As the name suggests, the SuperTrend technical indicator helps to identify market trends. This article introduces a SuperTrend trading strategy and shows how the strategy can be backtested using Excel.

To get a different perspective on the SuperTrend. See this recent article where I show how it can be profitable to reverse the indicator: A Forex SuperTrend Strategy.

The strategy was profitable over the time period tested and the results can be seen below.

## Trading Strategy

The criteria for the strategy are as follows:

#### Enter Long Trade

- When closing price is above 200 SMA and crosses from below to above SuperTrend
- Or when closing price is above SuperTrend and crosses from below to above 200 SMA

#### Enter Short Trade

- When closing price is below 200 SMA and crosses from above to below SuperTrend
- Or when closing price is below SuperTrend and crosses from above to below 200 SMA

#### Close Long Trade

- When either Profit Target or Stop-Loss is hit
- When trade is opened in the oppposite direction
- When closing price crosses from above to below 25 EMA

#### Close Short Trade

- When either Profit Target or Stop-Loss is hit
- When trade is opened in the oppposite direction
- When closing price crosses from below to above 25 EMA

## Video

The video explains the trading strategy and looks at the spreadsheets used for the backtest. It is also goes through the results and carries out a step-through analysis.

## Excel Formulas

These formulas are based on a version of the spreadsheet in my Ebook course, How to Backtest a Trading Strategy Using Excel. The cell references will depend on which data you are using in which columns. However, once you understand the trading strategy that is being tested it should be easy to adapt the formulas to your own spreadsheet or backtesting system.

**Trade Long** Y203 =IF(AND(F203>S203,F202<S202,F203>H203),”long”,IF(AND(F203>H203,F202<H202,F203>S203),”long”,””))

**Long Close Below EMA** AC203 =IF(AND(F203<I203,F202>I202,AI203=$AI$2,AB203=0,AA203=0,Z203=0),”ema close”,)

**Long EMA Close** AN203 =IF(AC203=”EMA close”,(F203-AD203)/(AE203-AD203)*AG203,)

**Trade Short** AO203 =IF(AND(F203<S203,F202>S202,F203<H203),”short”,IF(AND(F203<H203,F202>H202,F203<S203),”short”,””))

**Short Close Below EMA** AS203 =IF(AND(F203>I203,F202<I202,AY203=$AY$2,AQ203=0,AR203=0,$AS$2=1,AP203=0),”EMA close”,)

**Short EMA Close** BD203 =IF(AS203=”EMA close”,(AT203-F203)/(AT203-AU203)*AW203,)

## Results

The trading strategy was backtested on the EUR/USD forex pair on the 1-hour timeframe. The backtest was carried out over three periods of 20,000 1-hour periods (3 years, 3 months).

I then combined these backtests and the results are shown in the table below.

Criteria | Result |
---|---|

Initial Capital | $100,000 |

Final Capital | $1,386,579 |

Profit | $1,286,579 |

Wining trades | $6,858,641 |

Losing trades | $-6,091,474 |

Profit Factor | 1.15 |

Number of Wining Trades | 639 |

Number of losing Trades | 1,600 |

% Winning Trades | 29% |

Max Drawdown | 38% |

## Related Links

If you are interested in using Excel to backtest trading strategies my new Ebook course: How to Backtest a Trading Strategy using Excel is now available in the Amazon Kindle Bookstore.

If you are interested in backtesting and automated trading using MT4 have a look at How to Create an Expert Advisor for a SuperTrend Trading Strategy.

If you want to know how to calculate the SuperTrend in Excel, see my previous article, How to Calculate the SuperTrend Indicator using Excel.