{"id":27434,"date":"2024-08-21T15:00:00","date_gmt":"2024-08-21T07:00:00","guid":{"rendered":"https:\/\/www.tejwin.com\/?post_type=insight&#038;p=27434"},"modified":"2024-11-15T16:38:46","modified_gmt":"2024-11-15T08:38:46","slug":"tquant-lab-supertrend-strategy","status":"publish","type":"insight","link":"https:\/\/tejwin20260323.j.webweb.today\/en\/insight\/tquant-lab-supertrend-strategy\/","title":{"rendered":"SuperTrend Strategy: Buy Low, Sell High to Profit from Market Swings"},"content":{"rendered":"\n<figure class=\"wp-block-image aligncenter size-full caption-align-center\"><img fetchpriority=\"high\" decoding=\"async\" width=\"6016\" height=\"4016\" src=\"https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/rc-xyz-nft-gallery-bpZ_mOQZCiU-unsplash.jpg\" alt=\"SuperTrend Strategy\" class=\"wp-image-26693\" srcset=\"https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/rc-xyz-nft-gallery-bpZ_mOQZCiU-unsplash.jpg 6016w, https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/rc-xyz-nft-gallery-bpZ_mOQZCiU-unsplash-300x200.jpg 300w, https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/rc-xyz-nft-gallery-bpZ_mOQZCiU-unsplash-1024x684.jpg 1024w, https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/rc-xyz-nft-gallery-bpZ_mOQZCiU-unsplash-150x100.jpg 150w, https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/rc-xyz-nft-gallery-bpZ_mOQZCiU-unsplash-768x513.jpg 768w, https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/rc-xyz-nft-gallery-bpZ_mOQZCiU-unsplash-1536x1025.jpg 1536w, https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/rc-xyz-nft-gallery-bpZ_mOQZCiU-unsplash-2048x1367.jpg 2048w\" sizes=\"(max-width: 6016px) 100vw, 6016px\" \/><figcaption class=\"wp-element-caption\">Photo by <a href=\"https:\/\/unsplash.com\/@moneyphotos\" class=\"ek-link\" target=\"_blank\" rel=\"noopener\">rc.xyz NFT gallery<\/a> on <a href=\"https:\/\/unsplash.com\/\" class=\"ek-link\" target=\"_blank\" rel=\"noopener\">Unsplash<\/a><\/figcaption><\/figure>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_81 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a10aae4c20b3\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"ez-toc-cssicon\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a10aae4c20b3\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/tejwin20260323.j.webweb.today\/en\/insight\/tquant-lab-supertrend-strategy\/#Highlight\" >Highlight<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/tejwin20260323.j.webweb.today\/en\/insight\/tquant-lab-supertrend-strategy\/#Preface\" >Preface<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/tejwin20260323.j.webweb.today\/en\/insight\/tquant-lab-supertrend-strategy\/#Understanding_the_SuperTrend_Indicator_ADX_Indicator\" >Understanding the SuperTrend Indicator &amp; ADX Indicator<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/tejwin20260323.j.webweb.today\/en\/insight\/tquant-lab-supertrend-strategy\/#SuperTrend_Indicator\" >SuperTrend Indicator<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/tejwin20260323.j.webweb.today\/en\/insight\/tquant-lab-supertrend-strategy\/#ADX_Indicator\" >ADX Indicator<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/tejwin20260323.j.webweb.today\/en\/insight\/tquant-lab-supertrend-strategy\/#SuperTrend_Strategy_with_ADX_Optimization\" >SuperTrend Strategy with ADX Optimization<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/tejwin20260323.j.webweb.today\/en\/insight\/tquant-lab-supertrend-strategy\/#Backtesting_with_TEJ_Market_Data\" >Backtesting with TEJ Market Data<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/tejwin20260323.j.webweb.today\/en\/insight\/tquant-lab-supertrend-strategy\/#Construct_the_SuperTrend_Strategy\" >Construct the SuperTrend Strategy<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/tejwin20260323.j.webweb.today\/en\/insight\/tquant-lab-supertrend-strategy\/#Key_Observations_in_Backtesting\" >Key Observations in Backtesting<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/tejwin20260323.j.webweb.today\/en\/insight\/tquant-lab-supertrend-strategy\/#TSMC_2330TW_Stock_Performance_under_the_SuperTrend_Strategy\" >TSMC (2330.TW) Stock Performance under the SuperTrend Strategy<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/tejwin20260323.j.webweb.today\/en\/insight\/tquant-lab-supertrend-strategy\/#Conclusion\" >Conclusion<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/tejwin20260323.j.webweb.today\/en\/insight\/tquant-lab-supertrend-strategy\/#Why_TEJ_Data_Supports_Taiwan_Market_Investments\" >Why TEJ Data Supports Taiwan Market Investments<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/tejwin20260323.j.webweb.today\/en\/insight\/tquant-lab-supertrend-strategy\/#Extended_Reading\" >Extended Reading<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Highlight\"><\/span>Highlight<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Introduce the SuperTrend Indicator and the Average Directional Index ( ADX ).