A trend-following indicator based on ATR that plots a single line above or below price — line below means uptrend, above means downtrend.
Supertrend is a popular modern trend indicator built on ATR. It plots a single line that flips between being above and below price. When price is above the line, the line is GREEN and below price (acting as support). When price is below the line, the line is RED and above price (acting as resistance). The flip from one side to the other is the trade signal.
The inputs are ATR period (default 10) and multiplier (default 3). The line sits at multiplier × ATR away from price. Higher multipliers mean fewer signals but bigger trends. Lower multipliers mean more signals but more chop.
Supertrend is loved because of its simplicity — one line, two colors, clear signals. It's also a built-in trailing stop. The downside, like all trend indicators, is whipsaw in ranging markets.
USD/JPY's daily Supertrend stayed green from January to July 2024 — the line never flipped during the entire 2,000-pip rally. A simple Supertrend exit would have caught most of the move.
Frequently asked about supertrend
What is a supertrend in trading?+
A trend-following indicator based on ATR that plots a single line above or below price — line below means uptrend, above means downtrend.
When will I see supertrend used in real trading?+
On TradingView and many modern platforms. Popular among algo traders and automated systems.
What is the most common mistake traders make with supertrend?+
Trading Supertrend in choppy markets. The line flips repeatedly during consolidation and every signal fails. Add an ADX filter (only trade when ADX > 25) to skip chop.
What do experienced traders know about supertrend that beginners don't?+
Use Supertrend on multiple timeframes simultaneously. If the daily, 4-hour, and 1-hour all show green, the trade has multi-timeframe alignment and a much higher win rate.
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