Hello love ones,
My name is Dawuda Mohameed Zainudeen am from Ghana. Am happy to join this academy due to the help of @njaywan
The Supertrend indicator
is a trend following charter on your trading chart,which is like a moving average, that can show you the current trend direction. The indicator best works in trending market but can also give bad or wrong signals when a market is trading in a stable range. Supertrend works best when used with other indicator
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How Does Super-Trend Indicator Work?
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The super-trend indicator, this relies on two fundamental dynamic values period and multiplier. But before we start, it is important fir you to understand what ATR or Average True Range is. ATR is a type of indicator that give you volatility market value by decompressing the range of prices of a security for a particular time. The ATR is adjusted using the multiplier setting which determines how sensitive the indicator is.
Best setting to you use
I would say the setting you choose is up to the way you understand it . This is because the indicator has a default setting of 3.0 Multiplier and 10 ATR period . If you reduce the settings much, then the indicator will give a lot of signals, in which most of them will be wrong or false.
The rules for the Supertrend trading strategy are simple:
- Trade in the direction of the longer-term trend. ...
- Enter long trades when the short term indicators flips back to longs (turns green). ...
- Initial stop loss is 2 X average true range. ...
- Trail the stop loss on the short term Supertrend line once price advances
How false indications look in SuperTrend Indicator?
Supeertrend indicator becomes false when one trading on false signals can be extremely or highly costly, trades can only be placed when there is a consensus of technical indicators showing a future price movement and stability. False supertrend indicator may arise due to this number of factors, including timing lags, irregularities in data sources, smoothing methods, or the algorithm, this are the reason why indications may arise
The Supertrend indicator is a volatility based indicator that We can use for buying and selling signals as well as multiple plots of the indicator as a trading system.
If using two indicaters gives us a trend filter which can help decrease the number of whipsaw trades. I am happy to be given the chance to correct my mistakes @stream4u
Thanks you
@stream4u