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What is a supertrend?
SuperTrend
Supertrend is a trend-following indicator based on Average ATR (Average Amplitude). It is displayed as a line above or below the price on the chart, and provides intuitive buy and sell signals by changing color and position.
- Green line (below price): Uptrend → Long hold
- Red line (above price): Downtrend → Short or wait-and-see
Unlike other indicators, you can see at a glance **“Are you long or short?”
Supertrend calculation principle
Basic formula:
UpperBand = (High + Low) / 2 + (Multiplier × ATR)
LowerBand = (High + Low) / 2 - (Multiplier × ATR)
Default Settings: ATR Period 10, Multiplier 3.0
Supertrend settings
| Settings | Basic | sensitive | conservative |
|---|---|---|---|
| ATR period | 10 | 7 | 14 |
| multiplier | 3.0 | 2.0 | 4.0 |
| bong | 4 hour bar | 1 hour bar | daily salary |
- low multiplier: more signals, more fake signals
- High multiplier: Fewer signals, only more reliable signals
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Supertrend key signals
Signal 1: Color transition (clearest signal)
Red → Green Transition: 🟢 Uptrend begins → Long entry
Green → Red transition: 🔴 Start of downtrend → Short entry or long exit
Signal 2: Supertrend = Dynamic Stop Loss
Use as a stop loss line for your current position:
- Long holding: Closing price below super trend (green line) → Stop loss
- Short holding: Close price above supertrend (red line) → Stop loss
Futures Trading Strategy
Strategy 1: Trend following in the supertrend direction
Long:
- Confirmation of supertrend green transition
- Price above EMA 50 (confirming upward trend)
- After entry, the supertrend line acts as a stop loss line.
Short:
- Supertrend red transition
- Price below EMA 50
- Liquidation when it breaks above the supertrend line
Strategy 2: Supertrend + candle pattern combination
Immediately after a supertrend transition:
- Green transition + bullish dominant → strong long signal
- Red transition + bearish control → strong short signal
Weaknesses of supertrends
- Frequent false signals in sideways markets: Recommended to disable during Bollinger Band squeeze zone
- Delay: Because it is ATR-based, the signal is slightly delayed.
Solution: First check whether there is a sideways trend using RSI or Bollinger Bands.
Related guides
- Complete explanation of ATR indicators →
- EMA moving average →
- Trend-following swing strategy →
- Liquidation price calculator →
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