Supertrend
An ATR-based line that sits above or below price and flips sides when the trend reverses, giving a simple read on trend direction plus a trailing-stop level.
What the numbers mean
The first number is the ATR lookback, the second is how many ATRs away from price the line is placed. A larger multiplier sits further from price — fewer flips, but a worse price when the trend does turn; 10 and 3 are the conventional balance, with 7 and 2 favoured for intraday work.
- ATR 10, multiplier 3 — the standard daily-chart setting
- ATR 7, multiplier 2 — tighter and faster; common intraday
- ATR 14, multiplier 4 — wide and slow; fewer flips, larger give-back
- The multiplier is the whole trade-off: more ATRs away means fewer false flips but a worse exit price
How it is used
Read as a binary trend state: line below price and green means hold long, flip above and red means the trend has turned. It doubles as a trailing stop level because the line itself is a price.
- Line below price → hold long; line above price → hold short
- The flip is both the signal and the stop level, since the line is a price
- Distance from price to the line → how much room the position currently has
How it relates to everything else
Supertrend and Parabolic SAR answer the same question with different volatility inputs — ATR bands versus an acceleration factor — and both need a trend to exist before they are worth following. Because the band width is ATR-based, raising the multiplier has the same effect as widening a Keltner channel: fewer touches, later signals.
- Supertrend + ADX → the standard filter against range-bound whipsaw
- Supertrend + 200 EMA → trade only flips that agree with the long-term trend
- Shares its ATR input with Keltner channels and STARC bands, so they widen together
What to watch for
Same weakness as any trend-follower — in a range it flips repeatedly, each flip costing the width of the band. It also never signals early: by construction the flip happens after the move.