You may have seen the Supertrend Indicator appearing in Forex charts. It’s a great Forex indicator and you can actually make some money with it alongside a solid risk management plan. Using the Supertrend Indicator will give you a real advantage over your competition. You’ll be able to spot major trends starting and it will help guide you into making big money trades. Suptertrend is one of the best indicators of large-scale trends you’ll ever see. A lot of people are using the indicator and they are seeing some pretty good results. So, there are certainly people making a living just by utilizing the trend direction you see with Supertrend.
Here are 2 tips to getting you started with Supertrend right away.
Trading the Trends
You can see easily on the charts an overall direction of the price by using Supertrend. When it crosses over then price has shifted more to the buy or sell side overall. At this point you can begin to follow a trend for trading.
Trend trading is by far one of the most popular ways to trade. As opposed to picking bottoms and tops, you are looking to piggy back momentum with the current direction. Follow the patterns that most trend trading experts do. Higher highs and higher lows or lower highs and lower lows.
Once Supertrend crosses into a new direction then be on the lookout for a new low or high forming. At this point you can decide whether there is sufficient momentum in the price to warrant going long or short with the new trend. Of course you need to use stop loss in case the analysis has not been correct, but keep these small and you should begin to win overall.
Scalping Supertrend with Stochastic
Another great thing about the Supertrend Indicator is that it’s extremely easy to read and shows you what direction the overall bias is on the chart. You don’t need to be an expert trader to be able to follow what it’s telling you and understand what is going on in the market.
With this in mind you can scalp forex using a stochastic and Supertrend. The idea is that when the stochastic hits what is said to be an oversold or overbought level, which is opposite to the direction Supertrend is saying to trade, then you can look to go long or short when stochastic crosses up or down. A good stochastic setting for this is 8,3,3.
When Supertrend is saying direction of trend is up, wait for stochastic to cross down below 20 (which is said to be oversold) then look for price to head higher and possible stochastic crossing up. Use the low as a point to place you stop loss under, and never get greedy – take profits.
The reverse of this is exactly the same for selling short. Look for Supertrend down, wait for stochastic to go past 80 (overbought) and price to make action as if it is going to cross down again.
So there are two ideas on how to get started trend trading or scalping forex with Supertrend.
Of course, you’ll need to do some training in order to use the Supertrend Indicator effectively. When you have a basic understanding of the indicator, you will be able to make more accurate decisions. With the increased accuracy, you will be able to make some great trades and even make some big profits. This is the best way to make sure you can use the indicator correctly.