Supertrend Indicator: Generates Clear and Simple Trend Trading Signals
The Supertrend indicator is a custom forex indicator that generates accurate buy and sell signals in a trending market. As the name suggests, the “Supertrend” is a trend-following indicator just like moving averages and MACD (moving average convergence divergence). The indicator is displayed as blue and red line that is plotted on price bars and. Supertrend Indicator: shows trend direction and gives buy or sell signals according to that. It is based on a combination of the average price rate in the current period along with a volatility indicator. The ATR indicator is most commonly used as volatility indicator. The values are calculated as follows: Up = (HIGH + LOW) / 2 + Multiplier. ATR. The Supertrend indicator essentially determines trend direction, and consists of a single line plotted over prices. The market is bullish when the Supertrend is plotted below prices, and bearish when it is above prices. The indicator flips above/below prices whenever a change in trend is detected. Supertrend Indicator Calculations. Free Super Trend Indicator for MetaTrader 4/5. A Big Collection with Forex Indicators, Trading Systems, Expert Advisors for MQL4 & MQL5 by Best-MetaTrader-Indicators.com.
As the name suggests, the Supertrend indicator, like moving averages and MACD, is an indicator for trend tracking. Supertrend indicator is determined by price, and its values determine the current trend.
It is easy to use and gives an accurate idea of the current trend. This tool can be used on futures, Forex, and stocks.
It should also be noted that this Forex indicator can determine support and resistance levels.
Supertrend indicator is a very good tool for studying current market trends. It clearly describes the difference between downtrend and uptrend.
The formula for calculating Supertrend is as follows:
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- SuperTrend Superior = (higher + lower) / 2 + m * ATR (n)
- SuperTrend Lower = (higher + lower) / 2 - m * ATR (n)
Where:
- n is the number of ATR billing periods.
- m is the volatility factor measured by ATR.
Thus, ATR occupies a key place in the Supertrend indicator formula. Indicator setting
Supertrend is built on the basis of two parameters. The default values used for the Supertrend indicator are 10 for the Number_of_Periods parameter and 3 for the Multiplier parameter.
Supertrend indicator parameters are usually adjusted depending on the volatility of the asset being traded. If the asset is more volatile, you can increase the default values, and if the asset is not volatile, you can decrease the default values.
You can reduce the multiplier parameter if you need the Supertrend indicator to respond faster to price changes, but in this case, it can create quite a lot of false signals. Typically, the default settings are better than other values.
The Supertrend curve is superimposed on the price chart, and when the indicator falls below the closing price, it generates a buy signal, then the indicator color turns green. This also suggests that the trend is changing from downward to upward.
Conversely, when Supertrend closes above the price, it generates a sell signal, then the indicator color turns red. This suggests that the trend is changing from bullish to bearish.
The Supertrend indicator, in particular, acts as a level of support or resistance. After a buy signal, any decline in the indicator curve can also be interpreted as a buy signal, and vice versa.
Supertrend Indicator Mt4
Conclusion Supertrend gives traders clear and easy to read signals. This trading tool can be used on stocks, futures, or currencies, as well as on daily, weekly, and hourly charts.
It works much better in a trending market but can give false signals when the market moves sideways. We recommend using this indicator in conjunction with other tools when building your trading strategies to more accurately identify trends.
You can find some of the trading strategies based on the Supertrend indicator on our website in the Strategies section.
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Supertrend Indicator Formula
Do you need help with installing this indicator into MT4 for Windows or Mac OS? Our guide HERE will help you.