RADEX MARKETS Editorial Team
The RADEX MARKETS editorial team consists of seasoned financial professionals and market observers. Dedicated to delivering objective market summaries, macroeconomic insights, and educational content, the team strives to keep traders well-informed in a fast-paced financial environment.
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Most Supertrend formulas published online are incomplete, so a line rebuilt from them in a spreadsheet rarely sits where the platform draws it. The flips land on different bars, and rechecking the arithmetic does not close the gap.
This guide gives the full calculation, including the locking rule that most write-ups leave out, explains why two different default settings are in circulation, sets out which settings fit the timeframe you trade, and covers three things that go wrong when Supertrend is used on forex instead of stocks.
The Supertrend indicator is an ATR-based trend-following overlay that plots a single line on the price chart: below price in an uptrend and above price in a downtrend. The line switches sides when a bar closes through it. It takes two inputs, an ATR period and a multiplier, and the common default is 10 and 3.
Put the line on a live chart and watch where it flips.
Open an account and test the settings on the pairs you trade.
The Supertrend indicator is a trend-following indicator that draws a single line on the price chart, set a fixed multiple of ATR away from price. In simple terms, it shows the direction of the current trend: when the line sits below price the trend is up, and when it sits above price the trend is down. Traders apply it in three ways:
What the line does not show is how strong the trend is. A line sitting below price in a slow drift looks exactly the same as one sitting below price in a powerful rally.
Where the line sits depends on volatility. Its distance from price is the multiplier times ATR, a measure of how far price typically moves per bar, so the line stands further away in a volatile market and closer in a calm one.
A flip means a bar has closed on the far side of the line. The line then jumps to the opposite side of price and the trend reading reverses. In practice, traders treat a flip as the point where a position in the old direction is no longer supported by the indicator.
Supertrend was put forward by the French trader Olivier Seban in the early 2000s and grew out of retail charting platforms, with no academic literature behind it. That history has two consequences that come up later in this guide: there is no authoritative paper that fixes a reference version, and each platform has implemented the indicator in its own way.
Read more: The best forex indicators every trader should use in 2026
An indicator matters to a trader because it turns a judgement call into a rule. Supertrend does this for trend direction, which brings several practical benefits.
As a result, Supertrend can serve as the backbone of a simple trend-following plan, as long as its limitations are respected.
The table sets Supertrend beside other popular technical indicators, with a last column on how each one fits around a Supertrend signal.
| Indicator | Measures | Key components | Primary use | Time frame | How it works with Supertrend |
|---|---|---|---|---|---|
| Supertrend | Trend | One line set from an ATR period and a multiplier | Trend direction and trailing stop placement | Any time frame | The base signal: the side of the line sets direction and the line itself marks the stop |
| Average Directional Index (ADX) | Trend strength | ADX line, +DI and -DI | Measuring how strong a trend is | Medium to long term | A filter: act on flips only when ADX is above 25 |
| Average True Range (ATR) | Volatility | ATR line | Measuring volatility and setting stop distances | Any time frame | Already built into Supertrend; read it on its own to see the stop distance in pips before you enter |
| Bollinger Bands | Volatility | Middle band (a simple moving average), upper band and lower band | Spotting stretched prices and possible breakouts | Short to medium term | Tightly squeezed bands warn that the next flip may be a whipsaw inside a range |
| Moving average (MA) | Trend | Simple moving average (SMA) or exponential moving average (EMA) | Identifying the trend and dynamic support or resistance | Any time frame | A 200-period EMA decides which flips are worth taking |
| Moving Average Convergence Divergence (MACD) | Momentum | Fast EMA, slow EMA and signal line | Trend direction, momentum and possible reversals | Medium to long term | Confirms momentum after a flip, but overlaps with ADX, so one of the two is usually enough |
| Parabolic SAR | Trend | Stop and reverse (SAR) dots | Trend direction and trailing stop points | Short to medium term | Does much the same job as Supertrend, so adding both gives little new information |
| Relative Strength Index (RSI) | Momentum | RSI line with overbought and oversold levels | Overbought and oversold conditions and possible reversals | Short to medium term | A second check that momentum is not already stretched when the line flips |
| Stochastic Oscillator | Momentum | %K line and %D line | Overbought and oversold conditions and momentum | Short term | Times entries on pullbacks while Supertrend still points the same way |
Supertrend is calculated in three stages: basic bands, locked bands, and a direction rule that picks which band to draw. Most published formulas stop after the first stage, which is why a spreadsheet built from them never agrees with the chart. The stages below follow the logic that TradingView publishes for its built-in version.