<\/li>\n\n\n\n<li>Explain the SuperTrend Strategy and how to optimize it using the ADX indicator.<\/li>\n\n\n\n<li>Backtest the SuperTrend Strategy and observe its effectiveness in capturing market swings.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Preface\"><\/span>Preface<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The SuperTrend Indicator is a technical analysis tool for identifying trends in stock markets, aiding investors in determining market swings, and enhancing buy-sell timing. The SuperTrend Indicator is especially suitable for investors who need help discerning market directions or frequently exit trades too early, missing out on potential gains. However, one drawback of the SuperTrend Indicator is its tendency to be less effective during consolidation phases. Hence, by combining it with the Average Directional Index (ADX), which measures trend strength, we can refine this strategy to filter out noisy signals better and improve entry and exit decisions.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Understanding_the_SuperTrend_Indicator_ADX_Indicator\"><\/span>Understanding the SuperTrend Indicator &amp; ADX Indicator<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"SuperTrend_Indicator\"><\/span>SuperTrend Indicator<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>This indicator tracks trends by plotting upper and lower bands around price movements. When the price crosses above the upper band, it signals a potential upward trend; crossing below signals a downward trend.<\/p>\n\n\n\n<p>To calculate the upper and lower bands of the SuperTrend Indicator, we need to follow three steps:<\/p>\n\n\n\n<p><strong><em><span style=\"text-decoration: underline;\" class=\"ek-underline\">Step1: Calculate ATR<\/span><\/em><\/strong><\/p>\n\n\n\n<p>The ATR ( Average True Range ) is based on the TR ( True Range ), representing the maximum price movement within a specific period. The TR is usually determined by the greatest absolute value among the following three differences:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The difference between t day high and low prices.<\/li>\n\n\n\n<li>The difference between t-1 day closing price and the t day high price.<\/li>\n\n\n\n<li>The difference between t-1 day closing price and t day low price.<\/li>\n<\/ul>\n\n\n\n<p>The ATR is obtained by applying a moving average to the TR over a specified period, typically 14 days.<br>p.s. For more applications of ATR, you can refer to: <a href=\"https:\/\/tejwin20260323.j.webweb.today\/en\/insight\/loss-aversion-strategy\/\" class=\"ek-link\">TQuant Lab Loss Aversion Strategy \u2014 Average True Range.<\/a><\/p>\n\n\n\n<p><strong><em><span style=\"text-decoration: underline;\" class=\"ek-underline\">Step2: Calculate Basic Upper and Lower Bands<\/span><\/em><\/strong><\/p>\n\n\n\n<p>The formulas for the basic upper and lower bands are as follows:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Basic upper band<\/strong> = ( High + Low ) \/ 2 + Multiplier \u00d7 ATR<\/li>\n\n\n\n<li><strong>Basic lower band<\/strong> = ( High + Low ) \/ 2 &#8211; Multiplier \u00d7 ATR<\/li>\n<\/ul>\n\n\n\n<p>The Multiplier is a factor used to adjust the distance of the bands.<\/p>\n\n\n\n<p><strong><em><span style=\"text-decoration: underline;\" class=\"ek-underline\">Step3: Calculate Final Upper and Lower Bands<\/span><\/em><\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Final upper band<\/strong>: If the new basic upper band is lower than t-1 day final upper band, or if t-1 day\u2019 closing price is higher than t-1 day final upper band, the new basic upper band is used. Otherwise, the previous final upper band is retained.<\/li>\n\n\n\n<li><strong>Final lower band<\/strong>: If the new basic lower band is higher than t-1 day final lower band, or if t-1 day closing price is lower than t-1 day final lower band, the new basic lower band is used. Otherwise, the t-1 day final lower band is retained.