Are you aware of the facts that most of the day traders lose money always? Retail traders always asked me whenever I buy any stock, it comes down and the moment I sell, the stock started to move upward. Does this sound familiar to you? Well, if it is so, then don’t dishearten as it happened with almost everyone. In fact, I also face such kind of situation in my early days of trading in stocks and commodities till I found Supertrend Indicator.
Newbie traders jump into trading just because they find a stock price at a very low rate. It may happen that you may make some money and take trading as like gambling. This kind of trading is very risky and you may have to face serious losses. Day trading and investment in stock market is an art and before hopping into trading, it is better to have some basic skills.
Whenever we go shopping, we check the quality, manufacturing and expiry date and so on. Just like shopping, it is better to check the fundamentals and technicals of stocks so that you don’t have to cry out later. So, today I will let you know how you can use Supertrend Indicator for day trading and how you can make lots of money.
About Supertrend Indicator for Intraday Trading
Using Supertrend Indicator, you can analyze any stocks technically. Instead of predicting the trend, it signals you to go for long or short once the trend is confirmed. You can hold your position until the trend sustains and exit as soon as you get the other signal.
Supertrend works best in a trending market like in uptrends or downtrends as it gives false signals in sideways movement. It works great on a 10 or 15-minute chart and you can track the false signal also. If you are a day trader, then you can use other indicators along with Supertrend Indicator to confirm the signal also.
Features of Supertrend Indicator
When you plot Supertrend Indicator on a stock chart, it will show you a green and a red continuous line. Whenever the price of a stock turns more than the indicator value, then a buy signal with arrow generates. The color of the indicator change to green and it also shows you a crossover of the price over the indicator.
You can hold your long position till you get the sell signal. Similarly, a sell signal is generated with an arrow pointing downwards and having red in color. The moment you see a sell signal, you can exit from your position or can go for fresh short as the stock price likely to go down further.
You can use the indicator line for Stop-Loss and also trail it as the price move in either direction. If your position is long, then put your Stop-Loss at where the green indicator line is. In case, your position is in short side, then put your SL at the red Supertrend indicator line. Supertrend signals are good and that doesn’t mean you avoid putting Stop-Loss. Stop-Loss will help you to cut your losses and so always use SL without thinking much.
How To Plot Supertrend Indicator?
To plot a Supertrend Indicator, all you need is to open the chart of a stock and set 10-Minute intervals for day trading. You can use Zerodha Kite or any charting software like economic times stocks charts for Supertrend Indicator or anything you like. Insert the indicator as “Supertrend” and keep the default settings as Period 7 and Multiplier to 3. You can add your own settings also. For better result I set two Supertrend indicators having period 7 and 10 and Multiplier to 3. By doing so I double sure the signals to work in my favor and so I can now initiate my position.
Once you plot the indicators, it will look like in the picture below. You can see by plotting two Supertrend indicators, that signals two arrows and you can also avoid false signals too.
In the above chart, both Supertrend indicators signal buy at around 13.50 and the sell signal comes around 25. So, its almost 11.50 points per share. Suppose you bought 1000 shares at 13.50 and sell it around 25 then you will make a profit of Rs. 11500/-. However, the chart is for positional trading and you can do so in day trading also as the same principle is applied.
In Intraday trading, just plot 5 or 10-minute chart and initiate your position as per signal with strict Stop Loss. However, Supertrend is good enough for day trading and I suggest you use other technical indicators also along with Supertrend. In my next post, I will cover other indicators also, so that you will get more benefitted and trade with confidence.
Although Supertrend Indicator is good enough and using other indicators like RSI, MACD will be more beneficial. Don’t rely on a single indicator and instead try trading with other also. Furthermore, try to use different parameters and settings that may work for you.
If you have any queries or suggestion then kindly do so in the comments section below.
I hope this post will help you to achieve what you desire for. If you like it then don’t forget to share on your social networks like Facebook, Twitter, and Google+.
Author: Ratan Kumar
Ratan Kumar, an enthusiast stock market trader & blogger. Forecasting stock market moves with the use of technical analysis since 2008. For the technical trader & investor, new or experienced, he provides legitimate and valuable advisory from day trading to long-term investment horizon and helped thousands of investors to make money out of stock market.