The basic bands are the midpoint of the bar plus and minus a multiple of ATR.
Midpoint = (High + Low) ÷ 2
Basic upper band = Midpoint + (Multiplier × ATR)
Basic lower band = Midpoint − (Multiplier × ATR)
Take a daily EUR/USD bar with a high of 1.0889 and a low of 1.0797. The midpoint is 1.0843. With ATR at 0.0062, or 62 pips, and a multiplier of 3, the offset is 0.0186. The basic upper band is 1.1029 and the basic lower band is 1.0657.
The Average True Range (ATR) is the average of True Range over a set number of bars, used as a measure of how far price typically moves per bar.
True Range is the largest of three values: the current high minus the current low, the distance from the previous close to the current high, and the distance from the previous close to the current low.
These basic bands are not the Supertrend line. They are recalculated from scratch on every bar and move up and down freely, so plotting them gives a channel that wobbles with each candle. The next stage is what turns them into the line on your chart.
Read more: Forex Volatility: Measuring and Trading Currency Pair Swings
Band locking is a ratchet: the upper band is only allowed to move down, and the lower band is only allowed to move up. On each bar, the new basic band is compared with the band carried forward from the previous bar, and the indicator keeps whichever one is closer to price.
The second condition in each rule is the reset. Once price has closed through a band, that band is released and starts again from its basic value.
Seen this way, Supertrend is an ATR trailing stop and not a channel. In an uptrend the lower band follows price up and never steps back, which is exactly how a trailing stop behaves.
A trailing stop is a stop-loss level that moves in the direction of a profitable trade as price advances and stays where it is when price pulls back.
Here is the rule at work on four daily EUR/USD bars in an uptrend, using an ATR period of 10 and a multiplier of 3. The prices are illustrative.
| Bar | Midpoint | ATR | Basic lower band | Locked lower band | Close |
|---|---|---|---|---|---|
| Bar 1 | 1.0843 | 0.0062 | 1.0657 | 1.0657 | 1.0851 |
| Bar 2 | 1.0871 | 0.0064 | 1.0679 | 1.0679 | 1.0868 |
| Bar 3 | 1.0836 | 0.0067 | 1.0635 | 1.0679 | 1.0829 |
| Bar 4 | 1.0852 | 0.0066 | 1.0654 | 1.0679 | 1.0858 |
On bars 1 and 2 the basic lower band rises, so the locked band rises with it. On bar 3 price pulls back and volatility picks up, which drops the basic band to 1.0635. The locked band ignores that and stays at 1.0679, which is 44 pips higher. Bar 4 repeats the pattern with a gap of 25 pips. A spreadsheet that plots the basic band is therefore 44 pips away from the platform's line on bar 3, and that is the divergence you were trying to track down.
Our view: band locking is the part of Supertrend we consider most important to understand, and the part most guides leave out. Once you know the line can only move in the trend's favour, you read it as a stop that tightens rather than as a forecast, and that changes how you handle every flip.
Read more: What is a stop-loss order and how to set it
The direction rule decides which of the two locked bands is drawn. Only one is visible at a time.
In the four bars above, the uptrend holds throughout because every close stays above 1.0679. A daily close at 1.0670 would flip the direction: the lower band would disappear and the line would reappear above price at the locked upper band.
