SuperTrend is a trend-following indicator based on ATR (Average True Range), appearing as a line on chart to identify trend direction and provide dynamic stop loss levels. SuperTrend line below price in green indicates uptrend, above price in red indicates downtrend.
Basic Upper Band = (High + Low) / 2 + (Multiplier × ATR) Basic Lower Band = (High + Low) / 2 - (Multiplier × ATR) Final Upper Band = Basic Upper Band < Previous Final Upper Band or Previous Close > Previous Final Upper Band ? Basic Upper Band : Previous Final Upper Band Final Lower Band = Basic Lower Band > Previous Final Lower Band or Previous Close < Previous Final Lower Band ? Basic Lower Band : Previous Final Lower Band SuperTrend = Close <= Final Upper Band ? Final Upper Band : Final Lower Band Standard parameters: ATR period = 10, Multiplier = 3
Standard SuperTrend (10, 3): Most commonly used parameters
Sensitive SuperTrend (7, 2): More sensitive, suitable for short-term trading
Conservative SuperTrend (14, 4): More stable, reduces false signals
Multiple SuperTrend: Uses multiple SuperTrend lines with different parameters
SuperTrend Green (Below Price): Uptrend, hold long
SuperTrend Red (Above Price): Downtrend, hold short
Price Crosses Above SuperTrend: Trend changes from down to up, buy signal
Price Crosses Below SuperTrend: Trend changes from up to down, sell signal
SuperTrend as Stop Loss: Dynamic trailing stop, protects profits
SuperTrend Flat: Trend unclear, possibly consolidating
SuperTrend works best in trending markets, providing clear entry and exit signals. In strong trends, price rides along SuperTrend line, which serves as excellent trailing stop. Many traders combine SuperTrend with other indicators like ADX or RSI to improve signal accuracy. SuperTrend reversal signals can be used to close existing positions or open reverse positions. In ranging markets, SuperTrend generates frequent false signals; should avoid using or filter with trend strength indicators.
Provides clear trend signals, automatic trailing stops, visually intuitive, ATR-based adapts to market volatility, simple to use
Generates many false signals in ranging markets, significant lag, parameter settings significantly affect results, may exit strong trends prematurely, requires combination with trend strength indicators
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