SuperTrend
SuperTrend · module 08 of 33 · trend
An ATR-based trailing band that flips side when price closes through it.
- Supertrend (10, 3)
- ▲/▼ where the rule triggers
The line trails below price in up-trends and above in down-trends; a close through it flips the bias.
How to apply it
- 1. Add it. Start with ATR 10, multiplier 3 on 15m (Intraday).
- 2. Read the market first. A band below price defines the uptrend and provides a volatility-scaled trailing stop.
- 3. Adjust for ranges. Flips repeatedly; a lower multiplier makes this worse, a higher one delays every exit.
- 4. Manage the trade. Place the stop at 1.5 × ATR and the target at 3.5 × ATR, and only act when the chart above shows the trigger.
How it is calculated
Upper = HL2 + (m × ATR(n)); Lower = HL2 − (m × ATR(n)); the active band trails and flips on a close beyond it.
Inputs
- · ATR period (10)
- · Multiplier (3)
Reading it correctly
In a trend
A band below price defines the uptrend and provides a volatility-scaled trailing stop.
In a range
Flips repeatedly; a lower multiplier makes this worse, a higher one delays every exit.
Settings by style
| Style | Suggested values |
|---|---|
| Intraday | ATR 10, multiplier 3 on 15m |
| Swing | ATR 10, multiplier 2 on 4h for earlier exits |
These are conventional starting points, not optimised values. Test any change on your own pair and timeframe before relying on it.
Worked example
EUR/USD 15m with HL2 = 1.0880 and ATR(10) = 0.0012, multiplier 3: lower band = 1.0880 − 0.0036 = 1.0844. While closes stay above 1.0844 the uptrend reading stands, and the band ratchets up as price rises.
When it failed
On 15m NZD/USD during a quiet Asian session, ATR fell to 4 pips, so the band sat 12 pips from price. SuperTrend flipped six times inside a 22-pip range.
Limitations
- Purely reactive; the flip always comes after the turn.
- The multiplier is a direct trade-off between early exits and large give-back.
- Inherits any ATR warm-up and gap distortion.
Works well alongside
- · ADX / DMI
- · ATR
- · Market structure
Redundant with
- · Parabolic SAR
- · Keltner Channels
- · EMA trails
Stacking these produces agreement by construction, which is not confirmation.
Practice exercise
Compare SuperTrend(10, 3) exits against a fixed 1.5 ATR stop on 20 trend-pullback trades on 4h GBP/USD. Record total R for each.
Check your understanding
1. SuperTrend's band distance is set by:
- · Volume
- ✓ ATR multiplied by a chosen multiplier
- · RSI
- · The 200 EMA
The band is placed a multiple of ATR from the candle midpoint, so it widens automatically with volatility.
2. Lowering the multiplier from 3 to 1.5 will:
- · Reduce flips
- ✓ Produce earlier exits and more flips
- · Remove lag
- · Improve range performance
A tighter band is hit sooner, so exits come earlier and the indicator changes side more often.