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 settings for MT4 Indicator are 10 periods and 3 multipliers.
These SuperTrend 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 to 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 settings 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 strategy generally doesn’t do well with mature markets like the Large Capitalization Stocks of the S&P 500. When there is 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 choose the best SuperTrend settings.
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 five SuperTrends settings, increasing and decreasing the multiplier value.
Graphically we have this output:
Now we’ll search the best-performed SuperTrend 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 settings and find another set with many false signals:
The best performer is the ST settings with 3.5 and 4 multiplier inputs.
We can use these settings until the volatility changes.
We showed you how to properly use the SuperTrend settings and graphical it. 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 the buys signal is generated.
The ST turns red and the 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 the higher time frame for our automated trading systems.
Does a Supertrend indicator work?
Yes, it’s a fantastic technical analysis indicator for the 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 an indicator best for crude oil trading?
You can easily use the ST for the 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 the stock market?
You can use the ST with a stock screener in many trading platforms 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 any false signal. You can find the tutorial here.
SuperTrend in Traderpedia