SUPERTREND ATR WITH TRAILING STOP LOSS

The SUPERTREND ATR WITH TRAILING STOP LOSS strategy tool provides a trend-following execution system that combines volatility-based signals with a dynamic trailing stop-loss mechanism to manage trade exits.

Usage

The Usage section describes how the script can be used, examples should be provided in this section. This section also focuses on how main settings affect the indicator interpretation and output.

The strategy identifies market direction using a SuperTrend line calculated from the Average True Range (ATR). When the price crosses above or below this line, it signals a potential trend shift.

• Entry Logic: Depending on the selected "Position Type," the script enters a trade when the SuperTrend confirms the direction (Long or Short).
• Dynamic Trailing Stop: Once a trade is active, the script monitors price movement. If the price moves 1% in favor of the trade, the stop loss "rides up" (for longs) or "rides down" (for shorts). This helps lock in profits during strong trending movements.
• Exit Logic: The strategy closes a position under two conditions: if the market price crosses the dynamic trailing stop loss or if the underlying SuperTrend volatility line reverses direction.

Details

The script is constructed using Pine Script v6 and utilizes the following concepts:

• SuperTrend Calculation: Uses hl2 (Median Price) as the base, adjusted by a multiplier of the ATR over a specific period. The line remains stationary or moves in the direction of the trend to prevent premature exits during minor retracements.
• Stop Loss Management: It initializes a stop loss based on a fixed percentage from the entry price. The trailing mechanism is non-reversing; for a long position, the stop loss can only move upward.
• Execution Settings: The strategy is configured to calculate on every tick and order fill to ensure precise trailing stop updates during volatile price action.

Settings

FROM / TO

• Month, Day, Year: Defines the start and end dates for the backtesting period.

STRATEGY

• Position Type: Determines whether the strategy will only take "LONG" or "SHORT" positions.
• Initial Stop Loss: Sets the starting stop loss percentage relative to the entry price.
• ATR Period: Sets the number of bars back used for the ATR calculation.
• ATR Multiplier: Sets the factor by which the ATR is multiplied to determine the distance of the SuperTrend line from the price.

FAQ

How do I adjust the sensitivity of the trend signals? You can adjust the ATR Period and ATR Multiplier. A lower multiplier makes the indicator more sensitive to price changes, resulting in more frequent signals, while a higher multiplier filters out noise but may delay entries.

What happens to the stop loss if the price moves sideways? The trailing stop loss is designed to only move in favor of the trade. If the price moves sideways or against the trade without hitting the stop, the stop loss level remains at its highest (for longs) or lowest (for shorts) reached point.

How can I access this script? You can get access on the LuxAlgo Library for charting platforms like TradingView, MetaTrader (MT4/MT5), and NinjaTrader for free.