Using Super Trend to trade intraday & position in stocks, commodities & forex

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A very common problem with the intraday traders is that which indicators work well for the intraday trades. Being an intraday trader, chances are that you use technical analysis to identify trades based on different parameters. However, the first indicator which comes to our mind for intraday trading is Supertrend indicator due to its simplicity.

It can give you precise buy or sell signal in a trending market along with best supertrend strategy for intraday. What is Supertrend indicator?
A Super Trend is a trend following indicator similar to moving averages. It is plotted on price and the current trend can simply be determined by its placement vis-a-vis price. It is a very simple indicator and is constructed with the help of just two parameters- period and multiplier.
When we construct Supertrend indicator strategy, the default parameters are 10 for Average True Range (ATR) and 3 for its multiplier. The average true range (ATR) plays a key role in ‘Supertrend’ as the indicator uses ATR to compute its value and it signals the degree of price volatility.

How to identify buy and sell signal using supertrend indicator?
Super Trend being a trending indicator works beautifully in trending markets (both uptrends and downtrends). The buy-sell signal can easily be identified when the indicator flips over the closing price. A buy signal is generated when the Super Trend closes below the price and the color changes to green. On the other hand, a sell signal is made when the Super Trend closes above the price and the color of Super Trend turns red. There’s no technical indicator which can be 100% accurate and so is Super Trend also. It also generates false signals in the sideways market, though it gives lesser false signals as compared to other indicators. So you can combine Super Trend with other indicators to get better trading signals.
Trading strategy using Supertrend and Moving Average Crossover
This strategy basically comprises of Super Trend and 5-20 EMA crossover. When the Super Trend turns green ( Super Trend is below the price) and 5 EMA is above 20 EMA, a buy signal is generated. Similarly, when the Super Trend turns red ( Super Trend is above the price) and 20 EMA is above 5 EMA, a sell signal is generated.

The below is the chart of Nifty. The buy signals are shown with the help of green arrows and the sell signal is shown with the help of red arrows. As you can see in the chart that you can really catch big moves based on this strategy and keep trailing your stop loss with the help of Super Trend to protect your profits.
A Super Trend indicator can be used on equities, forex, or futures on various time frame including hourly, daily, weekly etc. However, Super Trend needs to be used in conjunction with other indicators like RSI, Parabolic SAR, MACD, etc to receive filtered signals.

Moreover, Supertrend also works as a trailing stop-loss for the existing trades and acts as a strong support or resistance.
Super Trend
Trend Trading, Very simple to use

1. PURPOSE
Supertrend indicator is a combination of momentum and volatility. This indicator helps you to ride the trend once it established.

2. INPUTS
Supertrend indicator uses two parameters, namely ATR and Factor (multiplier). We have given users an option to create two indicator lines on a single chart.

ENTER FACTOR VALUE 1 and ENTER ATR PERIOD 1 is for the first line whereas ENTER FACTOR VALUE 2 and ENTER ATR PERIOD 2 is for the second line. Use can change the color of each line and we have also given an option to show the second line or not.

The average true range (ATR) plays an important role in ‘Supertrend’ as the indicator uses ATR to calculate its value. The ATR indicator signals the degree of price volatility. 3. HOW TO INTERPRET
The indicator is easy to use and gives an accurate reading about an ongoing trend.

If the line is close above the price then trend is down and if line is close below the price bar then the trend is up.

As we have an option to apply two lines so we should look red line as a higher trend and blue line as a shorter trend.
4. OUTPUT

A ‘Supertrend’ indicator can be used on daily, weekly and hourly charts, but generally, it fails in a sideways-moving market.

This indicator works very well in a trending market.

This indicator also acts as a strong support or resistance and it also provides a trailing stop loss for the existing trade.

In a ‘buy’ signal, any dip towards the indicator can also be used as a buying opportunity and vice versa.

It is precise and easy to use as explained above. It is fast so quick trading decisions can be made for intraday traders.
Supertrend indicator was developed by Olivier Seban. It works at all the time frames 1 mi
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