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-image size-full caption-align-center\"><img decoding=\"async\" width=\"822\" height=\"370\" src=\"https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/supertrend-eng.png\" alt=\"SuperTrend Strategy\" class=\"wp-image-27439\" srcset=\"https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/supertrend-eng.png 822w, https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/supertrend-eng-300x135.png 300w, https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/supertrend-eng-150x68.png 150w, https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/supertrend-eng-768x346.png 768w\" sizes=\"(max-width: 822px) 100vw, 822px\" \/><figcaption class=\"wp-element-caption\">Chart\uff1aSuperTrend Indicator Diagram from <a class=\"ek-link\" href=\"https:\/\/tw.tradingview.com\/\" target=\"_blank\" rel=\"noopener\">TradingView<\/a><\/figcaption><\/figure>\n\n\n\n<p>The diagram above illustrates the SuperTrend Indicator applied to a price chart. We can observe that the SuperTrend Indicator effectively identifies upward trending phases; however, it produces noise during consolidation phases, leading to less reliable signals. To mitigate this, we pair the SuperTrend Indicator with the ADX, which helps us determine the trend&#8217;s strength. This combination allows us to construct a more robust SuperTrend strategy. Below, we will explain the formulas behind the SuperTrend and ADX indicators to provide insight into their inner workings.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"ADX_Indicator\"><\/span>ADX Indicator<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The ADX indicator, developed by J. Welles Wilder in 1978, measures the strength of a trend and ranges from 0 to 100, with higher values indicating more robust trends. By combining the SuperTrend Indicator with the ADX, we can more effectively differentiate between trending and consolidating phases.<\/p>\n\n\n\n<p>The ADX indicator ranges from 0 to 100, with the following interpretations:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li><strong>ADX &lt; 25<\/strong>: Weak market trend, indicating a consolidation phase.<\/li>\n\n\n\n<li><strong>25 &lt; ADX &lt; 50<\/strong>: The market is forming a moderate trend.<\/li>\n\n\n\n<li><strong>ADX &gt; 50<\/strong>: The market has established a strong trend.<\/li>\n<\/ol>\n\n\n\n<p>The ADX calculation involves four steps:<\/p>\n\n\n\n<p><strong><em><span style=\"text-decoration: underline;\" class=\"ek-underline\">Step1: Calculate ATR<\/span><\/em><\/strong><\/p>\n\n\n\n<p>The ATR is calculated in the same manner as in the SuperTrend Indicator.<\/p>\n\n\n\n<p><strong><em><span style=\"text-decoration: underline;\" class=\"ek-underline\">Step2: Calculate +DM, -DM ( Directional Movement )<\/span><\/em><\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>+DM\uff1a If ( t day High \u2013 t-1 day High ) &gt;(t-1 day Low \u2013t day Low ), <br>then +DM = max ( t day High \u2013t-1 day High, 0 ). Otherwise, +DM = 0.<br><\/li>\n\n\n\n<li>-DM\uff1aIf (t-1 day Low \u2013t day Low ) &gt; (t day High \u2013t-1 day High ), <br>then -DM = max (t-1 day Low \u2013t day Low, 0 ). Otherwise, -DM = 0.<\/li>\n<\/ul>\n\n\n\n<p><strong><em><span style=\"text-decoration: underline;\" class=\"ek-underline\">Step3: Calculate +DI, -DI ( Directional Indicator )<\/span><\/em><\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>+DI<\/strong>: 100 \u00d7 ( Moving Average of <strong>+DM<\/strong> \/ ATR )<\/li>\n\n\n\n<li><strong>-DI<\/strong>: 100 \u00d7 ( Moving Average of <strong>-DM<\/strong> \/ ATR )<\/li>\n<\/ul>\n\n\n\n<p><strong><em><span style=\"text-decoration: underline;\" class=\"ek-underline\">Step4: Calculate ADX<\/span><\/em><\/strong><\/p>\n\n\n\n<p><strong>DX<\/strong> = 100 \u00d7 ( |+DI &#8211; (-DI)| \/ |+DI + (-DI)| )<\/p>\n\n\n\n<p>The <strong>ADX<\/strong> is obtained by applying a moving average to the <strong>DX<\/strong> over a specified period.<\/p>\n\n\n\n<p>The following demonstrates how we will generate the trading signals required for the SuperTrend strategy using TQuant Lab.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"SuperTrend_Strategy_with_ADX_Optimization\"><\/span>SuperTrend Strategy with ADX Optimization<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The following demonstrates how we will generate the trading signals required for the SuperTrend strategy.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Backtesting_with_TEJ_Market_Data\"><\/span>Backtesting with TEJ Market Data<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<div class=\"wp-block-group is-layout-constrained wp-block-group-is-layout-constrained\">\n<p>We set the followin data and rule to backtest.