Supertrend Indicator is the simplest trend trading indicator. It was developed by Olivier Seban. It works in all the time frames i.e 1 minute, 5 minutes, and 15 minutes. Supertrend is mainly based on two parameters i.e 10 and 3. Supertrend shows trend direction. It provides buy and sell indicators.

In This Article

·         What is Supertrend?

·         How to analyse chart using Supertrend?

·         How to use Supertrend on KEEV?

Category – Trend Following Indicator

Type –Lagging Indicator

What is Supertrend?

A Supertrend is a trend-following indicator. The default parameters for the supertrend strategy are 10 for the Average True Range (ATR) and 3 for the multiplier. The average true range is an important part of ‘Supertrend’ as the indicator uses ATR to calculate its value and it signals the degree of price volatility. 

Supertrend Indicator Formula 

The Supertrend indicator formula is as under:- 

Up= (High+Low) ÷ 2 +multiplier × ATR 

Down = (High +Low) ÷ 2 – multiplier × ATR 

Calculation of Average True Range (ATR):- 

[(Prior ATR × 13) + Current TR ]÷ 14

Here 14 number indicates a period. 

How to analyse chart using Supertrend?

Supertrend works perfectly in the trending markets i.e uptrends and downtrends. You can interpret the buy-sell signal when the indicator flips over the closing price. A buy signal is when the supertrend closes below the price and the colour is changed to green. Whereas a sell signal is made when the supertrend is closed above the price and the colour of supertrend becomes red.

To use the indicator you need to open the chart of a particular stock that you want to analyse. Set a time interval of 10 minutes when performing intraday trading. When you open the chart insert supertrend and keep the settings 10 and 3.

While using indicators you shall never avoid using a stop loss. To take a long position you can put stop loss right at the green indicator line. Whereas for the short position you can put stop loss at the red indicator line.