With all three stages in place, your spreadsheet follows the same logic as the platform. It can still disagree with the chart, though, and the cause has nothing to do with the formula.
Two things make the same inputs produce different lines: the way ATR is smoothed, and the default values your platform ships with.
ATR is an average of True Range, and there is more than one way to take an average. On TradingView, ATR is by default a Relative Moving Average (RMA) of True Range, the smoothing method devised by J. Welles Wilder. The standalone ATR indicator on cTrader defaults to a simple moving average. Custom builds for MT4 and MT5 use whichever method their author chose.
Say ATR over 10 bars stands at 0.0062 and the next bar has a True Range of 0.0095. Wilder's smoothing gives the new bar a weight of 1/10 and moves ATR to 0.00653. An exponential average gives it a weight of 2/11 and moves ATR to 0.00680. With a multiplier of 3, the two band offsets differ by about 8 pips.
A gap of that size is enough for a close to break one line and miss the other. That is how the same settings end up with flips 1 or 2 bars apart on the same chart.
The defaults are the second source of confusion. TradingView and cTrader both ship Supertrend with a period of 10 and a multiplier of 3. Many tutorials quote 14 and 3 instead, a convention carried over from other charting platforms and from the usual 14-period default of ATR itself. Neither pair is the correct one. What matters is which pair your own tool is using.
The table lists what each platform's own documentation confirms.
| Platform | Default ATR period | Default multiplier | ATR smoothing method |
|---|---|---|---|
| TradingView | 10 | 3 | Wilder's smoothing (RMA) |
| cTrader | 10 | 3 | Not stated in the Supertrend documentation |
| MT4, custom indicator | Set by the indicator's author | Set by the indicator's author | Set by the indicator's author |
| MT5, custom indicator | Set by the indicator's author | Set by the indicator's author | Set by the indicator's author |
Before comparing anything, open the indicator's settings panel and read off the smoothing method and the two default values. The answer to "my indicator is broken" is almost always in that panel.
In our experience, when two charts disagree, the smoothing method is the first thing to check, because it explains the gap far more often than a fault in the indicator does. Pick one platform's line as your reference before you test any setting.
The best Supertrend indicator settings depend on the timeframe you trade. A period of 10 with a multiplier of 3 is the usual starting point for daily swing trading, a period of 7 to 10 with a multiplier of 2 to 2.5 suits 5 to 15-minute charts, and a period of 14 or 20 with a multiplier of 2 or 3 cuts the number of signals on daily charts and above. Each choice has a price, shown in the last column.
| Trading style | Typical timeframe | ATR period | Multiplier | Trade-off | How to apply it |
|---|---|---|---|---|---|
| Scalping | 5 to 15 minutes | 7 to 10 | 2 to 2.5 | Many flips per session, so the spread and false signals take a large share of each move | Take flips only in the direction of the 1-hour trend and exit on the opposite flip |
| Intraday | 15 minutes to 1 hour | 10 | 2.5 to 3 | Fewer false flips than scalping settings, but the line trails further behind and gives back more at each exit | Enter on a flip during the London or New York session and trail the stop at the line until the close |
| Swing | Daily | 10 | 3 | Signals arrive days into a move, and a stop at 3 times daily ATR calls for a smaller position size | Enter on a daily flip, size the position to the distance to the line and hold until the next flip |
| Fewer signals, less noise | Daily and above | 14 or 20 | 2 or 3 | Slow to react, so a large part of the trend has passed before the flip at both entry and exit | Use the line as a trend filter and take signals from a faster system only in its direction |
Treat tuning as a method. Start from the row that matches your timeframe and change one input at a time, beginning with the multiplier, because it has the more direct effect on how often the line gets hit.
If whipsaws are stopping you out too often, raise the multiplier by 0.5. If signals arrive so late that most of the move has gone, lower it by 0.5. Then test the new value over at least 100 signals before treating it as settled, since a handful of trades tells you nothing about a setting.
