Supertrend: ATR Bands for Trend Signals and Trailing Stops

Summary

Supertrend uses Average True Range (ATR) to place upper and lower bands around a source price. The multiplier scales the distance from price, so the bands reflect recent volatility. The indicator marks an uptrend with a green line and a downtrend with a red line, which can help traders follow trends or identify possible reversals.

The document also describes using the line as a trailing stop and gives basic installation guidance for MetaTrader 5. It provides no tested parameters, entry or exit rules, performance results, or comparison with other indicators. The formula alone does not specify how the trend state changes as prices move, and the document does not explain how to choose the ATR period or multiplier. Treat the color signals as an indicator description, not evidence of profitability.

Key ideas

• Supertrend places bands above and below a source price using a multiple of ATR.
• The ATR multiplier sets how far the bands sit from price.
• The indicator uses green and red lines to represent uptrends and downtrends.
• The line can be used for trend following, reversal monitoring, or as a trailing stop.
• The document gives no backtest evidence or parameter selection guidance.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.