✔️ Information reviewed and updated in May 2024 by Eduardo López
If you are an expert in cryptocurrency trading, you probably already know the most popular indicators such as the Super Trend. But, if you are still a beginner and want to know more about these amazing tools then this article is for you.
Some indicators offer clearer buy and sell signals, making it a bit easier for some traders to interpret. Most use different types of interpreters that can complement each other well.
In this article we are going to share with you a little more about the Supertrend or Super Trend Indicator. A great trend indicator that is essential for traders as it helps them more clearly differentiate the upward and downward trend of the markets.
✨Definition of the Super Trend indicator✨
Super Trend is a trend-following indicator, as is the case with MACD and moving average indicators. This indicator focuses on prices, and the calculation of the recent trend.
One of its advantages is that it works with all time views and with all instruments such as Forex, stocks, or futures contracts. Besides being the best tool to follow trends and optimize outings.
In the same way, it can indicate the support and resistance levels, and it follows the prices as a Dynamic Stop, unlike that it does not change in value or lock itself on the prices during the periods that do not have a trend. This allows you to allocate more space and time to the price to enter a trend and capture movements with large amplitudes.
✨ What is Super Trend for? ✨
This indicator can be used for stocks, futures or currencies, and daily or weekly charts, as long as they are trend markets. If the market is moving in a sideways range then it may turn out to give false signals, watch out.
For this reason, long positions are recommended when the indicator is below price, and short positions when the indicator is above price.
If you use it in the Forex market or with indices, it may work best during the trend phase.
✨ How is it obtained? ✨
The Super Trend indicator is calculated through a coefficient applied to the average volatility of the latest candles or bar charts depending on the view you choose. The formula for this indicator is as follows:
- Superior SuperTrend = (maximum + minimum) / 2 + m * ATR (n)
- Inferior SuperTrend = (maximum + minimum) / 2 - m * ATR (n)
Where "n" is the number of ATR calculation periods, and "m" is the multiplier of the volatility measured by the ATR.
It is recommended to use coefficients 3 and 10 for the multiplier coefficient and the number of candles or charts considered for the calculation. Keep in mind that the ATR indicator is a key part of the Super Trend indicator formula.
This indicator can be found for free on different trading platforms. It is recommended to use it for short-term technical analysis.