A whipsaw is a signal that reverses almost immediately, so a trader enters on one flip and is taken out by the opposite flip a few bars later.
Every setting is a trade-off between how early a signal arrives and how often it is wrong. A tighter line reacts sooner and gets broken by noise more often. A wider line filters the noise and reacts late. No value improves both at once, so there is nothing to gain from hunting for a perfect pair of numbers.
Our view: we would start every new pair on the platform's own default of 10 and 3 and move away from it only when a test gives a clear reason. A setting borrowed from a tutorial written for another platform makes it hard to tell whether a result comes from the market or from the setting.
Combining Supertrend with other indicators means using a second tool to decide which flips to act on. Supertrend loses money in ranges because price crosses the line again and again without going anywhere, and each crossing is a flip. A filter leaves the signal as it is and tells you when to ignore it.
The first filter measures trend strength. The Average Directional Index (ADX) rises when price is trending in either direction and falls when it is drifting. A common rule is to act on Supertrend flips only when ADX is above 25 and to skip them below that level.
Read more: Trend Trading Strategies: How to Use Indicators with Examples
The second filter sets direction on a larger scale. With a 200-period exponential moving average (EMA) on the chart, flips up are taken only when price is above the average and flips down only when it is below, so signals against the larger trend are skipped.
Both filters cost the same thing: fewer signals and later entries, because ADX and a long moving average both lag price. The share of signals removed varies by pair and timeframe, so count it in your own test before you rely on it. Some traders add a momentum oscillator such as RSI as well, although RSI measures the speed of recent price changes, which is a different question from trend strength.
The table sums up what each tool measures and how it works alongside Supertrend.
| Indicator | Measures | Key components | Rule with Supertrend | Trade-off | Time frame |
|---|---|---|---|---|---|
| Average Directional Index (ADX) | Trend strength | ADX line, +DI and -DI | Act on flips only when ADX is above 25 | Fewer signals and later entries | Medium to long term |
| 200-period EMA | Trend direction | One exponential moving average over 200 bars | Take flips up only above the EMA and flips down only below it | Misses the early part of a reversal | Medium to long term |
| Relative Strength Index (RSI) | Momentum | RSI line with overbought and oversold levels | Use as a second check on momentum before acting on a flip | Measures momentum, not trend strength | Short to medium term |
| Support and resistance | Price levels | Horizontal levels drawn from earlier highs and lows | Treat a flip that runs straight into a major level with caution | Relies on the trader's judgement in drawing levels | Any time frame |
Filtering does not turn a losing configuration into a profitable one. It removes the conditions in which the indicator was never going to work.
Read more: What is RSI in forex? Meaning, formula and signals
The flip is the signal. When a bar closes above the line in a downtrend, the line moves below price and the reading turns up. When a bar closes below the line in an uptrend, the line moves above price and the reading turns down. Because the line is itself a trailing stop, it also marks where a stop naturally sits: just beyond the line, which moves in the trade's favour as the trend extends.
Suppose EUR/USD flips up on a daily close at 1.0868 with the line at 1.0679. A stop at the line sits 189 pips from the entry. On a 0.10-lot position, where 1 pip is worth $1, that is a risk of $189. Supertrend sets no profit target, so a trader who wants a risk-to-reward ratio of 1:2 has to add one separately: 378 pips above the entry at 1.1246, worth $378. Without a target, the exit is the next flip.
Read more: What is take profit? Understanding how it works in trading
The second point is the one most often misread. While a bar is still forming, the line and the direction can change with every tick, so a flip can appear mid-bar and be gone by the close. Completed bars are never rewritten, which means Supertrend does not repaint in the strict sense. Acting on a mid-bar flip still causes trouble, because it can put you in and out of the market twice within one bar. Take signals on closed bars only.
