Have you ever wondered why some traders seem to catch every major trend while others get whipped around by market noise and false signals? The answer might be simpler than you think and it involves using two SuperTrend indicators instead of just one.
Trading can feel overwhelming when youre staring at charts covered with dozens of indicators trying to make sense of conflicting signals. But what if there was a way to cut through all that noise and focus on what really matters - the actual trend direction? Thats exactly what the Double SuperTrend strategy delivers and Im gonna show you how to use it effectively.
What Makes Double SuperTrend Different from Regular SuperTrend
Before we dive deep into the strategy lets talk about why using two SuperTrend indicators is way better than using just one. The SuperTrend indicator uses Average True Range to identify bullish and bearish trends, showing green for buy signals and red for sell signals. The problem with using a single SuperTrend is that it can give you whipsaws in choppy markets.
Thats where the Double SuperTrend comes in - it uses two different timeframe perspectives to filter out those annoying false signals that cost you money. Think of it like getting a second opinion before making an important decision. The strategy uses SuperTrend indicators with different parameters calculated on multiple timeframes, giving you both a birds eye view and a close up perspective on market movements.
Understanding the Major and Minor Trend Concept
The Double SuperTrend strategy splits market analysis into two layers:
Major Trend (Slow SuperTrend): This is your big picture view using longer ATR periods and higher multipliers. It tells you the overall market direction and acts as your trend filter. In the code we looked at it uses 14 periods with a 6.0 multiplier by default.
Minor Trend (Fast SuperTrend): This captures shorter term price movements within the major trend using 10 periods and 3.0 multiplier. It gives you the actual entry and exit signals.
The genius of this approach is simple - you only take trades when both trends agree. Using a higher timeframe to identify the primary trend direction and a lower timeframe for entry timing ensures trades align with the higher timeframe trend. This dramatically reduces losing trades caused by counter trend moves.
How the Double SuperTrend Strategy Actually Works
Lets break down the mechanics so you understand exactly whats happening under the hood. The SuperTrend indicator uses ATR (Average True Range) to establish whether a trend is bullish or bearish by combining price activity and volatility.
The ATR Foundation
ATR or Average True Range is the secret sauce that makes SuperTrend work. Average True Range is a technical analysis volatility indicator that measures the degree of price volatility using a smoothed moving average of true range values. It looks at the biggest price swings in each period including gaps between trading sessions.
Think of ATR like measuring how wild a roller coaster is - higher ATR means bigger price swings and more volatility while lower ATR means calmer smoother price action. ATR measures how volatile a stock has been on average over a specific period of time smoothing it out into a single number.
The Double SuperTrend uses ATR in two different ways:
- Minor Trend ATR: With a 10 period lookback and 3.0 multiplier it stays close to price and reacts quickly to changes
- Major Trend ATR: With a 14 period lookback and 6.0 multiplier it sits further from price and only signals major trend shifts
Signal Generation Process
Heres how the strategy creates trading signals step by step:
For Buy Signals: You get a buy signal when the minor trend flips from bearish to bullish (red to green) AND the major trend is already bullish. This means youre buying into an established uptrend on a temporary dip - thats trading with the momentum not against it.
For Sell Signals: You get a sell signal when the minor trend flips from bullish to bearish (green to red) AND the major trend is already bearish. Youre selling into an established downtrend on a temporary bounce.
Buy Dip and Sell Bounce Signals: The strategy also includes special "dip buying" and "bounce selling" signals. A buy dip signal appears when youre in a major uptrend but the minor trend briefly turns bearish - this catches pullbacks in strong uptrends. A sell bounce signal does the opposite catching rallies within strong downtrends.
| Signal Type | Major Trend | Minor Trend Change | Trading Action |
|---|---|---|---|
| Buy Signal | Bullish (Up) | Bearish to Bullish | Enter Long Position |
| Sell Signal | Bearish (Down) | Bullish to Bearish | Enter Short Position |
| Buy Dip | Bullish (Up) | Bullish to Bearish | Add to Long Position |
| Sell Bounce | Bearish (Down) | Bearish to Bullish | Add to Short Position |
Setting Up Double SuperTrend on Your Charts
Getting this strategy working on your charts is pretty straightforward whether youre using TradingView MetaTrader or any other modern platform. The SuperTrend indicator is available on various trading platforms and setting it up can fit different trading styles.
