Algo Trading in India |
  • January 13, 2020
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Many Traders might be using the super trend with different time frames, starting from 3 minute to 1 hour in Intraday. Some days they make profits and some days they make loss. Have you ever wondered what is the best or ideal time frame to trade super trend.

Super Trend trading system, it is one of the simplest and easy to use indicator. Users just have to select the instrument they want to trade and select the time frame, the indicator shows buy and sell signals accordingly.

It has two parameters, period & multipler. The most widely used parameters are 10,3 , when its buy, it shows up green arrow and as long as market keeps trending up, it trials the profits and locks it. So even market reverses and turns into sell signal, we would not lose all our profits.

If you are using higher time frames, you realize that at times when market reverses, you lose more as we have to wait for that one full candle to complete. That’s why many traders prefer trading super trend in smaller time frame, so that they get out quickly when Super trend changes from buy to sell or vice versa. 

But have you tested Super Trend with historical data? we simply consider only brokerage as our charges, mostly we deduct Rs.40 as brokerage and think that if we make above Rs.40, we are going to make profits. But there are lot many charges we need to consider,

 

  1. Brokerage
  2. Transaction charges
  3. GST
  4. STT
  5. Sebi fee
  6. Stamp duty

 

totally 6 different charges we end up paying for every trade we make.

I tested the super trend intraday trading system on Bank Nifty from 2009 to 2019 with various time frame 3 mins, 5 mins, 10 mins, 15 mins, 30 mins and 1 hour.

Once in a while, you can make very huge returns in lower time frame like 3 mins, on days like Nirmala Sitharaman announcement 20th Sep 2019, Bank Nifty rallied 2500+ points in Intraday, from that super trend on 3 mins time frame was able to capture 2136 points in just one trade. 

Do you think, you could keep getting such trades? You make big when you are right, but lose little when you are wrong, so based on risk reward basis, do you think its a very good trading system and you can make profits in the longer run?

This is how the results are, considered fixed quantity of 20, with capital 75000, to trade 1 lot of bank nifty futures currently 75k is more than enough. As you can see, super trend when applied on 3 mins time frame, it generated 351% before charges, but after we applied the above various transaction cost, we realized it doesn’t generate any profits at all, it broke. If one continued trading it on lower time frame, he/she would have blown off the trading account multiple times.

In this chart, it is clearly visible that the lower the time frame higher the charges, trading on 3mins time frame, you end up spending 10+ lacs on transaction charges alone.

We should neither trade on very low time frames or on very high time frames, 15 mins time frame seems to be the ideal. I calculated the ratio of actual returns/returns before charges, only 15 mins time frame is able to generate better ratio after all charges. 

As the time frame goes lower, the charges gets reduced because no of trades are also reduced as we increase the time frame. Trading Super trend on the lower time isn’t profitable which is proved above statistically., if you are doing so, please avoid it. Trade with the optimal time frame to get the best result of the indicators that you trade on.

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9 comments on “Best time frame for Super Trend Trading system

  1. Period 10 multiplier 4 in 3 mins gives better returns over time for banknifty index. (Entry at 9:18 am based on available signal in supertrend and exit at 3:10 by taking all other buy sell signals during these 6 hrs) Can you please test this and if you feel it’s working, can you create a bot for this? I have only tested manually for 4 months (Nov 2020 to till date and the returns looks very promising , 6000 points and trades were around 150) but could nt do it for years because of limitations.. (if you are convinced hoping that you give free access to me 🙂 for this bot)
    my mobile number: 9704291506

  2. Hi Kirubhakaran sir… Reminding your name shifts my focus from P&L to Process….since i am novice tarder still unable control my emotions during the live trading… please prepare a bot on Supertrend indicator and it should execute any number trades based on the signals given by the indicator…

  3. Very insightful

    1. What is the exit point taken ?
    2. Is Entry done at high of candle when supertrend signal comes ?
    3. How many trades per day consider on each direction ?
    4. Possible to share backtest sheet with till date- June 2021 testing?

  4. Try 3, 1.5 setting in Supertrend and use Hieken Ashi candle stick. Also trail SL of 35 Rs in Options buying.

    No more than 5 trades per day + volumn above average line.

    You will change your time-frame suggestions and feedback..

    Anyone needed, use bot and print money 🤑
    .

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