182# Dual Average Momentum Indicator with Supertrend Filter with Profit Target

Submit by Janus Trader (based on script of tradingsecrets)  2024

This trading strategy combines the Dual Average Momentum Indicator with the Supertrend Filter to identify both short-term and long-term trading opportunities. By using the Supertrend and 200-period EMA as filters, traders can enhance the accuracy of their entries and exits, reducing false signals and aligning with broader market trends. This strategy provides the flexibility to trade signals from the Dual Average Momentum or Supertrend alone, or to combine them for maximum return.

1. Indicator Setup and Components

• Dual Average Momentum and Supertrend: This indicator provides two types of signals (default setting):

  • Momentum Signals: These reflect rapid market changes, offering consistent returns and relatively low drawdowns.

  • Supertrend Signals: These signals capture longer-term trends, which typically yield higher returns, but also with higher drawdowns.

  • Combined Signals: When used together, the signals show strong profitability by aligning both short and long-term trends.

• Filters for Trade Setup:

  • Supertrend: Used to confirm directional bias. In buy conditions, the Supertrend line should be below the candles, and in sell conditions, it should be above the candles.

  • 200-Period Exponential Moving Average (EMA): Acts as an additional trend filter. A price above the 200 EMA suggests an overall uptrend, while a price below it indicates a downtrend.

• Profit Target Levels: The strategy uses a Profit Target indicator to display potential profit targets directly on the chart, aiding in planned exits.(Setting: 2, 10).

Currency pairs: volatile.

Time Frame 3 min or higher.

2. Signals and Entry Criteria

• Supertrend Signals Only:

  • Buy Signal: Enter a buy position when the Supertrend line is below the price candles, indicating an upward trend.

• Sell Signal: Enter a sell position when the Supertrend line is above the price candles, signaling a downward trend.

• Dual Average Momentum Signals Only:

  • Buy Signal: Enter a buy position when the Dual Average Momentum line turns bullish.

  • Sell Signal: Enter a sell position when the Dual Average Momentum line turns bearish.

• Combined Signal Strategy (Optimal for Maximizing Return):

  • Buy Signal: Enter a buy position only when both the Supertrend line is below the candles (confirming an uptrend) and the Dual Average Momentum bullish arrow.

  • Sell Signal: Enter a sell position only when the Supertrend line is above the candles (confirming a downtrend) and the Dual Average Momentum bearish arrow.

  • If neither the profit target nor the stop loss have been reached, close all positions when the supertrend changes position.

3. Trade Management

• Profit Target:

  • Use the Profit Target indicator to set predefined target levels on the chart for more disciplined exits. Targets can be based on percentage, fixed points, or ATR (Average True Range) to accommodate volatility.

• Stop Loss:

  • Set stop losses just below the Supertrend line in a buy position or just above it in a sell position.

  • For a more adaptive stop, consider setting it at 1.5-2 times the ATR below/above the entry point.

• Trailing Stop:

  • Implement a trailing stop that follows the Supertrend line. This helps to lock in profits as the trade moves in your favor.

4. Additional Tips for Optimization

• Adapt to Market Conditions: The strategy works across multiple timeframes, but shorter timeframes suit day trading while longer timeframes may yield better results for swing trading.

• Backtest on Various Assets: Test this approach on different assets to see where it performs best and to diversify your trading.

• Paper Trading: Practice with paper trading to refine entries and exits before committing real funds.

Note: While this strategy uses technical signals and filters to improve accuracy, always conduct thorough backtesting and adjust parameters as necessary for different markets and timeframes. Exercise caution and risk management, as no indicator is foolproof.

Link to download:

 https://www.tradingview.com/script/3FAhHHNC-Dual-Average-Momentum-with-Supertrend-Filter/

https://it.tradingview.com/script/6xyzUC1G-Profit-target-area/

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