An Analytical Study on Super Trend Trading System on Bank Nifty Perpetual Futures Contract

Abstract

To trade efficiently and profitably, we must understand the on-going trend in the market. While a many of popular technical analysis indicators attempt to provide a better understanding of the overall trend in the market, they are limited in both trend generation and momentum. Based on the Japanese Heiken Ashi (HA) candles we develop one trading system, which can reflect in a single number both the likelihood of trend generation and momentum in the market. We back tested the strategy using HA and Super Trend for BANKNIFTY’S perpetual futures contract for one major time frame in the market which is the daily time frame. We find if the strategy gives consistent profits for traders in the markets. The study contributes to economic literature as well as to practical trading scenarios by the development of a trading strategy using Heiken-Ashi charts as a charting technique combined with Super Trend as an indicator, which gives the trend generation and momentum in the market.