A dynamic trailing stop and trend-direction indicator built on ATR.
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Overview
The Supertrend Indicator, developed by Olivier Seban, is a deceptively simple trend-following tool that produces remarkably clean buy and sell signals. It plots a single line on price: green below price during uptrends, red above price during downtrends. The line also functions as a dynamic trailing stop.
The indicator is constructed using the Average True Range. The upper band is calculated as (High + Low) / 2 + multiplier × ATR, and the lower band as (High + Low) / 2 − multiplier × ATR. When price crosses above the upper band, Supertrend flips to a buy signal; when price falls below the lower band, it flips to a sell.
The default settings (ATR period 10, multiplier 3) work well across multiple timeframes and asset classes, making Supertrend one of the few indicators that is genuinely useful "out of the box." The multiplier controls sensitivity — lower values generate more signals with more noise; higher values produce fewer, more reliable signals with larger stop distances.
Supertrend is particularly effective for identifying the beginning of trending moves and providing objective exit criteria. Its trailing nature means profits are protected automatically as the trend extends, eliminating emotional decisions about when to exit.
Strategy Code
This is a TradingView Pine Script example for this indicator. Paste it into the TradingView Pine Editor, add it to your chart, and adjust inputs for your market and timeframe.
//@version=6
strategy("Supertrend Indicator", overlay=true)
fastLen = input.int(20, "Fast Length")
slowLen = input.int(50, "Slow Length")
fast = ta.ema(close, fastLen)This is a thinkorswim ThinkScript example for this indicator. Open thinkorswim, create a custom study, paste the script, and apply it to your chart.
input atrLength = 10;
input multiplier = 3.0;
def atrVal = ATR(atrLength);
def basis = (high + low) / 2;
def upper = basis + multiplier * atrVal;Join thousands of traders who use auto-Trading to execute this strategy automatically, 24/7.
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