Recommended Settings for Different Trading Styles
For Day Trading: If youre making multiple trades within a single day you want faster signals. Try these settings:
- Minor Trend: ATR Period 7, Multiplier 2.5
- Major Trend: ATR Period 10, Multiplier 5.0
- Timeframe: 5 minute or 15 minute charts
For Swing Trading: When holding positions for days or weeks you need settings that ignore intraday noise:
- Minor Trend: ATR Period 10, Multiplier 3.0 (default)
- Major Trend: ATR Period 14, Multiplier 6.0 (default)
- Timeframe: Daily or 4 hour charts
For Position Trading: Long term traders should use even slower settings:
- Minor Trend: ATR Period 14, Multiplier 4.0
- Major Trend: ATR Period 20, Multiplier 8.0
- Timeframe: Daily or weekly charts
The beauty of the Double SuperTrend is that you can adjust these parameters to match your risk tolerance and trading personality. Lower values increase sensitivity giving more signals while higher values filter noise but may delay signals.
Advanced Trading Techniques with Double SuperTrend
Once you understand the basics its time to level up your game with some advanced techniques that professional traders use.
Multi Timeframe Analysis
Heres where things get really powerful. The strategy combines multiple timeframes to identify market trends using the SuperTrend indicator from higher timeframes as a filter and generating signals from lower timeframes.
Try this approach:
- Check the daily chart for major trend direction
- Use the 4 hour chart for your Double SuperTrend signals
- Execute entries on the 1 hour chart
This triple confirmation drastically improves your win rate because youre only trading when everything lines up across multiple timeframes.
Combining with Volume Analysis
Looking for increasing volume when the SuperTrend changes direction helps filter out false signals while being cautious of trend changes that occur on low volume. When you see a buy signal on the Double SuperTrend but volume is weak that signals hesitation - wait for stronger confirmation.
Strong volume on a signal means institutional money is participating and the move is more likely to follow through. Weak volume suggests retail traders are the only ones playing and the move might fizzle out.
Position Sizing Based on ATR
Using ATR allows traders to calculate position size based on volatility maintaining consistent risk across different market conditions. Heres a simple formula:
Position Size = Risk Amount ÷ (ATR × Multiplier)
So if youre willing to risk $500 per trade and the current ATR is 2.5 with a 3.0 multiplier your position size should keep your stop loss at 7.5 points (2.5 × 3.0) which equals about 66 shares ($500 ÷ 7.5).
This keeps your risk consistent whether the market is calm or wild which is critical for long term trading success.
Real World Examples: Double SuperTrend in Action
Lets walk through some actual trading scenarios so you can see how this plays out in real markets.
Example One: Catching a Strong Uptrend
Imagine youre watching a stock that's been consolidating for weeks. The major trend SuperTrend has been flat red showing no clear direction. Then suddenly:
- The major trend flips from red to blue (bullish)
- A few candles later the minor trend flips from red to green
- You get a buy signal
This is the sweet spot - youre entering right as a new uptrend is being established. Your stop loss goes right below the major trend line protecting you if youre wrong. As price continues higher you trail your stop along the minor trend line locking in profits.
Example Two: Avoiding a False Breakout
Now picture this - you see the minor trend flip green giving what looks like a buy signal. But wait - the major trend is still red (bearish). The Double SuperTrend strategy tells you to ignore this signal because its counter to the major trend.
Sure enough price rallies for a bit then gets smacked back down hard. You avoided a losing trade because you waited for both trends to align. This is exactly why the double confirmation is so valuable.
Example Three: Buying the Dip
Youre in a strong uptrend - both trends are bullish and youre already long. Price pulls back and the minor trend flips red but the major trend stays blue. You get a "buy dip" signal.
This is your chance to add to your position at a better price because the overall trend is still intact. Its like getting your favorite stock on sale during a temporary discount.
Common Mistakes to Avoid
Even with a solid strategy like Double SuperTrend traders still make errors that cost them money. Here are the biggest ones to watch out for:
Trading Against the Major Trend This is the number one killer of accounts. When that major trend is clearly showing red (bearish) and you see a minor trend flip green its tempting to jump in for a quick bounce trade. Resist that temptation. The SuperTrend works best in trending markets and should be avoided in sideways or choppy markets to reduce false signals.
