Supertrend: The Trending One
Supertrend: A Friendly Indicator
Hey there,
Well did you ever think that how often a trader struggles to choose a correct indicator to trade best of him in Options and Intraday? Well, most of the move towards the indicator named 'Supertrend'. But why? Because it is the indicator known for its accuracy and 'easy to use ' quality. But the problem that comes to the new traders is "How to use it? " So, let's solve that problem.
Points Covered:
- Introduction
- How to use
- Parameters of Supertrend
- Trading Strategy/How does it work?
- Pros And Cons
Introduction:
This indicator is plotted on simple price and current trend. And to construct it we have to take the help from two parameters -
- Period
- Multiplier
How to use:
Well, to use the Supertrend you have to follow the steps given below.
- Go to any of your broker accounts
- Go on the chart of any equity share you want to see
- Tap on the option showing Indicators
- Put the period value to 10 and multiplier to 3
- You can set the chart according to you.
-For Intraday: 10-30 minutes
-For Options: 1-5 minutes
Note: You should use stop-loss as well in your ongoing trade.
If you are trading for a long time then you better put the stop-loss on the Green Indicator Line. If not, then put it on the Red Indicator Line.
Parameters Of Supertrend:
You better know there is no such 'setting of indicators' that proves itself best. In general, it is filled automatically as default when you use it at first. For Supertrend, it is set to (10,3).
As you know, we can set it on our own. What is the thing we should know about setting the indicator details?
- Smaller Numbers: They make the indicators more reactive means generating more Trading Signals.
- Larger Numbers: They make the indicators work in the less reactive arena which means possessing fewer Trading Signals.
Formula Of Supertrend:
- UP: [{(High+Low)/(2+multiplier)}*ATR]
- Down: [{(High+Low)/(2-multiplier)}*ATR]
ATR - Average True Range
Calculation Of True Range:
- [(Prior ATR*13)+(Current ATR)]/14
Trading Strategy/How does it work?
Supertrend is a very good indicator that helps us to know the next move of the market just by analyzing its ongoing position. When we look at this indicator, the most important thing that should be done by us is to notice when it changes its colour.
- Bullish Indication: When the super trends line changes its colour from red to green and it shows the signal of an upward arrow then it is a Bullish Market Indication.
- Bearish Indication: When the super trend line changes its colour from green to red and shows a signal of a downward arrow then it forms a strong Bearish Market Indication.
Pros And Cons:
Pros:
- This indicator is available on a different number of platforms free of cost.
- It helps traders to take fast decisions with accuracy in Options and Intraday.
- It is helpful in various trading segments like options, equity, forex or Intraday.
- It comes with a wide number of time frames present in it.
Cons:
- It does not provide 100% accuracy. So, trade at your own risk.
- It is more accurate only when the market is in its trending.
