SuperTrend: a trailing stop line
SuperTrend is a line that sits below or above price and follows the trend; when price closes across the line, the direction changes and the line jumps to the other side.
In the chart above you see a dashed line next to price. This is SuperTrend. When the line is green it sits below price and follows the uptrend; when it is red it sits above price and follows the downtrend.
SuperTrend uses price's average candle size (ATR) to draw a line at a certain distance from price. In an uptrend the line moves up as price rises, but it does not move down when price falls; it waits where it is. So the line works like a ‘trailing stop’ that follows the trend. If price closes below this line, the trend is considered to have turned down and the line jumps above price.
If you see a vertical dotted line on the chart, that is the candle where SuperTrend changed direction. Look at how the line's colour and position changed after that candle.
SuperTrend's strength is its simplicity: it gives a clear answer to one question, ‘which side is the trend on right now?’. Its weakness comes from the same place: in a sideways market price keeps crossing above and below the line and produces direction changes one after another. If every change of direction means a trade, many small losses pile up in a sideways period.
SuperTrend has two settings: how many candles ATR is calculated over (usually 10) and how many ATRs away from price the line sits (usually 3). A larger multiplier moves the line further from price, producing fewer direction changes but reporting a trend turn later. A smaller multiplier makes the line hug price, catching turns early but also falling for noise. No setting is best in every market; what matters is knowing which trade-off your chosen setting makes. That is why it is usually healthier to use SuperTrend not alone but together with long averages that show the main trend, or ADX, which measures trend strength.
How to read it
- Look at which side the line is on: a line below price shows an uptrend, a line above price shows a downtrend.
- Think of the line as a stop: if you are in a position during an uptrend, price closing below SuperTrend is a ‘trend over’ warning.
- Do not treat the direction change marked by the vertical dotted line as a buy or sell order on its own; check whether a level break or a volume increase came with it.
- Recognise a sideways market: if the direction changed several times in a short period, SuperTrend is not reliable there; you will also see that ADX is low.
Trap
The most common mistake is flipping your position at every SuperTrend direction change. In sideways periods that means small losses one after another. The second mistake is seeing the line as a ‘guaranteed stop’ without sizing the position for it: at the end of a strong trend the line can sit very far from price, and when the stop hits, the loss is bigger than expected. Always check how far the line is from price.
Tip
In the evidence scene on the analysis card, tapping the SuperTrend layer brings the line itself and its latest direction change into focus. If you have an open position, you can use this line as a reference for a trailing stop.
Glossary
- SuperTrend
- A trailing line that sits at an ATR-based distance from price and shows the trend direction.
- ATR
- Average true range: the average size of a candle's movement.
- Trailing stop
- A stop that moves along as price goes your way and stays put when it goes against you.
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Study the SuperTrend layer in an analysis →For information only, not investment advice.