Ignoring Market Context SuperTrend is a trend following tool which means it performs poorly in ranging markets. Before taking any signal look at the bigger picture - is the market actually trending or is it chopping sideways in a tight range? In choppy conditions take a break or switch to a different strategy.
Using Fixed Stop Losses One of the biggest advantages of the SuperTrend is that it gives you dynamic stop losses that adapt to market volatility. Unlike fixed dollar point or percentage stops the ATR stop adapts to sharp price moves or consolidation areas. Dont throw away this advantage by using arbitrary stop levels.
Over Optimizing Settings Its easy to fall into the trap of endlessly tweaking your ATR periods and multipliers trying to find the "perfect" settings. But heres the truth - there is no perfect setting for all markets and all conditions. The strategys performance heavily depends on the settings of SuperTrend indicators and parameters. Start with the defaults test them and only make small adjustments based on your actual trading results.
Forgetting About Risk Management The Double SuperTrend tells you when to enter and exit but it doesnt manage your risk for you. Never risk more than one to two percent of your account on any single trade regardless of how confident you feel about the signal.
Combining Double SuperTrend with Other Indicators
While the Double SuperTrend is powerful on its own it becomes even better when combined with complementary indicators.
RSI for Overbought and Oversold Conditions
Traders use RSI for assessing overbought and oversold positions when setting up multiple SuperTrend strategies. When you get a buy signal from Double SuperTrend check if RSI is below 40 - this confirms youre buying near oversold conditions which improves your odds. For sell signals look for RSI above 60.
Moving Averages for Additional Confirmation
Add a 200 period exponential moving average to your chart as a final trend filter. A confirmed trend above or below the 200 EMA is required with long positions when the price is above the 200 EMA. This adds another layer of confirmation ensuring youre only trading in the direction of the really big trends.
MACD for Momentum Confirmation
The MACD (Moving Average Convergence Divergence) can help you confirm the strength behind a SuperTrend signal. When you get a buy signal and the MACD is also crossing bullish thats a strong confirmation. If the MACD is diverging or showing weakness you might want to pass on that trade.
Risk Management and Money Management Rules
Even the best trading strategy in the world will fail without proper risk management. Heres how to protect your capital while using Double SuperTrend.
The Two Percent Rule
Never risk more than two percent of your total trading account on any single trade period. If you have a ten thousand dollar account that means your maximum risk per trade is two hundred dollars. This keeps you in the game even during inevitable losing streaks.
Scaling In and Out of Positions
Instead of going all in on a single entry consider splitting your position into thirds:
- Enter one third at the initial buy signal
- Add another third at the buy dip signal
- Add the final third if price continues confirming the trend
This averaging in approach improves your overall entry price and reduces the impact of timing the market perfectly.
Trailing Stops Strategy
The SuperTrend lines themselves make perfect trailing stops. For long positions trail your stop along the minor trend green line as it moves higher. This locks in profits while giving the trade room to breathe. You can use a trailing stop loss with the help of SuperTrend to protect your profits.
When the price finally crosses back below the minor trend line you exit automatically with your profits protected. Its a set it and forget it approach that removes emotion from the exit decision.
Backtesting and Optimization
Before risking real money on any strategy you need to backtest it thoroughly. The strategy includes date range settings to constrain backtest period and provides net profit calculations.
Setting Up Your Backtest
Use at least two years of historical data to test the Double SuperTrend strategy. This ensures you see how it performs across different market conditions - uptrends downtrends and sideways chop.
Track these key metrics:
- Win Rate: Percentage of winning trades (aim for above fifty percent)
- Risk Reward Ratio: Average winner divided by average loser (aim for above 1.5 to 1)
- Maximum Drawdown: Biggest losing streak (keep below twenty percent)
- Profit Factor: Gross profits divided by gross losses (aim for above 1.5)
Optimization Tips
When optimizing your Double SuperTrend settings:
- Test one parameter at a time
- Use walk forward analysis to avoid curve fitting
- Validate results on out of sample data
- Focus on robustness over maximizing profits
A strategy that makes slightly less money but works consistently across different market conditions is far better than one that looks perfect in backtests but falls apart in live trading.
Best Markets and Timeframes for Double SuperTrend
This strategy works across multiple markets but some environments are more favorable than others.
Stock Market Trading
The Double SuperTrend excels in liquid stocks with clear trending behavior. Large cap tech stocks like Apple Microsoft and NVIDIA tend to have strong sustained trends that the strategy catches beautifully. The SuperTrend indicator can be used on equities and works for futures forex and equities.
