Supertrend X Gaussian (intermediate)

Supertrend X Gaussian Filter Strategy

Notes:

These indicators and concepts are specifically designed for TradingView.com

All indicator breakdowns will be found in the indicators tab on the home page of: STRATEGY

Indicators:

1. Go to INDICATORS and type in: One-Sided Gaussian Filter w/channels [Loxx]

1. Go to INDICATORS and type in: Supertrend+ by Electrified

1. Set TIMEFRAME to: 15 min

How to Execute Long:

     1. Look for both indicators to be GREEN to ENTER LONG (The supertrend hazing must be green as well as the Gaussian being green as well).

In Lehmans Terms: If both the green line and the hazing below the line turn green, stock is likely to rise. The hazing below is the "Trend" or current momentum of the stock, with the Gaussian helping you to time the entry.

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Look for TWO REDS or an "S" symbol to EXIT LONG

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How to Execute Short:

        It is the exact oposite to enter a short.

        1. Look for TWO REDS to ENTER SHORT (Image 2)

        2. Look for TWO GREENS to EXIT SHORT (Image 1)

In Lehmans Terms: If both the line and the hazing below the line turn red, stock is likely to fall.

How does Supertend work?

The technique is based on the trend-following Supertrend indicator, which establishes the trend's direction by analyzing price and volatility. Depending on the trend direction, it plots a line above or below the price, which traders use as a reference point when making trading decisions.

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These are the steps to employ the Supertrend strategy:

       1. Determine the trend: The first step is to identify the trend direction by looking at the Supertrend indicator. If the line is above the price, it indicates a downtrend, and if it's below the price, it indicates an uptrend.

       2. Wait for a signal: Once the trend is established, traders wait for a signal to enter or exit the market. A signal is generated when the price       crosses the Supertrend line in the opposite direction. For example, if the price crosses above the Supertrend line in a downtrend, it could signal a reversal and an opportunity to go long.

       3. Manage risk: Traders must always manage risk by setting stop-loss orders to limit potential losses. They can also use trailing stop orders to lock in profits as the price moves in their favor.

How does Gaussian work and how to use it?

One-sided Gaussian is a statistical model that is sometimes used in trading to describe the distribution of returns for a particular asset. In a one-sided Gaussian model, the distribution of returns is assumed to be normal, but with a skewness in one direction, indicating that the returns are more likely to be positive or negative. The one-sided Gaussian model is based on the assumption that returns in financial markets follow a normal distribution, but with a skewness that is caused by the presence of positive or negative news events. For example, if a company announces positive earnings, it may cause the stock price to rise, resulting in a positive skew in the distribution of returns.

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How to use the Supertrend:

        1. Determine the direction of the one-sided Gaussian distribution: One-sided Gaussian distributions can be either positively skewed or negatively skewed. If the distribution is positively skewed, it means that the majority of the values are clustered towards the lower end of the distribution, and the tail is skewed to the right. If the distribution is negatively skewed, it means that the majority of the values are clustered towards the higher end of the distribution, and the tail is skewed to the left. Understanding the direction of the skew is important because it will influence your trading strategy. The direction of the skew is indicated by the either red or green line in the middle of the bands.

         2. Identify key support and resistance levels: Once you have determined the direction of the one-sided Gaussian distribution, you can identify key support and resistance levels. In a positively skewed distribution, the support levels are likely to be clustered towards the lower end of the distribution, and in a negatively skewed distribution, the resistance levels are likely to be clustered towards the higher end of the distribution.

Traders can use the one-sided Gaussian model to estimate the probability of positive or negative returns for a particular asset. By calculating the mean and standard deviation of the distribution of returns, traders can use the one-sided Gaussian model to estimate the probability of a positive or negative return. A one-sided Gaussian filter with channels in trading stock is a filtering technique to smooth stock price data over time, while also taking into account different aspects of the stock, such as its volume or volatility. The filter is a type of moving average filter that applies a weighted average to the stock price data over a defined period of time. In this case, the filter takes into account different channels or aspects of the stock, such as its closing price, volume, or volatility, and applies the filter independently to each channel. The filter is called "one-sided" because it only considers the past data points in a specific direction (usually from left to right), rather than considering the data symmetrically around the current point. This can help to provide a more accurate representation of the current trend in the stock price. By smoothing out the noise and fluctuations in the stock price data, the one-sided Gaussian filter with channels can help traders identify trends and make more informed decisions about when to buy or sell. It can also help to reduce the impact of sudden price movements or market volatility, which can improve the stability of trading strategies. In addition, the one-sided Gaussian model can also be used to estimate the risk of a particular trade. By estimating the probability of a positive or negative return, traders can adjust their position size and stop-loss levels to account for the potential risk.