Stop & Reverse Trading Strategy

A stop-and-reverse intraday strategy (with scanner + example) →

Hey there 👋🏼

Today in less than 5 minutes:

1) What is stop & reverse in trading?
2) SAR Intraday Trading Strategy
3) Example trade + stock scanner

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Stop & Reverse in Trading

Imagine you're playing chess. You might start with a plan to move your pieces aggressively toward your opponent's king, but suddenly, you realize your opponent has a strong defense.

Instead of sticking to your initial plan, you pause, reassess the board, and decide to switch tactics, now focusing on defending your pieces and counterattacking. This allows you to respond effectively to your opponent's moves and capitalize on new opportunities as they arise.

Just as in chess, where adjusting your strategy can turn the tide of the game, in intraday trading, stopping and reversing your position can help you navigate changing market conditions and increase your chances of success.

This is what the stop-and-reverse strategy is all about.

💡 The stop-and-reverse strategy is deployed by traders when they want to follow the market at every moment, thereby always maintaining a position in the direction of the market. This strategy highly relies on indicators for trend determination.

Let's explore a powerful stop-and-reverse strategy, particularly valuable for capturing short-term trends intraday ↓

SAR Intraday Trading Strategy

The strategy

Let’s use the Supertrend to determine the direction of our trade.

We will be using the following stock universe, indicator & time frame for this strategy:
- Stock Universe: NSE 200
- Supertrend (ATR Length: 10; Factor: 3)
- Time frame: 5 minutes

You can find these indicators on TradingView, a freely available charting software. Learn to make the most of it with our How to Use TradingView course, a full guide on how to use multiple tools to draw on charts and build your trading set-up.

Here’s how we will enter and exit a trade using this strategy:

LONG TRADE

1) Wait for the Supertrend to turn from bearish to bullish.

2) An entry is triggered at the high of the first candle. This candle should preferably be bullish.

3) Hold on to the trade as long as the Supertrend is bullish.

4) The trade can be exited at the close of the first candle after the Supertrend turns bearish.

5) A new short trade can then be entered into, as per the rules.

SHORT TRADE

1) Wait for the Supertrend to turn from bullish to bearish.

2) An entry is triggered at the low of the first candle. This candle should preferably be bearish.

3) Hold on to the trade as long as the Supertrend is bearish.

4) The trade can be exited at the close of the first candle after the Supertrend turns bullish.

5) A new long trade can then be entered into, as per the rules.

Though this strategy works best in intraday time frames, it can be used for trading in longer time frames as well.

We realize it’s impossible to scan through 500 stocks every 5 minutes to find a suitable stock. Hence, we have made this process a little easier for you, read on to find out!

Learn to combine the Supertrend indicator with other trading tools for short-term and long-term trading strategies in Mr. Khagesh Agarwal’s Supertrend Indicator Course. Use code STOCK10 to get 10% OFF, making it an effective price of ₹359.

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Ask us anything!

Do you have any doubts related to this strategy, or want to learn something else? Reply to this email & let us know!

Example Trade + Stock Scanner

Here’s an example of the strategy playing out:

LT, 5M

On 6th March 2023, an entry was triggered in Larsen & Toubro (LT) as per the strategy. The Supertrend turned bullish on a 5-minute timeframe, and a trade could have been taken at an entry price of ~₹3607, at the high of the first candle after the Supertrend turned bullish.

The trade gave an exit the next day, at the close of the first candle after the Supertrend turned bearish, giving a return of ~2% within just two trading sessions!

Simplify your process with a stock scanner

It’s impossible to scan through 500 charts looking for Supertrend crossovers, especially every 5 minutes. Hence, we created a stock scanner that will automate the first step of this strategy, i.e., this will help you find stocks with a Supertrend crossover 👇🏼

Note that we are not SEBI-registered advisors and none of the above trades are intended as recommendations. Do your own due diligence before trading/investing.

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Keep trading,
Upsurge.club

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