SuperTrend Bulls Eye Manual
SuperTrend Bulls Eye is the world’s first self-optimizing SuperTrend indicator which finds optimal settings for you across all markets, chart-types, and time frames.
It also introduces Generation 3 Scanning, whereby the indicator can be used during scans to find both the most profitable signals and best possible settings simultaneously.
To understand SuperTrend Bulls Eye and how it improves upon the original SuperTrend, we first need to understand how the original one works.
What is classic SuperTrend?
SuperTrend is a one of the most popular and influential trading indicators in the public domain. It is available for most platforms and is used by thousands of traders worldwide.
It was developed by the French author and trader Olivier Seban who described the indicator in his book ‘Everybody Deserves to be Rich’. Since then, it has gone on to receive widespread recognition as one of the great indicators for trend following and trend reversal traders.
How it works
SuperTrend is a very simple indicator based on a straightforward idea: ‘When trend reverses upwards, go long and use a trailing stop. When trend reverses downward, go short and use a trailing stop’. That’s it. SuperTrend is what is called an ‘always-in-the-market’ or ‘stop-and-reverse’ trading strategy. This means that the indicator will always be suggesting either a long or short position – it never goes flat. The idea is that you can take advantage of both trend directions.
On the chart below we can see SuperTrend applied. When a green triangle appears, it signals a long entry; when a red triangle, a short entry. A trailing stop is always plotted, and when a trade ‘stops out’ or triggers its trailing stop, an entry in the reverse direction is signaled. It’s a simple but powerful trend following approach.
The logic is super simple. In fact, there are only two parameters to SuperTrend: “Period” and “Multiplier”. The period sets the lookback for the calculation of the average true range (ATR), which is really just a measure of current volatility. This multiplier then sets how many multiples of this ATR you would like the trailing stop to trail by. For example, if the period is 14 and the multiplier is 2, then the trailing stop line will trail current price by a value of (2 x ATR(14)).
Essentially, the period sets how far back you want to look when calculating the ATR, and the multiplier sets how many multiples of this ATR you would like to trail by.
The issue with SuperTrend
The problem is: how do we know what the best settings are for these period and multiplier parameters? From symbol to symbol, time frame to time frame, and chart to chart, the optimal settings will always be different, and judging which will be the best is generally left to guess work. You may have an intuition or tend to use the same parameters across the board, but this isn’t really the ideal approach, because there is a best setting. SuperTrend Bulls Eye is the solution to this problem.
SuperTrend Bulls Eye
SuperTrend Bulls Eye is an intelligent version of SuperTrend which auto optimizes these two parameters for you.
This means that it will automatically find the best settings for both the ATR Period and the Multiplier parameters, depending on the chart you’ve applied it to. The parameters will always be selected to yield the most profitable outcome.
How does it do it?
SuperTrend Bulls Eye looks at historical price action to determine which settings would have given the best outcome by finding the configuration with the highest profit factor. These optimized settings are then used by the indicator going forward.
In a panel on the chart it displays what you can expect in terms of performance for the optimized settings. You can view the historical profit factor, average trade duration, number of trades taken, and average profitability of trades over the optimization period used to find these settings.
When SuperTrend Bulls Eye tests to find the most profitable combination of settings, it does so by looking back over a configurable number of bars to simulate the indicator’s performance. This number of bars as well as which combinations of settings to test are all configurable in the indicator’s settings.
The indicator has two main groups of settings: manual and optimization.
The indicator will use the manual settings when ‘Optimize Parameters’ is disabled. In this case, the backtest results displayed in the results panel will be based on the parameters you’ve inputted, and no optimization takes place. The multiplier and period control the previously explained multiplier and period parameters for SuperTrend. The ‘Trail Stop %’ controls the trailing percentage when using the ‘Percent Trailing’ trading style.
The manual settings are meant to be used when you don’t want the indicator to self-optimize.
