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 | $8,000 - $40,000 for meaningful exposure |
| Margin Type | Cash account for stock; Reg-T margin (50%) with Level 2-3 options approval for options |
| Best Used When | ACN in clear trending phase; Avoid during choppy/sideways markets |
| Nyse Applicability | ACN ideal for Supertrend due to clean trending behavior driven by institutional flows; IT-services bellwether with predictable volatility; High liquidity ensures reliable indicator signals |
| Sec Compliance | Fully compliant standard technical analysis strategy under SEC/FINRA rules |
| Lot Sizes | 100-share round lot (~$16,400 position; ~$8,200 at 50% Reg-T initial margin) • 100 shares per contract • No lot restriction, typically 25-200 shares |
| Trading Hours | 9:30 AM - 4:00 PM ET; Supertrend signals on daily close |
| Expiry Considerations | Weekly and monthly expiry (3rd Friday standard); Roll 5-7 days before for positional options |
| Tax Implications | Stock held >12 months: long-term capital gains (0/15/20% by bracket); <=12 months: short-term, taxed as ordinary income; equity options: capital gains by holding period, NOT Section 1256 (single-stock); wash-sale rule applies; Pattern Day Trader $25k rule if 4+ day trades in 5 days |
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 stocks including ACN.
Wait for daily CLOSE to confirm the flip. Intraday crosses often reverse by close. Enter at next day's open after confirmed flip or on pullback for 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 next clean signal.
Hold until opposite color flip. This could be days, weeks, or months depending on 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. Daily timeframe is more reliable.
Use Weekly Supertrend for major trend direction. Only take Daily signals aligned with Weekly. Use Hourly for entry optimization. Weekly green + Daily green flip = highest confidence.
ADX > 25 confirms trend strength. RSI > 50 and rising confirms bullish momentum. Price above 50 EMA confirms trend context. Volume > 1.2x average confirms conviction.
Wait for established trend (Supertrend green 5+ days). When price pulls back within 1-2% of Supertrend line and bounces (reversal candle), enter with 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 earnings. 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 70/30 in-sample/out-of-sample split. Accept < 20% degradation. Standard 10/3.0 is usually robust. Test across multiple IT-services stocks.
Use Fast ST (7/2.0) + Slow ST (14/3.5). Enter when both align. Exit on Fast flip (early warning). Re-enter if Slow holds. Reduces whipsaws while catching reversals early.
ITM calls (delta 0.75+) for trend following. Bull call spreads for defined risk. LEAPS for weekly signals. Exit options on 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 ACN buy-hold. Monthly review, quarterly optimization.
Cap ACN at 20% of portfolio. Total IT Supertrend max 25%. Monitor ACN-CTSH correlation - don't hold both at full size. Track total directional exposure.
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