Updated · BreakPoint Research Desk
Supertrend is a trend-following indicator that draws a single line above or below price using the Average True Range (ATR). In an uptrend the line sits below price; when price closes below it, the line flips above price and the trend is considered down. The common default is an ATR period of 10 and a multiplier of 3.
Traders use it as a trend filter and a trailing stop rather than as a stand-alone buy/sell system. It works well in sustained trends and poorly in sideways markets, where frequent flips create whipsaw losses.
Key takeaways
1. Measure volatility
Calculate the ATR over the chosen period (e.g. 10 candles). ATR averages the true range — the largest of high−low, |high − previous close| and |low − previous close|.
2. Build bands
Upper band = (high + low) ÷ 2 + multiplier × ATR. Lower band = (high + low) ÷ 2 − multiplier × ATR.
3. Ratchet the bands
In an uptrend the lower band can only move up; in a downtrend the upper band can only move down. This creates the step-like line.
4. Flip on a close through the line
When price closes below the lower band in an uptrend, Supertrend switches to the upper band and the trend turns down — and vice versa.
| Setting | Effect | Often used for |
|---|---|---|
| 10, 3 (default) | Balanced | Most timeframes; widely watched |
| 7, 2 or 10, 2 | Tighter line, more flips | Short intraday timeframes, active traders |
| 14, 3 or 10, 4 | Looser line, fewer flips | Swing trades on daily charts |
There is no single best setting. Tighter settings exit faster but get shaken out more; looser settings hold trends longer but give back more before exiting. Test on the instruments and timeframe you actually trade.
A stock breaks out of a base at ₹600 with Supertrend turning up below price at ₹570. Over eight weeks the line ratchets up to ₹720 as price reaches ₹780. A close at ₹712 flips Supertrend down.
Supertrend did not pick the top; it gave back about ₹68 from the peak. It did keep the trader in the trend through several pullbacks that could have prompted an early exit, and it defined the risk from day one.
Supertrend is a trade-management tool. It shines in trends and costs money in ranges — use market context to know which you are in.
Trading every flip as a signal
In ranges this produces a string of small losses.
Over-optimising settings
Settings tuned to past data rarely work on the next period.
Using it without a market filter
Check the index trend; Supertrend on a stock in a choppy market is unreliable.
Ignoring gaps
On daily charts, a gap can open far beyond the Supertrend line.
Treating it as predictive
It follows price; it cannot anticipate reversals.
Supertrend is available on BreakPoint’s built-in charts and on TradingView. The bigger question — is the market trending? — is where BreakPoint’s tools help. How they classify or select stocks stays private.
Trend or range, across timeframes
Index Trend shows whether each index is trending up, down or sideways across several timeframes — the filter that keeps Supertrend out of chop.
Stocks already trending
The Scanner groups stocks by the behaviour they show, such as trend continuation, so you apply Supertrend to candidates in trends.
Measure your whipsaw cost
Log Supertrend trades in Trade Diary to see how much range days cost you.
Save Supertrend on your chart layout in BreakPoint and it follows you to the mobile app.
Trend-following swing traders
Supertrend is a simple, visual trailing stop for multi-week trends.
Intraday traders
Useful with a higher-timeframe filter; expect more whipsaws on short timeframes.
Beginners
Easy to read — which is why it is easy to over-trust. Learn its failure mode first.
Not ideal for
Mean-reversion and range traders.
Pick by workflow, not by feature count. You can change plans later.
Free account
Add Supertrend to charts and study trend and range periods with the free guides.
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Supertrend is a trend-following indicator that plots a line below price in uptrends and above price in downtrends, based on the Average True Range. A close through the line flips the trend direction.
It calculates bands at the midpoint of each candle plus or minus a multiplier times the ATR, lets the active band move only in the trend’s favour, and switches bands when price closes beyond the active one.
The default ATR period 10 and multiplier 3 is the most widely used. Lower multipliers react faster with more false signals; higher multipliers are smoother and slower. The best setting depends on your timeframe and instrument.
It can help as a trend filter and trailing stop on intraday charts, especially with a higher-timeframe confirmation, but it produces more false signals on short timeframes and choppy days.
In sideways markets price repeatedly crosses the ATR bands, flipping the indicator back and forth. This whipsaw is inherent to trend-following tools.
Both follow trends. Supertrend adapts to volatility through ATR and gives a clear stop level; moving averages are smoother and better for defining the broad trend. Many traders use both.
Supertrend is commonly attributed to French trader Olivier Seban.
Check Index Trend before trusting any Supertrend flip, and review your results in Trade Diary.
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Terms used here: Trend Following · Stop-Loss · Momentum · Swing Trading
This article is for education only. It is not investment advice or a recommendation to buy or sell any security. Trading involves risk of loss; examples are hypothetical and past behaviour of any pattern does not guarantee future results.