BATTLE OF THE SUPERTRENDS. And The Winner Is...BATTLE OF THE SUPERTRENDS
Here is an interesting comparison of many of the Top "Supertrend Strategies" that are published here on Tradingview (Including my own: "SUPER SMART ST") . Please note that all test shown here were done using Heikin Ashi candles, which seem to improve Supertrends functionality ...
15 MINUTE (BTC/USD) COMPARISONS
ONE HOUR (BTC/USD) COMPARISONS
FOUR HOUR (BTC/USD) COMPARISONS
Recently I released several SUPERTREND based indicators, studies and strategies. In fact, I created an entire " Trading Toolkit " that incorporates Supertrend along with many other built-in Indicators, Oscillators and Technical Analysis Tools.
--- SCROLL TO BOTTOM HERE FOR LINKS TO THEM ALL ---
I decided to compare my "Super Smart" SuperTrend with the SuperTrend strategies others had published. As you can see in screenshots above, the results were very interesting. What follows is a summary of my experiences and journey surrounding this super topic.
IT STARTED WITH BACKTESTING
After a lot of thought and "playing around" with SuperTrend over the past few months, I was compelled to perform hundreds of backtests across many cryptocurrencies and all the common timeframes. I was seeking to improve upon SuperTrend (if I could) without degrading any of it's many inherent qualities.
But before I jump into my personal journey toward a "Smart" Supertrend, let me share a few thoughts with those of you who are new to Supertrend...
WHAT IS SUPERTREND?
As the name suggests (and as many of you likely already know) , 'Supertrend' is a trend-following indicator that is notably popular.
WHY?
Well, it does a remarkably great job of recognizing a trend (once in progress) and signaling you to when to jump into a trade after the trend is clear. However, many traders feel the greater value of Supertrend is that it helps KEEP YOU IN your position until that trend is over by ignoring minor dips and retracements along the way. Yes, supertrend has it's short comings (detailed later) , but boy... when it's right, it can be very profitable.
IT SOUNDS SO EASY
When you look at any Supertrend chart (in history) it looks so impressive. You begin to fantasize about gains and profits. After all, Supertrend maps out many impressive price movements. It just seems so easy, right? But you soon realize that "trusting" what Supertrend is telling you is hard... "BUY, BUY, BUY... this is a friggin' trend." But you doubt yourself and what Supertrend is telling you and you hesitate. Been there?
Then you finally get in and Supertrend starts yelling... "STAY IN, STAY IN, STAY IN"... but you're up a percentage point (or two) already and you don't want to lose your profit. You exit. Usually way too soon. You're super happy until you see Supertrend continuing to track along with a monster trend. You missed out! Bummer.
SECRETS OF SUPERTREND
You have to remember a couple of secrets to get Supertrend to work the way you've fantasized:
1) Trust it, get in when it signals and stay in until it signals you to exit.
2) Accept the fact that Supertrend does not work well in sideways markets, so if you detect that this is what is forthcoming in the market... lay back, go do some GRID TRADING or have a beer. Wait for a trending market (unfortunately this is usually less than 30% of the time).
3) Should you enter on a Supertrend signal and discover after-the-fact you are in a flat or sideways market, exit as soon as this is clear or at the latest, when Supertrend signals an exit. Yes, you might have a loss. But don't assume Supertrend didn't work, it did work but the market did not have a trend worth following, so you'll have to enter again on the next signal. For every big Supertrend trade you nail, you'll have to wade through perhaps 6 or 7 not so great trades.
4) To improve your odds, try combining Supertrend with other indicators. Often it's a combination of things that gives you your optimal ins and outs.
Speaking of combinations...
STONEHENGE SUPERTREND PLUS (Toolkit)
It was "Secret #4" (above) that lead me to create the " Stonehenge Supertrend Plus Toolkit. "
This features THREE Supertrends:
A CURRENT timeframe Supertrend,
A HIGHER timeframe Supertrend and
My exclusive SUPER SMART Auto-Adjusting Supertrend.
In addition, it is closely integrated with dozens of other indicators and data points.
BUT WHY THE FUNNY MEGALITHIC NAME?
Well, it looks like Stonehenge! Check it out... it displays an array of stones arranged in a manner that does a pretty good job of predicting the future. Learn to read these stones and you can sometimes predict the future!
And best of all, these Stonehenge "predictive stones" not only incorporate Supertrend data but they also enhance Supertrend as you consider entry and exit points along the way.
LET ME CLARIFY
1) There is Supertrend (the standard indicator)
2) There is SUPER SMART SUPERTREND (a version I optimized)
3) Then there is STONEHENGE (a multi-indicator toolset that incorporates Supertrend and Super Smart Supertrend)
LET ME CLARIFY FURTHER
My indicators here have TWO parts that work together:
1) An overlay that appears on the chart with your candles.
2) A separate stand-along indicator that presents data as an array of colored "stones" which help predict future price movement.
