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Super Trend

  • The super trend is a simple and easy-to-use indicator and gives a precise reading about an ongoing trend.

  • It is built with two parameters, namely period and multiplier.

  • The Buy and Sell signal modify once the indicator tosses over the closing price. When the Super trend closes above the Price, a Buy signal is generated, and when the Super trend closes below the Price, a Sell signal is generated.

  • The default values used while constructing a super indicator are for the average range. The best suitable value for Intraday trading would be 14 days and 2.1, 2.2 for its multiplier.

  • The actual average range (ATR) plays a vital role in 'Supertrend' as the indicator uses ATR to calculate its value. The ATR indicator signals the scale of price volatility.

Where Can a Super Trend Indicator Be Used?

  • A 'Supertrend' indicator can be used on equities, futures, or forex and on daily, weekly, and hourly charts, but it is usually unsuccessful in a sideways-moving market.

  • Like any other indicator, 'Supertrend' works best with other indicators such as MACD, Parabolic SAR, RSI, etc.

  • A 'Supertrend' also acts as strong support or resistance, and it also provides a trailing stop loss for the existing trade.

  • Before the super trend indicator, knowledge of the ATR is necessary as the super trend employs ATR values to calculate the indicator values.

  • The super trend indicator is plotted over the stock's price chart or the index. The hand is a continuous line that changes its colour between green and red based on the price moment in the underlying.

  • An important thing that must be understood here is that a Super trend does not predict the direction; instead, once the direction is recognized, it will direct you to initiate a position and recommend you stay until the movement maintains.

Noteworthy Functions

For The Long Position

When the long position has been recognized, the trader is recommended to hold the post till the Price closes below the green line. The green line acts as a trailing stop loss for the extended position.

For The Short Position

  • A sell signal is generated when the stock/index price turns lesser than the indicator value. At this stage, the indicator colour turns red, and you can also see a crossover of the Price versus the indicator (Price lesser than indicator value)

  • The sell signal can commence a fresh short or exit long. Waiting for the sell signal to exit the existing long position can sometimes lead to taking a loss. So the trader should use his judgment here.

  • Once the short position has been recognized, the trader is recommended to hold the post till the Price closes below the green line. So in a sense, the red line helps as a trailing stop loss for the short position.

  • The super trend indicator is a better tool for Intraday trading when compared to a regular Moving Average trading system.

Market Hunt Tick

  • Period refers to the ATR number of days. The default value on the Market hunt tick is, which means to say that the system will calculate the ATR value for the last days. You can input any matter you deem suitable.

  • The multiplier refers to a value by which the ATR will get multiplied. The default value on the Market hunt tick, so whatever the value of ATR, it will get multiplied.

  • The multiplier is a vital input for the Super trend. If the multiplier value is too high, then a lesser number of signals is made.

  • Similarly, if the multiplier value is too small, then the occurrence of signals increases. Hence chances of making false trading signals are pretty high.

 

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