Avoid using it on low volume penny stocks where price action is erratic and trends are unreliable.
Forex Markets
Currency pairs work great with Double SuperTrend especially the major pairs like EURUSD GBPUSD and USDJPY. These pairs have enough volatility to generate clear signals without being too choppy. The 4 hour and daily timeframes work particularly well for forex.
Cryptocurrency Trading
Crypto markets are highly volatile which makes ATR based indicators like SuperTrend very effective. Bitcoin Ethereum and other major cryptocurrencies show strong trends that the Double SuperTrend strategy captures well. The strategy can be applied to crypto trading and works best when assessing whether the price is trending.
Just be aware that crypto never sleeps so you need to monitor your positions more actively or use automated trading systems.
Optimal Timeframes
| Timeframe | Best For | Trading Style |
|---|---|---|
| 5 minute | Scalping | Very active intraday |
| 15 minute | Day trading | Active intraday |
| 1 hour | Swing trading | Multiple days |
| 4 hour | Position trading | Weeks |
| Daily | Long term | Months |
The lowest timeframe you should use is the 15 minute chart as SuperTrend gives accurate signals at precise time. Below 15 minutes the noise increases and false signals become more common.
Automating Your Double SuperTrend Strategy
Once youve mastered the strategy manually you might want to automate it to remove emotion and ensure consistent execution.
TradingView Alerts
The Pine Script code includes alert conditions for all signal types:
- Buy Signal (Double ST)
- Sell Signal (Double ST)
- Buy Signal (Inside ST)
- Sell Signal (Inside ST)
- Buy Dip Signal
- Sell Bounce Signal
Set up these alerts to get notified on your phone whenever a signal appears. You can then manually review the setup and execute if everything looks good.
Algorithmic Trading Integration
For full automation you can connect TradingView alerts to broker APIs using services like TradingView webhooks. This allows your strategy to execute trades automatically without any manual intervention.
Just be careful - automated trading magnifies both gains and losses. Start with small position sizes and monitor closely until youre confident the system works as expected.
Psychology and Discipline
Heres something they dont teach you in most trading courses - having a great strategy is only half the battle. The other half is having the discipline to follow it consistently.
Following Your Rules
The Double SuperTrend gives you objective signals that remove guesswork. When you get a buy signal you buy. When you get a sell signal you sell. When theres no signal you sit on your hands. Sounds simple right?
But in the heat of the moment with real money on the line your brain will try to override the system. Youll see a signal but talk yourself out of it. Or youll take a trade that doesnt meet the criteria because you have a "feeling" about it.
Resist these urges. Trust the system and track your results. After fifty trades youll have real data showing whether the strategy works or not.
Handling Losing Streaks
Every strategy has losing streaks - its inevitable. Using the SuperTrend Indicator in conjunction with other tools and techniques is essential to minimize false signals and manage risk effectively. The Double SuperTrend typically has a win rate around fifty five to sixty five percent which means four out of ten trades might be losers.
When you hit a rough patch dont panic and start tweaking your settings. Review your trades to make sure youre following the rules correctly. If you are then accept that losing streaks are part of trading and trust that the strategy will work over a large sample size.
Keeping a Trading Journal
Document every trade with:
- Entry price and reason
- Stop loss and target levels
- Market conditions
- How you felt emotionally
- What you learned
This journal becomes invaluable for improving your execution and maintaining discipline over time.
Frequently Asked Questions
What is the difference between single and double SuperTrend strategies?
A single SuperTrend uses one indicator with one set of parameters to generate signals. It can work but often produces false signals in choppy markets. The Double SuperTrend uses two indicators with different parameters - a fast one for signals and a slow one for trend filtering. This dramatically reduces false signals by requiring both trends to align before taking a trade.
Can I use Double SuperTrend for day trading?
Absolutely. The Double SuperTrend works well for day trading especially on 5 minute and 15 minute charts. Just adjust your ATR periods to be more responsive - try 7 period and 10 period instead of the default 10 and 14. Day traders also need to be more active in managing trades since positions wont be held overnight.
How do I know which ATR multiplier to use?
The default multipliers of 3.0 for the minor trend and 6.0 for the major trend work well for most situations. If youre getting too many false signals increase the multipliers to 3.5 and 7.0. If youre missing too many good moves decrease them to 2.5 and 5.0. Test different settings on historical data to see what works best for your specific market and timeframe.