AND YET FURTHER CLARIFICATION
1) I have both free and paid versions of everything.
2) I have both Strategy and Study versions of everything.
3) Strategy versions allow BACKTESTING, while Study versions have ALARMS.
IT MIGHT SOUND COMPLICATED, BUT...
If you're confused, just install a free version ( part 1 and part 2 ) and explore this for a few days. If you like what you see, you might consider the more advanced STONEHENGE TOOLKIT . That's all there is to it!
Now back to our regularly scheduled programming!!!
WHAT'S SO SMART ABOUT SUPER SMART SUPERTREND?
As I built the Stonehenge Toolkit, I kept noticing that the Supertrend part had a very annoying downside: Entry signals lagged and Exit signals came late. If those two things could be improved, Supertrend would be really "Super."
After much trial and error and even more backtesting I developed a solution that achieved my goals without OVER modifying Supertrends' inherent qualities. In a nutshell, I made Supertrend smarter!
MANY PEOPLE ASK...
What's the best ATR period and multiplier setting for Supertrend? After all, there are typically only two important data points we must enter for Supertrend to work, namely the 'period (ATR number of candles or days)' and the 'multiplier (value by which ATR is multiplied).' BTW, in case you don't know, ATR signals the degree of price volatility. A common default setting is 10 for the ATR period and 3 for the multiplier.
While this is good to know, Super Smart Supertrend already has well tested default settings built-in, so you can install it and use it right away, without adjusting settings in the beginning. Just plug and play.
HOW IT WORKS
So here's what I did. Using data from other indicators I came up with a SMART SUPERTREND that auto-adjusts as the market changes. It still has settings so you can fine tune for specific assets and timeframes (if you like) , but once the settings are entered, it auto-adjusts as the market and prices evolve.
With "Super Smart SuperTrend" there is no ATR period setting (ATR is determined programmatically) and now there are TWO multipliers you can experiment with... (a lower one set at 1.7 default and a higher one at 2.5). These multiplier settings create a multiplier range that can be used programmatically to adjust the multiplier automatically as the market and prices evolve.
BTW, there is also a separate STANDARD Supertrend that you can run parallel or turn on/off to compare things if you like.
THE RESULTS
Across all time frames and assets I've tested, I generally get better results with my "Smart" version. Better entries, better exits and well defined trends. However, when compared with a STANDARD Supertrend, "Super Smart" is not radically different, but when it does differ it is almost always better. All this is substantiated by backtesting of course.
BATTLE OF THE SUPERTRENDS
How good is SUPER SMART SUPERTREND? You can decide for yourself. I ran backtests on 8 Supertrend strategies I found here at Tradingview (sample results posted above). I set my charts to use Heikin Ashi candles as these seem to improve Supertrend in general. These comparisons were the best 8 I could find and I commend each author/coder for their fine work. I was not trying to out-do any one, I just wanted to improve my trading results. I'm also rather sure some other strategy will eventually out perform Super Smart Supertrend. And if they do, great! I believe in making more money, not making more indicators!
I tested all of the scripts found here:
www.tradingview.com
I used the timeframes of 15 minutes, 1 hour and 4 hours (as published above) . And I used the default settings built-in to each script strategy and again, with Heikin Ashi candles. I fully understand that you can tweak the settings on any Supertrend strategy and get different results.
I hope you have as much fun with this "BATTLE OF THE SUPERTRENDS" as I had creating it. But at the end of the day, I hope you install and try one of my indicators in the very near future and try the Supertrend indicators by these other authors (linked above).
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MY SUPERTREND BASED INDICATORS
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The free versions are extremely powerful and will serve you well, they will also give you a preview of the even more powerful "STONEHENGE SUPERTREND PLUS TRADING TOOLKIT." I recommend you use both Stonehenge AND a Companion overlay.
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STONEHENGE SUPERTREND PLUS TOOLSET (paid versions)
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DH: (Strategy) Stonehenge SuperTrend Plus Toolkit / Stones
DH: (Companion) Stonehenge SuperTrend Plus Toolkit / Overlay
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STONEHENGE BASIC TOOLSET (free versions)
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STONEHENGE SUPERTREND BASIC (Double Stone Indicator Version)
(You may use either of the SUPERTREND overlays below as a companion with this "double stone" indicator)
DH: (Study) Basic Stonehenge SuperTrend - Double Stone Version
SUPER SMART SUPERTREND (Overlay Companion Indicators)
DH: (Study) Super Smart SuperTrend: Self Adjusting
DH: (Strategy) Super SmartSuper Trend: Backtest Version
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That's it. Get "SMART" Today!
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ENJOY!
Dan Hollings
Master Crypto Grid Trader
Stonehenge Master Mason
Host of the "High Leverage Lounge"
Please Explore My Other Indicators, Scripts, Grids and Educational Ideas.
@DanHollings on Tradingview.
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