Indicator
Supertrend
Supertrend plots a single line that sits below price or above it, switching sides when price closes through the band. The band distance is set by ATR, so it widens when movement is large and narrows when it is small.
Bars used for the volatility measure.
Band distance. Lower = flips far more often.
Chart runs on a generated sample series, not live or historical exchange data. Values are computed with the same functions CernoQuant uses to run backtests.
How it is calculated
How to read it
- The line’s position relative to price is the whole output: below price in one state, above it in the other.
- Because the distance is ATR-scaled, the line sits further from price when bars are large — it adapts to volatility automatically.
- A flip means price has closed through the band. It describes movement that has already occurred.
What it does not tell you
- It looks decisive on a chart because it only ever shows one state, which conceals how frequently it flips in choppy conditions.
- The multiplier changes behaviour substantially. A low multiplier flips constantly; a high one flips rarely and far from the turn.
- It is derived from ATR and prior closes, so like everything else here it is backward-looking.
Common settings
A 10-period ATR with a multiplier of 3 is the common default. Reduce the multiplier in the chart below to see how much more often the line flips.
Frequently asked questions
How does Supertrend work?
It places a band above and below price at a distance scaled by ATR, then shows whichever side price has not closed through. When a close crosses the band, the line flips to the other side.
What is the best Supertrend setting?
There is no setting that is best in general. A lower multiplier flips more often and reacts sooner; a higher one flips less and reacts later. Settings tuned on past data usually fit that data rather than generalising.
Does Supertrend repaint?
The line for a completed bar does not change afterwards, but the current forming bar can flip and unflip until it closes. That is ordinary for close-based calculations rather than repainting in the misleading sense.
Is Supertrend reliable in sideways markets?
It flips frequently when price moves without net progress, because each small move can carry a close through the band. This is the same weakness every trend-following construction has.
Related
- Average True Range (ATR) — Indicator
- Trend vs Range: Why Context Changes Everything — Concept
- Moving Average Crossover: How It Works — Strategy
Educational use only
This page is educational material about how a technical tool is calculated and read. It is not investment advice, not a recommendation to buy or sell anything, and not a signal service. No indicator predicts future prices. CernoQuant is a trading journal and analytics platform, not a SEBI-registered investment adviser. Trading decisions and their outcomes are yours alone.
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