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Stock Pool\uff1aTop 10 market value of listed electronics companies in Taiwan stock market at the end of 2018<\/li>\n\n\n\n<li>Backtest period\uff1afrom Jan 1, 2019, to Jul 1, 2024<\/li>\n\n\n\n<li>Trading set\uff1aliquidity slippage and transaction fees<\/li>\n\n\n\n<li>Initial capital of 1,000,000 NTD<\/li>\n\n\n\n<li>Benchmark\uff1aTAIEX-Total Return Index ( IR0001 )<\/li>\n\n\n\n<li>ATR calculation period for the SuperTrend Indicator\uff1a50 days<\/li>\n\n\n\n<li>Multiplier\uff1a4 <\/li>\n\n\n\n<li>ADX calculation period\uff1a14 days<\/li>\n<\/ul>\n<\/div>\n\n\n\n<div style=\"border: 1px black; border-style: solid none; text-align: center; border-color: #296580; padding: 24px; margin-top: 24px; margin-bottom: 24px;\">\n<p style=\"margin: 0px; font-size: 24px; font-weight: bold; line-height: 1.5;\">Start Building Portfolios That Outperform the Market!<\/p>\n<div style=\"margin-top: 32px;\"><strong><a style=\"border: none; border-radius: 4px; background-color: #296580; color: white; font-size: 20px; width: fit-content; text-decoration: none; padding: 12px 30px 12px 30px;\" href=\"https:\/\/tejwin20260323.j.webweb.today\/en\/databank-solution\/market-data\/\">TEJ Market Databank<\/a><\/strong><\/div>\n<\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Construct_the_SuperTrend_Strategy\"><\/span>Construct the SuperTrend Strategy<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>To create a balanced SuperTrend strategy, we use the ADX to confirm trend strength and adjust the entry\/exit rules :<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Long Entry<\/strong>: Buy when the closing price crosses above the SuperTrend\u2019s upper band, indicating a potential uptrend.<\/li>\n\n\n\n<li><strong>Short Entry<\/strong>: Sell when the price crosses below the lower band and ADX exceeds 50, signaling a strong downtrend.<\/li>\n<\/ul>\n\n\n\n<p>This combined approach mitigates SuperTrend\u2019s sensitivity in flat markets, improving profitability in trend-driven segments.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Key_Observations_in_Backtesting\"><\/span>Key Observations in Backtesting<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-image aligncenter size-full caption-align-center\"><img decoding=\"async\" width=\"1059\" height=\"603\" src=\"https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/add-2.jpg\" alt=\"SuperTrend Strategy\" class=\"wp-image-26803\" srcset=\"https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/add-2.jpg 1059w, https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/add-2-300x171.jpg 300w, https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/add-2-1024x583.jpg 1024w, https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/add-2-150x85.jpg 150w, https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/add-2-768x437.jpg 768w\" sizes=\"(max-width: 1059px) 100vw, 1059px\" \/><figcaption class=\"wp-element-caption\">Chart\uff1aBacktesting Performance Compared to Benchmark<\/figcaption><\/figure>\n\n\n\n<p>As shown in the table above, the SuperTrend strategy achieved an annualized return of 25.88%, with a relatively low annualized volatility of around 13%. When further examining the performance metrics, the Sharpe ratio is 1.84, and the Sortino ratio is 2.82, indicating that the SuperTrend strategy effectively avoids downside risks while earning excess returns with relatively lower risk. <\/p>\n\n\n\n<p>Observing the performance curve, although the SuperTrend strategy did not significantly outperform the market, we can see that after reaching a peak at the beginning of 2021, the returns leveled off until mid-2022, successfully avoiding the significant downturn of the 2022 bear market. Moreover, there was a good recovery trend after 2023, demonstrating the SuperTrend strategy&#8217;s ability to lock in profits during uptrends and preemptively avoid downside risks.