Trading style is an additional feature which allows you to toggle the indicator between normal ‘Classic SuperTrend’ and ‘Percent Trailing’ mode. When ‘Classic SuperTrend’ is selected the indicator acts just like traditional SuperTrend. ‘Percent Trailing’ mode is a simple variation on classic SuperTrend which overrides the SuperTrend trailing stop with a percent-based trailing stop. When this mode is enabled, the indicator will simulate its trade results (and alter its approach to optimization) to trade with this ‘Percent trailing’ approach.
In Percent Trailing mode, the indicator enters long and short trades using the regular SuperTrend signals. However, once a trade is entered, no new entries are taken until the existing trade is stopped out by the percent-based trailing stop now plotted on the chart.
The optimizer settings control which combinations of parameters you want the indicator to test when self-optimizing. The indicator can optimize its three primary settings: Multiplier, Period, and Trail Stop % (when using Percent Trailing style).
These settings work just like in a traditional optimizer.
For each of the three parameters, you can set the range of values that the optimizer should test out when running its optimization. Each parameter has a start, end, and increment value. The optimizer will test out every value for that parameter from the start value to the end value, in steps of ‘increment’.
For example, in the screenshot above, the Multiplier parameter has a start of 1, an end of 4, and an increment of 1. This means that the optimizer will test the performance of the indicator for Multiplier = 1, Multiplier = 2, Multiplier = 3, and Multiplier = 4. At the same time, the ATR Period has a start of 5, an end of 45, and an increment of 5.
For the Multiplier, the possibilities are 1, 2, 3, and 4. For the ATR Period, they are 5, 10, 15, 20, 25, 30, 35, 40, 45.
When the optimizer runs its tests to find the most profitable combination of settings, it will test all of the possible combinations defined by these values:
Generation 3 Scanning
With a regular indicator like the traditional SuperTrend, some platforms allow you to scan for signals such as buy or sell entries. In this case, you enter your parameters and scan for signals generated by the indicator.
SuperTrend Bulls Eye, however, can self-optimize its own parameters. This means that, when you run a scan with SuperTrend Bulls Eye, you’re not only scanning for entries, but for entries generated by the best possible settings on each symbol.
As the scan runs, SuperTrend Bulls Eye optimizes itself for each symbol simultaneously – meaning that the signals you receive in your scanner come from the most profitable setting combinations. We call this Generation 3 Scanning.
The indicator also exports the current Profit Factor as a plot – meaning that it can be used as a condition in your scan. For example, you can scan for SuperTrend Bulls Eye signals only on those symbol and setting combinations with a profit factor greater than 2.0.
These scans are currently possible in MotiveWave and NinjaTrader 8.
Running a scan with SuperTrend Bulls Eye is simple.
1. Open a Scan page and create a new, study-based scan.
2. Select SuperTrend Bulls Eye as the study.
3. In SuperTrend Bulls Eye’s settings, enable ‘Configure for Usage in Scanner’
4. If wanted, enable ‘Automatically Optimize Parameters’
5. Ensure that enough minimum bars are loaded by the scan for SuperTrend Bulls Eye to run its optimizations
6. Define your Study Criteria
7. Run the scan
Check out the clips below for either detailed walkthrough of how to set up scans for SuperTrend Bulls Eye in MotiveWave or a short clip demonstrating the steps.
Generation 3 Scanning is possible using the Market Analyzer in NinjaTrader 8.
- Open a new Market Analyzer window
- Add the instruments you’d like to scan
- Right click in the Market Analyzer and select ‘Columns’
- Add a new ‘Indicator’ column, select SuperTrend Bulls Eye
- Select the plot to scan for
- Customize your column as you see fit
Watch this detailed walkthrough on how to set up scans with the Market Analyzer in NinjaTrader 8:
Usage in the MotiveWave Strategy Builder
SuperTrend Bulls Eye can be used to build automated strategies in MotiveWave using our Strategy Builder. The indicator can re-optimize its parameters while the strategy is running.