Supertrend
TrendBeginner
Supertrend is a trailing line built from the average true range. When price closes on one side of the line, the indicator flips and follows the new direction at a distance set by recent volatility. It is popular because the chart shows a single trend color and a built-in trailing stop.
Not investment advice. Nothing here is a recommendation to buy or sell anything. Backtests and historical studies are not guarantees, and a rule that worked in one sample can fail in the next. Trading can lose money. Links are for education, not endorsements. Do your own research.
- Rules
- Typical inputs are a 10-period ATR and a multiplier of 3. A long is allowed while price is above the line. A short, or an exit, triggers when price closes below it. The line only ratchets in the direction of the trade, so it behaves like a volatility stop rather than a moving average of price.
- Where AI fits
- AI can code the ATR bands, then search the multiplier and length with a holdout so a tight stop is not rewarded only because it fit one sample. It can also require a higher-timeframe Supertrend, or an ADX reading, to agree before a flip is traded. An LLM is useful for explaining why a flip failed on a particular chart.
- Markets
- FX, equity indexes, liquid stocks, and futures. Crypto charts use it heavily, with wider gaps and weekend risk.
- Timeframes
- From 15-minute charts up to daily. Shorter charts flip more often.
- Risks
- In a range the line flips back and forth and each flip is a small loss. The multiplier that looks best in a backtest often fails on the next regime. It says nothing about how strong a trend is, only which side price is on.