<\/p>\n\n\n\n<figure class=\"wp-block-image aligncenter size-full caption-align-center\"><img loading=\"lazy\" decoding=\"async\" width=\"1081\" height=\"322\" src=\"https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/underwater.png\" alt=\"SuperTrend Strategy\" class=\"wp-image-26995\" srcset=\"https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/underwater.png 1081w, https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/underwater-300x89.png 300w, https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/underwater-1024x305.png 1024w, https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/underwater-150x45.png 150w, https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/underwater-768x229.png 768w\" sizes=\"(max-width: 1081px) 100vw, 1081px\" \/><figcaption class=\"wp-element-caption\">Chart\uff1aSuperTrend Strategy underwater plot<\/figcaption><\/figure>\n\n\n\n<p>The underwater plot chart shows that the two most significant drawdowns occurred during the pandemic in early 2020 and the bear market in 2022. However, compared to the 30% drawdown experienced by the broader market during these periods, the SuperTrend strategy&#8217;s 16% and 14% drawdowns were relatively minor.<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"TSMC_2330TW_Stock_Performance_under_the_SuperTrend_Strategy\"><\/span>TSMC (2330.TW) Stock Performance under the SuperTrend Strategy<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Take the famous company in Taiwan \u2013 TSMC as a sample to understand the performance of individual stocks under the Super Trend strategy. In the chart, red dots represent entry points, and green dots represent exit points. We can see that the SuperTrend strategy successfully profited during the uptrend from 2019 to 2020. However, during the consolidation phase in 2021 and the downtrend in 2022, there were some cases where it bought at relatively high points, indicating a failure. Fortunately, the sell points optimized by the ADX indicator limited some of the losses, and the buy point in 2023 successfully captured the profits up to July 2024.<\/p>\n\n\n\n<figure class=\"wp-block-image aligncenter size-full caption-align-center\"><img loading=\"lazy\" decoding=\"async\" width=\"1110\" height=\"490\" src=\"https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/2330chart.png\" alt=\"SuperTrend Strategy\" class=\"wp-image-27005\" srcset=\"https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/2330chart.png 1110w, https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/2330chart-300x132.png 300w, https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/2330chart-1024x452.png 1024w, https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/2330chart-150x66.png 150w, https:\/\/tejwin20260323.j.webweb.today\/wp-content\/uploads\/2330chart-768x339.png 768w\" sizes=\"(max-width: 1110px) 100vw, 1110px\" \/><figcaption class=\"wp-element-caption\">Chart\uff1aTSMC SuperTrend Strategy Performance Chart<\/figcaption><\/figure>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>This strategy was inspired by the Super Trend indicator. Given the indicator\u2019s failure during consolidation phases, we used the ADX indicator to optimize the strategy and reduce short-term trading noise. This strategy effectively captured uptrend gains and minimized losses, particularly valuable given the recent bullish trends in Taiwan\u2019s tech-heavy stock index. TEJ\u2019s comprehensive financial data on Taiwanese equities allowed for accurate trend following and risk management.<\/p>\n\n\n\n<p class=\"has-text-align-center\"><em><strong>Please note that the strategy and target discussed in this article are for reference only and do not constitute any recommendation for specific commodities or investments<\/strong>. <\/em><\/p>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button has-custom-width wp-block-button__width-100 has-custom-font-size\" style=\"font-size:22px\"><a class=\"wp-block-button__link has-background wp-element-button\" href=\"https:\/\/tejwin20260323.j.webweb.today\/en\/databank-solution\/financial-data\/\" style=\"border-radius:16px;background:linear-gradient(135deg,rgb(243,224,131) 0%,rgb(102,197,166) 50%,rgb(51,132,181) 100%)\"><strong>Access to Comprehensive Quantitative Data<\/strong><br><strong>Start Building Portfolios That Outperform the Market Today!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Why_TEJ_Data_Supports_Taiwan_Market_Investments\"><\/span>Why TEJ Data Supports Taiwan Market Investments<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>TEJ provides extensive, high-quality financial data covering the Taiwan stock market, tailored for market trend analysis. As the Taiwan Stock Exchange recently peaked due to rising semiconductor stocks, TEJ\u2019s data allows investors to monitor trends closely and craft strategies tailored to Taiwan\u2019s unique market dynamics.<\/p>\n\n\n\n<p><strong><mark style=\"background-color:rgba(0, 0, 0, 0);color:#0978b8\" class=\"has-inline-color\">Taiwan Economic Journal (TEJ)<\/mark><\/strong>, a financial database established in Taiwan for over 30 years, serves local financial institutions and academic institutions, and has long-term cooperation with internationally renowned data providers, providing high-quality financial data for five financial markets in Asia.