What it is
Supertrend, created by Olivier Seban, combines a trend direction and a trailing stop in one line. It sits below price in an uptrend and rises with it, never moving down; when price closes below it, the trend flips and the line jumps above price.
The multiplier controls how much room it gives. A smaller multiplier flips sooner and more often; a larger one stays with trends longer but gives back more before it flips.
How it is calculated
Find the candle's midpoint, (high + low) / 2. Work out the ATR over 10 candles. Basic upper band: midpoint + 3 x ATR. Basic lower band: midpoint minus 3 x ATR. In an uptrend the lower band can only rise or stay the same from candle to candle; in a downtrend the upper band can only fall or stay the same. When price closes below the active lower band, the trend flips down and the line switches to the upper band, and the reverse for a close above the upper band.
Settings
| Setting | Default | Range | What it changes |
|---|---|---|---|
| ATR length | 10 | 1 to 100 | How many candles the ATR is averaged over. |
| multiplier | 3 | 0.5 to 10 | Distance from price in ATRs. Lower flips sooner and more often; higher holds trends longer. |
| line style | slopes | slopes, steps, dots, crosses | How the line is drawn. Display only. |
| join at the flips | off | off, on | Whether the old and new lines are joined where the trend flips. Display only. |
| bands | active only | active only, both | Show only the active line or both the upper and lower bands. |
| buy and sell arrows | off | off, on | Marks each flip with an arrow. |
| timeframe | chart | chart, 3 min, 5 min, 10 min, 15 min, 30 min, 1 hour, 2 hours, 4 hours, 1 day | Works out Supertrend on a higher timeframe and draws it on your chart. |
| second Supertrend | off | off, on | Adds a second, faster Supertrend so you can require both to agree. |
| second ATR length | 13 | 1 to 100 | ATR length for the second Supertrend. |
| second multiplier | 1.5 | 0.5 to 10 | Multiplier for the second Supertrend. |
| shading | to price | off, to price, full band | Fills the space between the line and price, or the whole band. Display only. |
| shade strength | medium | light, medium, strong | How strong the shading is. Display only. |
How to read it
How to trade it
- 1
Choose direction on a higher timeframe: for example, only take longs on a 15 minute gold chart while the 1 hour Supertrend is below price (use the timeframe setting).
- 2
Entry trigger: the 15 minute Supertrend flips long. Enter on the close of the flip candle, or on a pullback towards the new line.
- 3
Stop just below the Supertrend line. With 10 and 3 on gold at 15 minutes, that is often 8 to 15 points away; skip the trade if it is too far for your risk.
- 4
Target 2 times the stop for part of the position, then let the line trail the rest until it flips.
A close back through the Supertrend line flips it and cancels the trade. If the higher timeframe Supertrend flips against you, stop taking signals in the old direction.
On WickSpeak, Supertrend writes a plain-English reading on the live candle: which way it points, how far the line is from price in points, how to trade it and what would prove it wrong. In Playbook you can test: flips long, flips short, is bullish, or is bearish. Pair a flip with a trailing stop on ATR or on the play's own line and backtest it with your costs. The chart version can also show a second Supertrend, a higher timeframe Supertrend and buy and sell arrows.
Best markets and timeframes
Supertrend suits trending markets: gold, US30 and NAS100 on 15 minute to 4 hour charts. On 1 minute charts and in quiet forex ranges it flips too often unless the multiplier is raised.
Common mistakes
- Taking every flip in a sideways market, where it gets whipsawed.
- Lowering the multiplier to get earlier entries, which mostly adds false flips.
- Ignoring how far the line is: a late entry far from the line has a much bigger stop.
Works well with
Questions traders ask
What are the best Supertrend settings?
10 and 3 is the standard and a sensible start. Faster settings such as 7 and 2 give more signals and more false flips. Test settings on your own market over many trades rather than choosing the one that looks best on a single chart.
What is a double Supertrend?
Two Supertrends with different settings on the same chart, often 10 and 3 with a faster one such as 13 and 1.5. Traders enter only when both agree, which cuts some false flips. WickSpeak has a second Supertrend built in.
Does Supertrend repaint?
The line on closed candles does not change. On the live candle the line and a possible flip can change until the candle closes, so wait for the close before acting.
Is Supertrend good for gold?
It is popular on gold because gold trends in long runs. Use the ATR based stop it gives rather than a fixed point stop, and filter with a higher timeframe to cut flips in quiet sessions.