In this tutorial you will learn how to find perfect SuperTrend settings.
SuperTrend (ST), developed by Olivier Seban, is a great indicator to identify the current market trend.
ST could be the key to unlocking predictions about future trends for intraday traders or longer term.
The standard SuperTrend’s settings for MT4 Indicator are 10 periods and 3 multiplier.
These settings are good for intraday or multiday respectively; additionally, you can correctly use the indicator with many different financial instruments.
The primary lesson of these indicators is for the most part: don’t open a position contrary of the trend.
But the SuperTrend buy signal and sell signal is about more than just identifying the trend. The technical indicator does not only turn green and turn red for entry signals…
The real promise of the SuperTrend is making a great trailing stop system using the power of the Average True Range ATR indicator.
SuperTrend for trend follower trading systems
In the past few years, the markets have changed. Trend follower strategies failed to work with many financial instruments (for example with currencies like EURUSD).
Today it is difficult to find an instrument that works well with trend following strategies.
Generally we prefer to use mean reversion strategy systems that work well in financial markets.
Remember that trend follower strategies generally don’t do well with mature markets like the Large Capitilazation Stocks of the S&P 500. When there a large amount of
“smart money” and volume the financial instrument usually exhibits mean reverting characteristics.
That being said, there still remain many stocks in the Nasdaq or other financial instruments like Commodities that can be traded with the SuperTrend indicator.
How to choose the perfect SuperTrend Settings
We like to make life easier for traders, so we’ll show you a system to correctly set the supertrend.
We will Demonstrate a better way to set the SuperTrend indicator.
The principal objective that we would like to achieve is to limit false buy and sell signals.
To limit false signals, we need to visually study the supertrend color changes. Take note that ST turns either green or turns red when the trend is changing.
For example to analyze a stock market, we apply 5 SuperTrend indicators to a stock chart showing historical closing prices.
After we change the settings of the five SuperTrends, increasing and decreasing the multiplier value.
Graphically we have this output:
Now we’ll search the best performed settings of the last 3 months in a daily chart.
We can eliminate these settings:
Now we can examine the chart with only 3 ST and find another settings with many false signals:
The best performer are the settings with 3.5 and 4 multiplier inputs.
We can use these settings until the volatility changes.
We showed you how to properly set the SuperTrend indicator graphically. We like to use this system because is straightforward and very simple. Also, we could use more advanced tools like TradeStation or MultiCharts Backtesting software to find the best performer settings.
Finally, we prefer to use the SuperTrend trading strategy with longer term time frames (Daily, Weekly and Monthly). In this way, we can limit many false signals.
SuperTrend Indicator Formula: Link
What is a supertrend indicator in trading, and how is it used?
The ST turns green and buy signal is generated.
The ST turns red and sell signal is generated.
What is the Supertrend indicator, and how is it used?
In this tutorial we are talking about Super Trend indicator: Link
How to use Supertrend indicator for intra-day trading?
You can use the ST for intraday trading with a 15 minute or 60 minute chart. However, we like higher time frame for our automated trading systems.
Does a Supertrend indicator work?
Yes, it’s a fantastic technical analysis indicator for trend follower trading system.
Which is the best combination of indicators for swing trading?
SuperTrend and RSI is the best combination of indicator for swing trading, in our view.
Is supertrend indicator best for crude oil trading?
You can easily use the ST for crude oil trading system, when the crude oil trending.
What is the best Nifty trading buy/sell signal software?
The ST indicator is the best signal generating for the Nifty 50 Index of Indian Stocks, in our view.
SuperTrend is the best technical indicator to trade in stock market?
You can use the ST with a stock screener in many trading platform to check the trend direction.
Also you can use this indicator for trailing stop loss using the ATR. It’s a fantastic tool for this task.
Who is Olivier Seban?
Olivier Seban is the SuperTrend indicator developer.
He is a French writer author of the bestseller “Tout le monde mérite d ‘être riche”. This is a post about him.
Do you never use a Multi Time Frame SuperTrend Indicator?
Yes, we developed a MultiTimeFrame SuperTrend Indicator to try to minimize many false signal. You can find the tutorial here.
SuperTrend in Traderpedia