Supertrend Indicator Strategy – (11.07% profit/trade!) | Backtested

The SuperTrend indicator is a type of trend following indicator that was created by trader Oliver Seban. It signals the direction of a trend, its continuation, or changes in direction. Our backtest reveals that the indicator can catch most of the returns while avoiding the worst drawdowns, thus giving acceptable risk-adjusted returns.

In the rest of this post, we will test its effectiveness and explain how it works.

We backtest the following trading rules:

* Buy when the close of a bar crosses above the previous value of the Supertrend indicator;

* Sell when the close of a bar crosses below the previous value of the Supertrend indicator;

In the image below you can see a trade example following the rules stated above.

The buy signal was triggered on 05/29/2020 at 3044.31, and the sell signal is triggered on 01/21/2022 at 4397.94, resulting in a gain of 1353.63 points which equals a profit of 44.46%.

We also backtest in the S&P500 index over the last 60 years. Check out how it performs in the long term with detailed performance metrics here>>

https://www.quantifiedstrategies.com/supertrend-indicator-trading-strategy/