The third point is structural. Supertrend tells you direction and nothing about strength. It has no oscillator reading and no scale, so a flip in a flat market looks identical to a flip at the start of a strong trend. That gap is why the indicator needs a separate strength filter, as covered in the section on combining it with other indicators above.
Most Supertrend guides are written for stock markets, which have an opening bell, a closing bell and commission-based costs. Forex has none of those, and three consequences follow. Figures measured on our own platform are marked where they are still to be confirmed.
Forex trades around the clock from Monday to Friday with no exchange close, so the start and end of a daily bar is a convention set by the broker's server time. Some servers close the day at 17:00 New York time, while others use midnight GMT.
The two conventions slice the same price action into different candles. The daily highs and lows differ, so True Range differs, so ATR and the bands differ, and a flip can land on a different bar. Two traders running 10 and 3 on daily EUR/USD at two brokers can be looking at different signals without either platform being wrong.
Currency pair checked, period covered and number of bars between the flips under the two cuts: (to be confirmed with the brand side).
Check your broker's server time before you compare a daily Supertrend line with a chart from any other source.
When the market reopens after the weekend at a price away from Friday's close, the gap enters True Range through the previous-close terms of the calculation. One unusually large value then feeds into ATR and widens the bands.
The arithmetic alone looks like this. With ATR over 10 bars at 0.0060 under Wilder's smoothing, a Monday bar with a True Range of 0.0140 lifts ATR to 0.0068. At a multiplier of 3, a newly calculated band sits 24 pips further from the midpoint than it would have done.
Under Wilder's smoothing the outlier never drops out of a window. Its weight shrinks by 10% on each new bar instead. A wider band is harder for price to close through, so a trend that would otherwise have flipped can stay in place for several more days.
Measured effect on our own data, meaning how much ATR widened after a specific gap and how many bars it took to return to normal: (to be confirmed with the brand side).
Fast settings produce more flips, and every flip is a round turn that pays the spread. Take a period of 7 and a multiplier of 2 on a 5-minute EUR/USD chart, a configuration that can flip many times in a single session.
The cost is simple to work out. On 1 standard lot of EUR/USD, 1 pip is worth $10, so each 0.1 pip of spread costs $1 per round turn. Multiply that by the number of flips in the period and you have the drag the method must overcome before it earns anything.
Total drag per lot = Number of flips × Spread in pips × $10
EUR/USD spread from our own pricing, number of flips for 7 and 2 on the 5-minute chart over a defined period, cost per round turn and total drag: (to be confirmed with the brand side).
The average move captured per flip shrinks as the timeframe gets shorter, while the spread per trade stays the same. A faster setting therefore hands a growing share of each move to costs, and slippage on fast entries adds to the bill. Faster is not the same thing as better.
Read more: What Is Slippage in Trading? Causes & 6 Tips to Reduce It
Supertrend is not among the standard indicators supplied with MT4 or MT5. To use it on either platform you have to install a custom indicator, whereas cTrader and TradingView include it in their built-in lists.
The consequence goes beyond the extra step. A custom indicator is written by a third party, and its author decides how ATR is smoothed and what the default inputs are. Two traders on the same platform, with the same period and multiplier, can therefore see flips on different bars because they installed different files.
Before trusting any comparison, open the indicator's inputs tab and look for a smoothing or averaging option. If the method is not shown, read the description that came with the file, or test the indicator against a spreadsheet built from the three stages above.
The most detailed public backtest of Supertrend comes from Liberated Stock Trader, which ran 4,052 test trades on the 30 stocks of the Dow Jones Industrial Average. On daily charts, 1,455 trades produced a win rate of 43%, with an average winning trade of 7.8% and an average losing trade of 4.3%. On 5-minute charts, 2,597 trades produced a win rate of 42%. Its author concludes that Supertrend is not a reliable or profitable standalone indicator and should never be used in isolation.
