Captures sustained directional trends using ATR-based indicator
| Strategy Type | Trend Following with Dynamic Trailing Stop |
| Market Outlook | Captures sustained directional trends using ATR-based indicator |
| Risk Profile | Low to Moderate - Built-in trailing stop mechanism |
| Reward Profile | 1:2 to 1:5 on trending moves; Captures 60-80% of major trends |
| Time Horizon | Swing trading (5-20 days) to Positional (1-3 months) |
| Capital Requirement | GBP 2,000 - GBP 10,000 for meaningful cash exposure; less upfront via CFD/spread-bet margin |
| Margin Type | Cash for delivery (GIA or ISA); margin for CFDs/spread bets |
| Best Used When | AstraZeneca in a clear trending phase; avoid during choppy/sideways markets |
| Lse Applicability | AstraZeneca is well suited to Supertrend due to clean trending behaviour driven by institutional flows; a pharma bellwether with predictable volatility; high liquidity (~12m+ shares/day) ensures reliable indicator signals. Quoted in pence (GBX) on the LSE. |
| Fca Compliance | Fully compatible standard technical-analysis strategy under FCA conduct rules and the UK market abuse regime (UK MAR). CFDs and spread bets carry mandatory FCA risk warnings. |
| Lot Sizes | 1 CFD = 1 share; leverage via margin (retail typically 20%, i.e. 5:1, under FCA limits) • Listed equity options (ICE/Euronext): 100 shares per contract - UK single-stock option retail liquidity is thin and spreads can be wide • No lot restriction, typically a handful to a few hundred shares; 0.5% stamp duty on purchases; T+2 settlement |
| Trading Hours | 8:00 AM - 4:30 PM London time (GMT/BST); Supertrend signals on the daily close |
| Expiry Considerations | Listed options expire the third Friday monthly; roll 5-7 days before for positional option trades. CFDs/spread bets have no expiry but incur daily overnight financing |
| Tax Implications | Cash shares (GIA): Capital Gains Tax 18%/24% above the GBP 3,000 annual exempt amount; 0.5% stamp duty on purchases. Inside a Stocks & Shares ISA (GBP 20,000 allowance) gains are tax-free. Spread-bet profits are CGT/stamp-duty free; CFD profits are CGT-liable but stamp-duty free. Tax depends on circumstances and can change |
These are widely-tested default settings. Period 10 captures recent volatility well. Multiplier 3.0 balances between staying in trends and protecting from reversals. They work well for most shares including AstraZeneca.
Wait for the daily CLOSE to confirm the flip. Intraday crosses often reverse by close. Enter at the next day's open after a confirmed flip, or on a pullback for a better entry.
Whipsaws are part of the strategy. Accept small losses (Supertrend limits them). Ensure winners are larger than losers. Don't revenge trade - wait for the next clean signal.
Hold until the opposite color flip. This could be days, weeks or months depending on the trend. Don't exit on minor pullbacks - trust the trailing-stop mechanism.
Yes, but use tighter settings (Period 10, Multiplier 2.0) on hourly charts. Intraday Supertrend has more signals and whipsaws. The daily timeframe is more reliable.
Use the Weekly Supertrend for major trend direction. Only take Daily signals aligned with Weekly. Use Hourly for entry optimisation. Weekly green + Daily green flip = highest confidence.
ADX > 25 confirms trend strength. RSI > 50 and rising confirms bullish momentum. Price above the 50 EMA confirms trend context. Volume > 1.2x average confirms conviction.
Wait for an established trend (Supertrend green 5+ days). When price pulls back within 1-2% of the Supertrend line and bounces (reversal candle), enter with a stop just below the line.
Skip when: ADX < 20, more than 2-3 flips in 20 days, weekly and daily conflict, or 7 days before results. These conditions produce unreliable signals.
Strong trend (ADX > 30): use standard or wider multiplier (3.5). Moderate trend (ADX 20-30): standard settings (10/3.0). Weak trend (ADX < 20): skip or use tighter settings cautiously.
Test Period 5-20 and Multiplier 1.5-4.0 with a 70/30 in-sample/out-of-sample split. Accept < 20% degradation. Standard 10/3.0 is usually robust. Test across multiple pharma/healthcare shares.
Use Fast ST (7/2.0) + Slow ST (14/3.5). Enter when both align. Exit on a Fast flip (early warning). Re-enter if Slow holds. Reduces whipsaws while catching reversals early.
Where liquid: ITM calls (delta 0.75+) for trend following and bull call spreads for defined risk. More commonly in the UK: CFDs or spread bets for liquid leverage. Exit on the opposite Supertrend flip.
Track: win rate (45-55%), win/loss ratio (2-3x), profit factor (>1.5), Sharpe (>1.0), Max DD (<15%). Compare to AZN buy-hold. Monthly review, quarterly optimisation.
Cap AZN at 20% of portfolio. Total healthcare Supertrend max 25%. Monitor AZN-GSK correlation - don't hold both at full size. Track total directional exposure.
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