The Double Supertrend Trading Strategy is a technical analysis tool that is used by forex traders to identify potential entry and exit points in the market. It is based on the Supertrend indicator, which was developed by French mathematician Olivier Seban. The Double Supertrend Trading Strategy was introduced as a way to more accurately identify trend changes and potential market reversals.
The Double Supertrend Trading Strategy works by analyzing price action and volatility to identify areas of potential trend change. It does this by combining two Supertrend indicators with different settings, which allows it to more accurately identify trend changes and potential market reversals.
What is the Double Supertrend Trading Strategy?
The Double Supertrend Trading Strategy is a technical analysis tool that is used by forex traders to identify potential entry and exit points in the market. It is based on the Supertrend indicator, which was developed by French mathematician Olivier Seban. The Double Supertrend Trading Strategy was introduced as a way to more accurately identify trend changes and potential market reversals.
- The Double Supertrend Trading Strategy uses two Supertrend indicators with different settings to more accurately identify trend changes and potential market reversals.
- It analyzes both price action and volatility to identify areas of potential trend change.
- The strategy can be used in conjunction with other technical analysis tools, such as trend lines and chart patterns, to confirm trade signals.
Double Supertrend Trading Strategy
An example of how the Double Supertrend Trading Strategy can be used in the forex market is as follows:
A trader using the Double Supertrend Trading Strategy may notice that the EUR/USD pair is trending upwards and that the shorter-term Supertrend indicator has crossed above the longer-term Supertrend indicator. This would indicate a potential Buy signal, as it suggests that the uptrend is likely to continue. The trader may also observe that the price action has broken above a key resistance level, further confirming the Buy signal. In this scenario, the trader may decide to enter a long position in the EUR/USD pair, looking to profit from the potential uptrend.
Buy Signal
- When the shorter-term Supertrend indicator crosses above the longer-term Supertrend indicator.
- When the price action is trending upwards and the Supertrend indicators are both above the price action, indicating an uptrend.
- When the price action breaks above a key resistance level and the Supertrend indicators are both above the price action, indicating a potential trend reversal.
Sell Signal
- The shorter-term Supertrend indicator crosses below the longer-term Supertrend indicator.
- The price action is trending downwards and both Supertrend indicators are below the price action.
- The price action breaks below a key support level and both Supertrend indicators are below the price action.
Double Supertrend Trading Strategy Pros & Cons
Pros
- The Double Supertrend Trading Strategy can help traders identify potential entry and exit points in the market.
- It is based on the Supertrend indicator, which has a high level of accuracy in identifying trend changes and potential market reversals.
- The strategy can be used in conjunction with other technical analysis tools to confirm trade signals.
Cons
- It may produce false signals. this can occur when the market conditions do not align with the assumptions or calculations underlying the strategy, leading to incorrect buy or sell signals.
- It relies on technical analysis, which is based on the assumption that past price patterns will repeat themselves in the future. However, this assumption may not always hold true, and using a purely technical approach may not take into account fundamental factors that can affect currency prices.
- May not perform well in volatile or trending markets. The strategy is designed to work best in range-bound markets, where prices oscillate within a certain range. If the market is trending strongly in one direction or is experiencing high levels of volatility, the strategy may not be effective.
Conclusion
The Double Supertrend Trading Strategy is a technical analysis tool that is used by forex traders to identify potential entry and exit points in the market. It combines two Supertrend indicators with different settings to more accurately identify trend changes and potential market reversals. The strategy can be used in conjunction with other technical analysis tools to confirm trade signals.
The Double Supertrend Trading Strategy is a useful tool for forex traders looking to identify potential entry and exit points in the market. It combines the accuracy of the Supertrend indicator with the added benefit of two indicators with different settings, allowing traders to more accurately identify trend changes and potential market reversals. However, it is important to use the strategy in conjunction with other technical analysis tools and to be aware of its limitations, such as its reliance on technical analysis and the potential for false signals in certain market conditions.
Self-confessed Forex Geek spending my days researching and testing everything forex related. I have many years of experience in the forex industry having reviewed thousands of forex robots, brokers, strategies, courses and more. I share my knowledge with you for free to help you learn more about the crazy world of forex trading! Read more about me.
