Super Trend (ATR)
THE SUPER TREND (ATR STOPS) - is a powerful but underused technical trading tool.
Just like its name suggests, it is a trend-following indicator, meaning that it will never give you sell signals when you have an active uptrend. Also, it can be used in trading almost any instrument on any timeframe as long as the broker provides a trading platform that supports it.
How the Super Trend (ATR) is constructed?
The Super trend indicator is quite similar to the moving average. There are a few differences such as the distance from the price, the behavior when crossing over, and the change of color. When you open the indicator’s properties, you will see two options:
ATR Period (default = 5)
ATR Multiplier (default = 3.5)
The Average True Range, commonly known as the ATR, is an indicator used to measure the volatility of a market.
So, when your ATR period in the Supertrend indicator is set at “14”, then it means the indicator is looking back at the highs and lows of 14 days.
That said, when a market is highly volatile, then the ATR will be high. On the other hand, if there is little volatility, then we ATR will be low.
Now, the Supertrend combines the ATR with a “multiplier” to detect the changes in trend direction.
Alert when
Bullish signal: The price cross above ATR Stops line
Bearish signal: The price cross below ATR Stops line
Indicator config
ATR period: 5
ATR multiplier: 3.5
TIPs for trading
When the color changes to red, then it is telling you to open a sell trade as the trend is currently down.
When the color turns to green (or lime), then it means you should open a buy trade since the trend is now going up.
The Supertrend indicator is a simple, easy-to-use but very effective volatility-based trading tool.
It follows the trend direction of the price and gives early entry and/or exit signals. If used properly, it can become a trader’s valuable tool of making decent income off online trading including forex, stocks, indices, and so on.
The trader should practice with the indicator until they get the best setting and timeframe to apply.
If coupled with proper discipline and risk management, the Supertrend indicator can turn a losing trader into a consistent winner without the need for tons of mind-boggling calculations and methods.
Tradingview script
If you have the same ATR period and ATR multiplier configuration settings, the signals in this script are equivalent to the signals on the yummy profit app.
Note: You can "add to favorite scripts” to use this script.
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