Indicators / Trend / SuperTrend
SuperTrend Indicator Explained: Entries, Exits and Trailing Stops
Quick answer
SuperTrend is a trend-following line built from the Average True Range (ATR). It sits below price in an uptrend and above price in a downtrend, and flips when price closes through it. It works best as a trailing stop and trend filter, not as a stand-alone buy and sell signal.
Video: SuperTrend for Beginners.
What SuperTrend measures
SuperTrend places a line a multiple of ATR away from the middle of each candle. Because ATR grows when the market is volatile, the line gives price more room in fast markets and less in quiet ones.
How SuperTrend is calculated
Lower band = (high + low) ÷ 2 − multiplier × ATR
In an uptrend the lower band is shown and can only rise; in a downtrend the upper band is shown and can only fall. A close through the active line flips the trend.
Settings
| ATR length | Multiplier | Effect |
|---|---|---|
| 10 | 3 | The common default |
| 10 | 2 | Tighter: earlier flips, more whipsaws |
| 14 to 20 | 4 | Looser: holds big trends, later exits |
How to read SuperTrend
1. Colour is the trend
Green below price: uptrend. Red above price: downtrend. Take trades in the direction of the current colour.
2. Flips are structure changes
A flip means price closed beyond a volatility-adjusted level. It is a change in short-term structure, not a guarantee of a new trend.
3. Use it as a trailing stop
Because the line only moves in the trend's favour, it makes a natural trailing stop: exit when price closes through it.
Common mistakes
- Taking every flip in a range. Sideways markets flip SuperTrend back and forth.
- Setting it too tight. Small multipliers stop you out of good trends.
- Entering far from the line. The stop is then far away too.
What to pair SuperTrend with
- ADX to avoid flips when there is no trend.
- Multiple timeframes to trade with the higher-timeframe colour.
- Volume to confirm flips.
SuperTrend FAQ
What are the best SuperTrend settings?
ATR 10 with a multiplier of 3 is the common default. Raise the multiplier to hold trends longer.
Is SuperTrend good for stocks and crypto?
It suits trending markets in any asset, but it whipsaws in ranges like any trend tool.
Can SuperTrend be used as a stop loss?
Yes. Its line only moves in the trend's favour, which makes it a natural trailing stop.