What Is Supertrend Indicator?
Supertrend is a relatively recent indicator (popularized in the 2010s) that plots a line above or below price depending on the current trend. When the line is below price, the market is uptrending; above price, downtrending. It flips when price closes through the line.
The calculation uses ATR to set the line's distance from price, so the band naturally widens in volatile conditions and tightens in quiet ones. The two parameters — ATR period and multiplier — control responsiveness. Defaults are 10 and 3; tighter values create more flips and false signals.
Supertrend is popular because it's visually clear and gives unambiguous signals. The weakness, like all trend-following tools, is chop — sustained sideways action whipsaws Supertrend constantly. Combining it with an ADX filter (only trade when ADX > 25) materially improves results.
Related terms
- ATR (Average True Range) — Volatility indicator measuring the average range of price movement per candle.
- ADX (Average Directional Index) — Trend strength gauge — high ADX = trending market, low ADX = chop.
- Trend — The general direction of price movement over a period — uptrend, downtrend, or sideways.
- Moving Average — A line plotted on a chart showing the average price over a chosen lookback period.