Extra indicators
SuperTrend
A single line below the price in an uptrend (green) and above it in a downtrend (red), set a few ATRs away.
The idea in plain words
It is a trailing stop that adapts to volatility: in calm markets it stays close, in wild markets it gives more room. When the price closes beyond it, the trend is considered to have flipped.
How it is calculated
Bands are placed a multiple of ATR above and below the candle's midpoint; the line only moves in the trend's direction and switches sides when the close crosses it.
Upper = (high + low) ÷ 2 + multiplier × ATR, Lower = (high + low) ÷ 2 − multiplier × ATR
Uptrend: line = lower band (never moves down); downtrend: line = upper band (never moves up)
Defaults: ATR 10, multiplier 3How to use it
- Follow the trend while the line is green; step aside or reverse when it turns red.
- Use the line as a trailing stop.
Drawing conclusions
- Fewer, later signals than moving average crossovers, with fewer whipsaws.
Example
In a two-month NAS100 uptrend the green line trails 2–3% below the price, then flips to red during a sharp sell-off.
Prices in examples are illustrative.
Watch out for
- In sideways markets it will flip back and forth and lose.
A little history
Commonly credited to the French trader Olivier Seban.
Educational content only. No indicator or pattern predicts the future, and nothing here is investment advice.