&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong><mark style=\"background-color:#ebc766\" class=\"has-inline-color has-black-color\">Complete Coverage<\/mark><\/strong>: Includes all listed companies on stock markets in Taiwan, China, Hong Kong, Japan, Korea, etc.&nbsp;<\/li>\n\n\n\n<li><strong><mark style=\"background-color:#ebc766\" class=\"has-inline-color\">Comprehensive Analysis of Enterprises<\/mark><\/strong>: Operational aspects, financial aspects, securities market performance, ESG sustainability, etc.&nbsp;<\/li>\n\n\n\n<li><strong><mark style=\"background-color:#ebc766\" class=\"has-inline-color\">High-Quality Database<\/mark><\/strong>: TEJ data is cleaned, checked, enhanced, and integrated to ensure it meets the information needs of financial and market analysis.&nbsp;<\/li>\n<\/ul>\n\n\n\n<p>With TEJ&#8217;s assistance, you can access relevant information about major stock markets in Asia, such as securities market, financials data, enterprise operations, board of directors, sustainability data, etc., providing investors with timely and high-quality content!<\/p>\n\n\n\n<div class=\"wp-block-buttons is-content-justification-center is-layout-flex wp-container-core-buttons-is-layout-a89b3969 wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button has-custom-width wp-block-button__width-100 has-custom-font-size\" style=\"font-size:21px\"><a class=\"wp-block-button__link has-background has-text-align-center wp-element-button\" href=\"https:\/\/tejwin20260323.j.webweb.today\/en\/contact\/\" style=\"border-radius:16px;background:linear-gradient(135deg,rgb(160,209,216) 0%,rgb(51,145,181) 50%,rgb(50,95,191) 100%)\"><strong>Learn More About Our Databases and Solutions?<br>Contact Us and Get the Free Trial Today!<\/strong><\/a><\/div>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Extended_Reading\"><\/span>Extended Reading<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><a href=\"https:\/\/tejwin20260323.j.webweb.today\/en\/?post_type=insight&amp;p=26933\" class=\"ek-link\">Verifying LSTM Stock Price Prediction Effectiveness Using TQuant Lab (Part 2)<\/a><\/li>\n\n\n\n<li><a href=\"https:\/\/tejwin20260323.j.webweb.today\/en\/insight\/loss-aversion-strategy\/\" class=\"ek-link\">TQuant Lab Loss Aversion Strategy \u2014 Average True Range<\/a><\/li>\n<\/ul>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The SuperTrend Indicator is a technical analysis tool used to identify trends in financial markets. It assists investors in determining relative high and low points during market swings, helping them make buy and sell decisions. However, one drawback of the SuperTrend Indicator is its tendency to be less effective during consolidation phases. To address this, we will use the Average Directional Index (ADX) to optimize the SuperTrend strategy in this article.<\/p>\n","protected":false},"featured_media":30717,"template":"","tags":[3063,2962,3176,2988,2537],"insight-category":[50,1356],"class_list":["post-27434","insight","type-insight","status-publish","has-post-thumbnail","hentry","tag-backtesting-2","tag-market-data","tag-python-2","tag-quantitative-analysis","tag-2537","insight-category-fintech","insight-category-tquant-lab-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/tejwin20260323.j.webweb.today\/en\/wp-json\/wp\/v2\/insight\/27434","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/tejwin20260323.j.webweb.today\/en\/wp-json\/wp\/v2\/insight"}],"about":[{"href":"https:\/\/tejwin20260323.j.webweb.today\/en\/wp-json\/wp\/v2\/types\/insight"}],"version-history":[{"count":20,"href":"https:\/\/tejwin20260323.j.webweb.today\/en\/wp-json\/wp\/v2\/insight\/27434\/revisions"}],"predecessor-version":[{"id":30148,"href":"https:\/\/tejwin20260323.j.webweb.today\/en\/wp-json\/wp\/v2\/insight\/27434\/revisions\/30148"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/tejwin20260323.j.webweb.today\/en\/wp-json\/wp\/v2\/media\/30717"}],"wp:attachment":[{"href":"https:\/\/tejwin20260323.j.webweb.today\/en\/wp-json\/wp\/v2\/media?parent=27434"}],"wp:term":[{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/tejwin20260323.j.webweb.today\/en\/wp-json\/wp\/v2\/tags?post=27434"},{"taxonomy":"insight-category","embeddable":true,"href":"https:\/\/tejwin20260323.j.webweb.today\/en\/wp-json\/wp\/v2\/insight-category?post=27434"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}