📌 Introduction
In trading, the trend is your best friend. But how do you know when a trend is changing? That’s where the Supertrend Indicator comes in.
The Supertrend is a trend-following indicator that gives clear buy and sell signals directly on the chart. It works well in intraday, swing, and positional trading.
🔹 What is the Supertrend Indicator?
The Supertrend Indicator is based on Average True Range (ATR), which measures volatility.
- When price closes above the Supertrend line → Buy signal.
- When price closes below the Supertrend line → Sell signal.
It works best in trending markets but can give false signals in sideways markets.
🔹 How Does Supertrend Work?
The Supertrend has two main parameters:
- ATR Period → Default is 10.
- Multiplier → Default is 3.
👉 Formula:
- Supertrend = ATR × Multiplier (plotted above or below price).
- The line shifts above/below the price based on the trend direction.
🔹 Best Supertrend Settings
- Intraday Trading (5min / 15min charts): ATR = 10, Multiplier = 3.
- Swing Trading (Hourly / Daily charts): ATR = 14, Multiplier = 3 or 4.
- Scalping (1min charts): ATR = 7, Multiplier = 2.
💡 Tip: Always backtest before applying to live trades.
🔹 How to Use Supertrend – Buy & Sell Signals
✅ Buy Signal
- When the price closes above the Supertrend line.
- Supertrend turns green.
- Example: Nifty moves above 20,200 with Supertrend flipping green → Buy entry.
❌ Sell Signal
- When the price closes below the Supertrend line.
- Supertrend turns red.
- Example: Reliance breaks below ₹2,500 with Supertrend flipping red → Sell entry.
🔹 Supertrend Trading Strategies
1. Supertrend + Moving Average
- Use 50 EMA with Supertrend.
- Take trades only in the direction of the moving average trend.
- Filters false signals in sideways markets.
2. Supertrend + RSI
- Buy when Supertrend is green + RSI above 60.
- Sell when Supertrend is red + RSI below 40.
- Confirmation increases accuracy.
3. Dual Supertrend Strategy
- Use two Supertrend indicators with different settings:
- Fast (ATR 10, Multiplier 2).
- Slow (ATR 21, Multiplier 4).
- Enter trades only when both agree on the trend.
🔹 Pros & Cons of Supertrend
✅ Advantages
- Easy to use for beginners.
- Works well in trending markets.
- Gives clear buy/sell signals.
❌ Limitations
- Gives false signals in sideways/choppy markets.
- Best used with other indicators for confirmation.
📊 Conclusion
The Supertrend Indicator is one of the simplest and most effective tools for traders. It helps identify the direction of the trend and gives clear entry and exit signals.
👉 For best results:
- Use Supertrend with RSI or Moving Averages.
- Avoid trading only based on the Supertrend in sideways markets.
- Always use stop-loss to manage risk.
📌 Disclaimer: This blog is for educational purposes only. ArthVed 9X is not a SEBI-registered advisor. Please consult your financial advisor before making investment decisions.
