Supertrend Indicator Guideline

The supertrend indicator in MT4 or MT5 was created by the French trader Olivier Seban, whose books were translated extensively around the world. It is used to detect price trends with precision. This super trend indicator MT5 schemed in the stock price chart to help investors clearly see marked current trends. It is a trend-following indicator that generates buy or sell signs in the Forex market. Supertrend performs well in trending markets but can be imprecise when the market trade in a range. In this course, we will discuss the supertrend indicator for Tradingview and the other MetaTrader platforms in detail to better understand it. The indicator is Free Download via Finansya!

Supertrend Indicator Guide

What’s is supertrend ?

Supertrend  is a trend-following strategy like the moving averages. It shows the direction of the trend, furthermore, provides buy or sell signals in precision. This instrument is displayed in two different colors. By default are red and green but you can change them. The red is a signal of a fall in the prices means you can sell an asset. while when it is green it is a signal of a rise in the prices and it means that you can buy an asset.

What are the Parameters for the Supertrend Indicator?

The supertrend indicator which is used in the MetaTrader trading platform contains two fundamental parameters which are period and multiplier. These parameters are fixed by default, 10 (days) for the average true range or trading period and 3 for the multiplier. You can change these parameters and set your own setting to meet your needs.

Notes:

  • Should ensure that the timeframe used is similar to that of the chart (you can use the Heiken Ashi chart rather than the traditional chart to facilitate the work).
  • Any change you made in the parameters can affect the use of this indicator.
  • The more you change in parameters can lead to an over-optimized trading strategy in that time, because there are no best parameters for forex trading indicators.
  • The higher you set your parameters, you eliminate the noise from the market, taking the risk of fewer trading signals.
  • You should test any modification you made before using real money.
  • The lower you set your parameters, you can make the indicator more sensitive to the market price, therefore having more signals.

What is supertrend strategy ?

The super trend indicator MT4 strategy displays two trends: 

  • uptrends
  • downtrends 

These trends help investors to differentiate between the buy and sell signals. 

In the beginning, look for buy and sell signals when the indicator starts moving in either direction, above or below the closing price. 

Thus, you have a buy signal when the supertrend indicator MT5 line below the bar close price and a sell signal when the indicator closes above the bar close price.

After that, mark these signals in the chart by the change in the colors of the up and downtrends. When the color shift into green it is a buy signal while, when it shifts into red is it a sell signal.

How does the supertrend indicator work ?

Before all, it is important to understand the average true range concept which is an MT4 indicator that helps investors to identify the volatility in the market. Indeed, the supertrend indicator Tradingview uses average true range to calculate its value which takes into account the volatility of the market. Moreover, you can use the multiplier to adjust this parameter which helps to determine the sensitivity of the indicator. Before the calculation of the average true range , you need to determine the series of true-range values first. TR indicator corresponds to the highest of these values which correspond to the absolute value of the current upper price minus the previous close and the absolute value of the current downer price minus the previous close. After that, you divide the latter with the number of periods represented by n. Finally, you find the moving average of true ranges.

supertrend indicator formula

Calculation of the supertrend indicator MT4 is as follows:

  • step 1: Calculate the basic upper band 

Uptrend = (high + low) / 2 + M * average true range value 

M: Multiplier

  • Step 2: Calculate the basis lower band 

Downtrend = (high + low) / 2 – M * average true range value

Average true range:

{(prior average true range * 13) + current true-range} / 14

The 14  presents a period, so you can obtain the average true range by multiplying the previous average true range valueby 13, after that add the latest true range and divide it by period.

Application of this computation is very complex, and it is given just to know how this indicator works. Therefore, if you are not good at mathematic, you don’t need to use it. You just need to know how to apply the indicator in a chart. So, all You need is to know how to examine the indicator and choose the values for periods and multiplier.

How to use Supertrend indicator in your Metatrader ?

The use of the supertrend MT5 indicator is very simple. It is summarized in four steps which are presented as follow:

  1. choose the stock that you want to trade and open it in the chart.
  2. Set your time interval in the platform you work in.
  3. Add Supertrend indicator to your chart, and set your parameters, preferably 10 and 3 for the multiplier, or you can set your own settings.
  4. Follow the trade and check if the signals are in your favor, and concentrate on the red and green lines to know when you will buy and sell an asset.

Example

  • Set stop loss: If you are taking a long position, you can put stop loss at a level below the green line, and when the prices drop below and exceed the red line it means that you are reversing to a short position so, you can put the stop loss below the red line. The best way to earn wealth in your trading is to use the supertrend indicator with stop loss.
  • Support and resistance: supertrend indicator gives traders the support they need when it finds them in a position of an uptrend, furthermore it gives them the resistance they need when in a position of a downtrend.

Advantages and disadvantages of supertrend indicator

Advantages:

  • Very simple to use and easy to understand.
  • You find it on several platforms for free.
  • help intraday traders to make decisions quickly.
  • provides precise forex signals.
  • It is very good in the Forex and crypto trending markets.

Disadvantages:

  • Supertrend Indicator is irrelevant during the “trading range” it can give false signals.
  • Not suitable for all situations. 
  • It works badly in a volatile market, therefore, traders need to identify the underlying trend before using this indicator.
  • Takes time to reverse when a trend moves from one to another, so, it will be difficult to capture Forex market extremes. Therefore, so you need to use it in conjunction with other indicators. such as primary trend, RSI…

Download Supertrend indicator for MT4 

Supertrend indicator for MT4 is a very easy indicator that allows investors to better understand the Forex market as it displays the different buy and sell signals in the Metatrader 4 chart.

The following picture is taken from the MetaTrader 4 that presents the different buy and sell signals generated by the supertrend indicator MT4.

Supertrend Indicator MT4

Download Supertrend indicator for MT5

Supertrend indicator for MT5  is presented as follows in the MetaTrader 5 chart below. It shows two lines, these lines represent an uptrend which is in green color, and a downtrend which is in red, therefore you can differentiate between the buy and sell signals.

Supertrend Indicator MT5

Download Supertrend indicator for Tradingview 

Supertrend indicator for Tradingview is a very useful tool that helps intraday Forex traders to make the right decision faster. It provides precise buy and sell signals, furthermore, it is not difficult to use. The following picture is from the tradingview platform which as you can see displays buy and sell signals which are provided once you attach the supertrend indicator to your chart.

Supertrend Tradingview

Conclusion

The supertrend indicator which can be utilized in Tradingview is one of the most important tools that every Forex and crypto trader should know to improve their results and gain wealth. But is more important to know how to use it to be useful when combine with he the traders Dynamic Index.

Key takeaways

  • Supertrend indicator MT4 is very helpful to intraday traders, and they can use it also in the Tradingview platform.
  •  A very easy tool but effective.
  • shows the direction of the trend and provides precise buy and sell signals.
  • This Tradingview indicator Can act as a stop loss trailing and offers support and resistance.
  • It is preferable to use supertrend indicator MT5 with the conjunction of other indicators to give you the right result.