Does Double SuperTrend work in ranging markets?
No not really. The SuperTrend works best when prices are moving strongly in one direction and should be avoided in sideways or choppy markets to reduce false signals. When markets are ranging the major and minor trends will whipsaw back and forth generating lots of losing trades. In range bound conditions its better to step aside or use a different strategy designed for consolidation periods.
What is a good win rate for Double SuperTrend trading?
Aim for a win rate between fifty five and sixty five percent. The strategy focuses on catching trends which means some trades will be small losses when the trend doesnt materialize but winning trades should be larger moves that more than compensate for the losers. A two to one or three to one reward to risk ratio is more important than having a super high win rate.
Should I trade both long and short signals?
That depends on your market and comfort level. In strongly trending markets like crypto or forex trading both directions makes sense. In stock markets that have an upward bias over time many traders choose to only take long signals and sit out the short signals. Backtest both approaches and see which gives better results in your specific market.
How much capital do I need to start trading Double SuperTrend?
You should have at least five thousand dollars to trade this strategy comfortably. With proper position sizing risking two percent per trade that gives you one hundred dollars of risk per trade which is enough to take positions in most markets. You can start with less but smaller accounts have less room for error during losing streaks.
Can I combine Double SuperTrend with fundamental analysis?
Definitely. Use fundamental analysis to identify which stocks or assets to watch then use the Double SuperTrend to time your entries and exits. For example if you fundamentally like a stock but its been falling let the SuperTrend tell you when the downtrend ends and a new uptrend begins. This combines the best of both worlds.
What are the best trading platforms for Double SuperTrend?
TradingView is probably the best platform since the Pine Script code runs natively and you can set up alerts easily. Other good options include MetaTrader 4 or 5 with custom indicators and NinjaTrader for futures traders. Most modern platforms support SuperTrend indicators either built in or through custom scripts.
How often should I check my Double SuperTrend trades?
That depends on your timeframe. Day traders need to monitor continuously during market hours. Swing traders can check once or twice daily. Position traders might only need to check a few times per week. Set up alerts so you dont have to watch charts constantly - let the strategy notify you when signals appear.
Final Thoughts and Key Takeaways
The Double SuperTrend trading strategy offers a systematic approach to trend following that removes much of the guesswork from trading decisions. By combining a fast SuperTrend for signals with a slow SuperTrend for trend filtering you dramatically improve the quality of your trades.
Key points to remember:
- Always trade in the direction of the major trend - never fight it
- Wait for both trends to align before entering trades
- Use the SuperTrend lines as dynamic trailing stops
- Adjust your position size based on ATR to maintain consistent risk
- Backtest thoroughly before risking real money
- Keep a trading journal to track your progress
- Accept that losing streaks are normal and unavoidable
- Combine with other indicators like RSI and volume for confirmation
- Focus on execution and discipline over trying to optimize for perfection
Trading isnt about finding a magic indicator that wins every time - those dont exist. Its about finding a solid strategy with an edge executing it consistently and managing your risk properly. The Double SuperTrend gives you that edge when used correctly in trending markets.
Start small test extensively and build your confidence before scaling up your position sizes. With patience and discipline the Double SuperTrend can become a core component of your trading toolkit helping you capture substantial trends while avoiding many of the whipsaws that plague single indicator systems.
Remember that markets are constantly evolving and what works today might need adjustments tomorrow. Stay flexible keep learning and always prioritize protecting your capital over chasing big wins. Thats how you survive and thrive in this game over the long run.
Sources and Further Reading:
- Supertrend Indicator: Formula, Best Settings And Strategies - ElearnMarkets
- Supertrend Indicator: What It Is and How It Works - XS
- Supertrend Indicator: How To Set Up, Use and Create Profitable Strategy - GoodCrypto
- How to Use the Supertrend Indicator Effectively - LuxAlgo
- SuperTrend Indicator: A Comprehensive Guide - TrendSpider
- Dual Timeframe Supertrend RSI Intelligent Trading Strategy - Medium
- Mastering the SuperTrend Trading Strategy - Algocrab
- Average True Range (ATR) - Wikipedia
- The Average True Range Indicator and Volatility - Schwab
- Average True Range (ATR) Indicator & Strategies - AvaTrade