identification. The CCI oscillator provides signals to enter the trade.
So, How to trade with the strategy that combines the Supertrend and the CCI?
- Download “TraderVersity-CCIsupertrendSystem” (Zip/RAR File).
- Copy mq4 and ex4 files to your Metatrader Directory …/experts/indicators/
- Copy the “TraderVersity-CCIsupertrendSystem.tpl” file (template) to your Metatrader Directory …/templates /
- Start or restart your Metatrader Client.
- Select Chart and Timeframe where you want to test your forex system.
- Right-click on your trading chart and hover on “Template”.
- Move right to select “TraderVersity-CCIsupertrendSystem” trading system and strategy.
- You will see the “CCI-SUPERTREND Systemm” is available on your Chart.
- The candle should cross the supertrend indicator and close above it.
- The supertrend indicator line turns into blue. This gives you a hint there is an uptrend in the market.
Now, you are waiting for the signal from the CCI oscillator. Its line should cross the line of value 0 or 100 to the top.
Put an initial stop loss below the supretrend indicator with a buffer of 3 pips.
- The candle should cross the supertrend indicator and close below it.
- The supertrend indicator line turns into red. This gives you a hint there is a downtrend in the market.
Now, you are waiting for the signal from the CCI oscillator. Its line should cross the line of value 0 or -100 to the bottom.
Put an initial stop loss above the supretrend indicator with a buffer of 3 pips.
- The Supertrend Indicator is probably one of the most popular custom indicators for MetaTrader 4.
- The indicator is ideal for trend following strategies to spot a continuing trend.
- Also, Supertrend indicator can be an entry signal, exit signal, and stop-loss follower.