The figures, and what each one leaves out, are set out here.
| Measure | Reported figure | Sample and source | What it does not account for |
|---|---|---|---|
| Win rate | 43% | 1,455 daily-chart trades on the Dow Jones 30 stocks, Liberated Stock Trader | Forex pairs, spreads and overnight swap |
| Average gain per winning trade | 7.8% | 1,455 daily-chart trades on the Dow Jones 30 stocks, Liberated Stock Trader | The losing trades, which averaged 4.3%, and trading costs |
| Number of trades tested | 4,052 | 2,597 on 5-minute charts and 1,455 on daily charts, Liberated Stock Trader | Any forex instrument, as the test covered stocks only |
A win rate of 43% does not disqualify a method by itself. Trend following earns from the size of its winners and can afford to lose more often than it wins: winners of 7.8% against losers of 4.3% give a reward-to-risk ratio of about 1.8. What that asks of you is harder than it sounds. You have to sit through runs of losing trades, let winners run until the flip, and keep each position small enough to survive the losing streaks. The author's verdict is still negative, and the test includes no forex costs at all.
Claims at the other end of the range deserve the same scrutiny. Headlines promising a 98% win rate, or a gain of 11.07% per trade, contradict the test above and come without the detail needed to check them. Ask four things of any performance figure: the sample size, the period and market covered, the spread and slippage assumptions, and the exit rule.
Our view: the fair reading of this evidence is that Supertrend earns its place as a trend filter and a stop guide, not as an entry system on its own. We find a negative backtest more useful than a perfect one, because it shows where the indicator needs help, and the answer points back to the strength and direction filters covered above.
The Supertrend indicator is easy to read because it reduces the chart to one line, and both its advantages and its limitations come from that same design. Weighing them shows where it fits in a trading plan and where it does not.
For this reason, Supertrend works best as one part of a plan, alongside a strength filter, a fixed risk per trade and a separate exit rule.
The basic bands are the bar's midpoint, (high + low) ÷ 2, plus and minus the multiplier times ATR. The locking rule then lets the upper band only move down and the lower band only move up until price closes through it, and the line shows the lower band in an uptrend and the upper band in a downtrend. The three stages are set out in the calculation section above.
There is no single best setting, because it depends on the timeframe you trade. A period of 10 with a multiplier of 3 is the usual starting point for daily swing trading, and a period of 7 to 10 with a multiplier of 2 to 2.5 is typical for 5 to 15-minute charts. The settings table above lists the trade-off for each.
Supertrend works best where trends persist, which in practice means higher timeframes such as the daily chart. On lower timeframes the number of signals rises faster than the edge does once the spread is counted.
Not in the strict sense, because the values on completed bars are never rewritten. The value on the current bar is provisional until the bar closes, so a flip seen mid-bar can vanish, and signals should be taken on closed bars only.
Not as a standard indicator. It has to be added to MT4 or MT5 as a custom indicator, while cTrader and TradingView include it, and the custom build you install decides how ATR is smoothed.
It can, but the published evidence is against it. In a backtest of 1,455 daily-chart trades it won 43% of the time and the author concluded it should not be used in isolation, so it is better treated as a trend filter or trailing stop alongside a strength filter.
Supertrend is an ATR trailing stop, which is why the locking rule decides where the line sits. The same period and multiplier give different lines on different platforms because ATR is smoothed in different ways. Settings follow the timeframe you trade, and no single value suits every chart. On forex, the daily cut, weekend gaps and the spread all shape the result before the indicator does.
Four checks follow from that. Confirm your platform's smoothing method and defaults before anything else. Take signals on closed bars only. Change one parameter at a time and judge it over at least 100 signals. Pair the line with a strength filter instead of using it alone.
The next step is to rebuild the line in a spreadsheet for the pair and timeframe you actually trade, then check each flip against your own chart.
The RADEX MARKETS editorial team consists of seasoned financial professionals and market observers. Dedicated to delivering objective market summaries, macroeconomic insights, and educational content, the team strives to keep traders well-informed in a fast-paced financial environment.
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