What it means
SuperTrend is a single-line trend-following indicator combining ATR (Average True Range) with a midpoint (typically (high+low)/2). Formula: upper band = midpoint + factor × ATR; lower band = midpoint - factor × ATR. The visible line switches between upper and lower bands based on trend direction. Default factor: 3. When price closes above the line: uptrend (line below price). When below: downtrend (line above price).
Why it matters
SuperTrend provides a clean visual trend signal without ambiguity — at any moment, the chart shows whether you're in an uptrend or downtrend. Mechanical signals from SuperTrend crossovers (flip from above-line to below-line) can be used as trend-change triggers. Popular among algorithmic traders for its simplicity.
How to use it
Trade in the SuperTrend direction. Long when price above SuperTrend line; short when below. Use line itself as trailing stop. Default factor 3 works well; lower factor (2) = more responsive but more whipsaw; higher (4) = smoother but lagging.
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