The Supertrend indicator is a trend following overlay on your trading chart, much like a moving average, that shows you the current trend direction.
The indicator works well in a trending market but can give false signals when a market is trading in a range.
It uses the ATR (average true range) as part of its calculation which takes into account the volatility of the market. The ATR is adjusted using the multiplier setting which determines how sensitive the indicator is.
How Does It Work?
The changing colors determine the trend direction of the instrument you are trading.
When the indicator flips to green due to the closing price being above the line, a buy signal is generated.
Once price closes on the oppositive side of the line, it flips from green to red and a sell signal is generated.
What Are The Parameters For The Supertrend Indicator?
Like all technical analysis tools, there are parameters that can be adjusted for your trading style.
Changing these settings can make the indicator more or less sensitive to price movements.
For the basic Supertrend settings, you can adjust period and factor:
The period setting is the lookback for the ATR calculation
Factor is the what the ATR is multiplied by to offset the bands from price
Ensure when you adjust any setting and implement in your trading strategy, you have tested the changes.
The indicator works well in a trending market but can give false signals when a market is trading in a range.
It uses the ATR (average true range) as part of its calculation which takes into account the volatility of the market. The ATR is adjusted using the multiplier setting which determines how sensitive the indicator is.
How Does It Work?
The changing colors determine the trend direction of the instrument you are trading.
When the indicator flips to green due to the closing price being above the line, a buy signal is generated.
Once price closes on the oppositive side of the line, it flips from green to red and a sell signal is generated.
What Are The Parameters For The Supertrend Indicator?
Like all technical analysis tools, there are parameters that can be adjusted for your trading style.
Changing these settings can make the indicator more or less sensitive to price movements.
For the basic Supertrend settings, you can adjust period and factor:
The period setting is the lookback for the ATR calculation
Factor is the what the ATR is multiplied by to offset the bands from price
Ensure when you adjust any setting and implement in your trading strategy, you have tested the changes.