📊 TECHNICAL
Supertrend
An ATR-based trend-following indicator that plots above or below price to define the current trend direction. Generates clear buy/sell signals with stop-loss levels.
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Live Demo — Supertrend applied to NIFTY 50 (illustrative)
PriceEMA(9)EMA(21)SMA(20)
What is Supertrend?
The Supertrend indicator is a trend-following tool that uses the Average True Range (ATR) to define dynamic support and resistance levels. It plots a single line above or below price — green below price = uptrend, red above price = downtrend. When price crosses the line, the trend reverses.
It is especially popular in India for intraday and swing trading in the F&O segment.
Formula
Upper Band = (High + Low) / 2 + (Multiplier × ATR)
Lower Band = (High + Low) / 2 – (Multiplier × ATR)
If Close > previous Upper Band → trend is UP (Supertrend = Lower Band)
If Close < previous Lower Band → trend is DOWN (Supertrend = Upper Band)Parameters
| Parameter | Default | Description |
|---|---|---|
| ATR Length | 10 | Period for ATR calculation |
| Multiplier | 3.0 | How far from price the band is placed |
Signal Interpretation
- Green line below price → Uptrend; use as trailing stop-loss for long positions
- Red line above price → Downtrend; use as trailing stop-loss for short positions
- Price crosses from above to below the line → Sell signal / close longs
- Price crosses from below to above the line → Buy signal / close shorts
Three-Supertrend Strategy
A popular Indian trading strategy uses three Supertrends simultaneously:
- ST(10, 1) — Short-term
- ST(10, 2) — Medium-term
- ST(10, 3) — Long-term
All three green = Strong buy signal. All three red = Strong sell signal. Mixed = No trade.
Trading Strategies
- Intraday: On 15-minute charts, enter when Supertrend flips with ATR(10, 3). Use the Supertrend line as your trailing stop-loss.
- Swing: On daily charts with ATR(7, 3) — ride trends for days to weeks.
- F&O: Use Supertrend on BANKNIFTY 5-minute chart for directional options buying.
Tips & Best Practices
- Higher multiplier → fewer signals, fewer whipsaws, but larger stop-losses.
- Lower multiplier → more signals, more whipsaws, tighter stops.
- Always use in the direction of the higher timeframe trend. Don't fight a weekly uptrend with a 15m Supertrend sell signal.
- Supertrend is purely mechanical — it has no bias. It will keep you on the right side of the trend.