Using Supertrend and Parabolic SAR as a Trend Filter

Summary

The indicator colors a chart background according to whether the close agrees with both Supertrend and Parabolic SAR. It marks an upward condition when the close is above both indicators and a downward condition when the close is below both. The example uses Supertrend settings of 3 and 10 and Parabolic SAR settings of 0.02, 0.02, and 0.2.

The author presents the display as a directional filter, says it may suit trending markets, and suggests pairing it with separate entry and exit rules. No trades, backtest, or performance results are included. When the close is between the two indicators, the example leaves the background unchanged. Agreement between these trend-following indicators does not guarantee continuation and may give late signals or perform poorly in sideways markets; the settings and filter need testing in the intended market and timeframe.

Key ideas

• The background signals an upward condition when the close is above both Supertrend and Parabolic SAR.
• It signals a downward condition when the close is below both indicators.
• The example leaves the background unchanged when the two indicators do not agree with the close.
• The author positions the display as a trend filter to combine with separate entry and exit rules, without providing test results.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.