Supertrend
Supertrend is a trend-following line built from price range and volatility. Price above the line means uptrend, below means downtrend.
What It Measures
Trend direction and its recent strength via Average True Range (ATR) volatility.
The Math (Simplified)
It places a band around the midpoint of each day's high-low range, widened by ATR volatility. The band only moves one way at a time, so it hugs the trend.
Default Inputs & Tuning
ATR period 10 with a 3x multiplier is the standard setting. Higher multipliers make the line less sensitive.
When It Works (Market Edge)
Strong trends: it rides the whole move and gives a clear exit when the trend breaks.
When It Fails
Ranging markets: the line flips frequently and produces a series of small losing trades.
Common Myths
Myth: Supertrend never gives false signals.
Truth: It is a lagging trend filter, not a crystal ball. In ranges it flip-flops just like any moving average.
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