Profitable Trading strategy using Supertrend and Moving Average (MCX)

Silver trading or commodity is a great choice for traders because of its high demand and frequent price changes.

Also it is best instrument to trade for office going people.

A combination of Supertrend and Moving Average is one of the most effective ways to trade silver on the Multi Commodity Exchange (MCX). These indicators help traders spot trends, confirm buy and sell signals, and manage risk better.

This article will explain how Supertrend and Moving Averages work, how to use them together, and how to apply them to a simple but effective silver trading strategy with clear entry and exit rules.

Understanding Supertrend and Moving Average

What is Supertrend?

supertrend

Supertrend  is a simple trend-following tool that helps traders see the market direction. It is shown on price charts and changes color based on price movement.

• A green Supertrend line signals an upward trend, meaning a buying opportunity.

• A red Supertrend line signals a downward trend, meaning a selling opportunity.

Supertrend is calculated using Average True Range (ATR) and a Multiplier. It adjusts to price changes, making it useful for both short-term and long-term trading.

What is a Moving Average?

moving average

A Moving Average (MA) helps smooth out price movements to show the overall trend. It calculates the average price over a set period, making it easier to see the market direction.

There are two common types:

• Simple Moving Average (SMA): Gives equal importance to all price points over a specific period.

• Exponential Moving Average (EMA): Gives more importance to recent prices, making it react faster to price changes.

Moving Averages help traders confirm trends and find key price levels where prices may change direction.

Why Use Supertrend and Moving Average Together?

supertrend and moving average use together

Supertrend and Moving Average work well together because they help traders confirm trends and reduce false signals.

• Supertrend provides buy and sell signals based on price direction.

• Moving Average confirms trend strength and acts as a stop-loss guide to manage risk.

• The combination is useful for intraday and swing trading, helping traders capture profitable price moves.

Profitable Trading Strategy Using Supertrend and Moving Average

Step 1: Setting Up the Indicators

indicator set up

To use this strategy, apply the following indicators to the silver price chart:

• Three Supertrend indicators with different settings:

  • Supertrend 1 (ATR 7, Multiplier 3)

  • Supertrend 2 (ATR 14, Multiplier 1)

  • Supertrend 3 (ATR 21, Multiplier 2)

• 20-period Exponential Moving Average (EMA) to track trend direction and act as a trailing stop-loss.

Step 2: Finding a Buy Signal

find a buy signal

A buy trade is taken when:

• All three Supertrend indicators turn green, confirming an uptrend.

• The price is above the 20 EMA, supporting the buying momentum.

Trade Execution for Buy

• Entry: When all three Supertrend indicators give a buy signal.

• Target: Set at 0.35% above the entry price.

• Stop-loss: Place at 0.22% below the entry price.

• Trailing Stop-loss: Use the 20 EMA as a trailing stop. Move the stop-loss up as the price rises.

Exit Rules for Buy Trade

Exit the trade if:

• The price hits the 0.35% target (Profit is taken).

• The price hits the 0.22% stop-loss (To prevent loss).

• A candle closes below the 20 EMA, signaling a possible trend reversal.

Step 3: Finding a Sell Signal

find a sell signal

A sell trade is taken when:

• All three Supertrend indicators turn red, confirming a downtrend.

• The price is below the 20 EMA, showing selling pressure.

Trade Execution for Sell

• Entry: When all three Supertrend indicators give a sell signal.

• Target: Set at 0.35% below the entry price.

• Stop-loss: Place at 0.22% above the entry price.

• Trailing Stop-loss: Use the 20 EMA as a trailing stop. Move the stop-loss down as the price falls.

Exit Rules for Sell Trade

Exit the trade if:

• The price hits the 0.35% target (Profit is taken).

• The price hits the 0.22% stop-loss (To prevent loss).

• A candle closes above the 20 EMA, signaling a possible trend reversal.

Example Trade Using This Strategy

example

Suppose silver is trading at ₹75,000 per kg on MCX.

• All three Supertrend indicators turn green, confirming an uptrend.

• The price is above the 20 EMA, supporting a buying opportunity.

Trade Details

• Entry Price: ₹75,200

• Stop-loss: ₹75,034 (0.22% below entry price)

• Profit Target: ₹75,464 (0.35% above entry price)

If the price moves up, the stop-loss is adjusted using the 20 EMA until either the profit target is hit or a candle closes below the 20 EMA, signaling an exit.

Advantages of This Strategy

High Accuracy

Using three Supertrend indicators, this strategy ensures strong confirmation before entering a trade, reducing false signals.

Works in Trending Markets

This strategy is best for markets that have a strong trend, allowing traders to hold trades for longer profits.

Effective Risk Management

With a 0.35% profit target and 0.22% stop-loss, this strategy keeps risk low while maximizing gains.

Trailing Stop for Better Profits

The 20 EMA trailing stop helps lock in profits while keeping losses small.

Challenges of This Strategy

Not Suitable for Flat Markets

If the market is moving sideways, this strategy may give false signals, leading to small losses. It is best used when silver is moving in a clear direction.

Needs Discipline

Traders must follow exit rules and stick to stop-loss levels to avoid unnecessary losses.

Final Thoughts

Trading silver on MCX using Supertrend and Moving Average is a great way to find trends and improve trade accuracy. This strategy helps traders enter profitable trades while keeping risks under control.

By using three Supertrend indicators, a 20 EMA trailing stop, and fixed profit and stop-loss levels, traders can follow a structured and disciplined approach. However, it is best used in trending markets and avoided during sideways price movements.

With proper risk management and patience, this strategy can help traders increase profits while keeping losses small.

FAQs

Is this strategy good for beginners?

Yes, this strategy is easy to follow, but beginners should practice on a demo account before trading real money.

What time frames work best for this strategy?

This strategy works well on 5-minute, 15-minute, and 1-hour charts, depending on the trading style.

Can this strategy be used for other commodities?

Yes, it can be used for gold, crude oil, and other commodities, but the settings should be adjusted based on price movements.

How can I manage risk with this strategy?

Using a 0.35% target, 0.22% stop-loss, and a 20 EMA trailing stop helps manage risk effectively.

Does this strategy work in highly volatile markets?

Yes, but avoid trading during major news events that can cause unexpected price swings.

Which platforms support this strategy?

Platforms like TradingView, MetaTrader, and MCX trading terminals allow traders to use Supertrend and Moving Averages for analysis.