Supertrend indicator for Metatrader 4

Q: How does the Supertrend Indicator work?<

The indicator displays a line on the chart. If the price is above the line, an uptrend is signaled, and below it, a downtrend is indicated.

Q: Which parameters can be adjusted in the Supertrend?

You can adjust the ATR period and Multiplier to control the indicator's sensitivity.

Q: Can the Supertrend provide false signals?

Yes, in volatile markets, the indicator can produce false signals. Therefore, it's advisable to combine it with other indicators.

Updated: October 16, 2024 2 min read

Summary

The Supertrend indicator is a popular tool among traders, based on the Average True Range (ATR). It helps identify market trends and aids in making trading decisions. It indicates when a trend is present, when it reverses, and can be used as a basis for entry and exit signals. In this article, you will learn how the Supertrend indicator works, how it is calculated, and how you can effectively use it.

Top 3 Key Takeaways

The Supertrend indicator is based on the Average True Range (ATR) and helps identify market trends and trend reversals.
It can be used as a signal for entry and exit points, as well as a stop-loss management tool.
Its simplicity makes it ideal for trend-following strategies, but false signals can occur in volatile markets.

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Price chart with implemented supertrend indicator

What is the Supertrend Indicator?

The Supertrend indicator displays the trend of a price movement while taking market volatility into account. It is calculated using the ATR (Average True Range) and is a useful tool for determining the direction of a trend. Unlike moving averages or trendlines, the Supertrend provides additional information by factoring in volatility.

Advantages of the Supertrend Indicator

It reliably identifies trends in a market and helps trade in the direction of the trend.
It can be used in trend reversal strategies to spot potential trading opportunities.
It supports risk management by being used as a stop-loss or trailing stop tool.

Application of the Supertrend Indicator

The Supertrend indicator is particularly useful for:

Trend-following strategies: When the trend is clear, the Supertrend can be used as an entry and exit signal.
Trend reversal strategies: Once the trend changes, the Supertrend signals it, offering a chance to reposition.
Risk management: The indicator can be used as a stop-loss or trailing stop to limit losses and secure profits.

How is the Supertrend Indicator Calculated?

The calculation of the Supertrend indicator is done using the following formulas:

Upper line: (High + Low) / 2 + Multiplier × ATR
Lower line: (High + Low) / 2 - Multiplier × ATR

The Multiplier and ATR period can be adjusted by the trader to modify the sensitivity of the indicator.

How to Read the Supertrend Indicator?

Reading the Supertrend indicator is simple:

If the candles are above the line, it indicates an uptrend.
If the candles are below the line, it signals a downtrend.
A switch of the line from bottom to top or vice versa indicates a trend reversal.

Supertrend Indicator and Volatility

An important aspect of the Supertrend indicator is its reliance on volatility. Since the indicator is based on the ATR, it dynamically adjusts to market fluctuations. However, during volatile phases, false signals may occur. Therefore, it is recommended to use the Supertrend in combination with other indicators like moving averages or oscillators for better signals.

Recommended Settings for the Supertrend

The most commonly used settings for the Supertrend indicator are:

ATR period: 10 or 14
Multiplier: 3 or 4

Depending on the market and personal preference, these parameters can be adjusted to modify the indicator's sensitivity.

MQL Code


  #property version ""
  #property  strict
  #property indicator_chart_window
  #property indicator_color1  clrBlue
  #property indicator_color2  clrMagenta
  #property  indicator_width1 4
  #property  indicator_width2 4
  #property  indicator_buffers 3
  double TrendUp, TrendDown, TrendResult;
  int changeOfTrend;
  input  string IndicatorName="SUPERTREND"; //Objects Prefix (used to draw objects)
  extern  double ATRMultiplier=3.0; //ATR Multiplier
  extern  int ATRPeriod=20; //ATR Period
  extern  int ATRMaxBars=1000; //ATR Max Bars (Max 10.000)
 //+------------------------------------------------------------------+
 //| Custom indicator initialization function |
 //+------------------------------------------------------------------+
  int  OnInit()
 {
 //---- indicators
  IndicatorSetString( INDICATOR_SHORTNAME, IndicatorName);
  SetIndexBuffer(0, TrendUp);
 SetIndexStyle(0, DRAW_LINE, STYLE_SOLID,  indicator_width1);
 SetIndexLabel(0, "Trend Up");
  SetIndexBuffer(1, TrendDown);
 SetIndexStyle(1, DRAW_LINE, STYLE_SOLID,  indicator_width2);
 SetIndexLabel(1, "Trend Down");
  SetIndexBuffer(2, TrendResult);
 SetIndexStyle(2, DRAW_NONE);
 //----
  return(0);
 }
 //+------------------------------------------------------------------+
 //| Custom indicator deinitialization function |
 //+------------------------------------------------------------------+
  void  OnDeinit( const  int reason){
 }
 //+------------------------------------------------------------------+
 //| Custom indicator iteration function |
 //+------------------------------------------------------------------+
  int  OnCalculate ( const  int rates_total,
  const  int prev_calculated,
  const  datetime& time,
  const  double& open,
  const  double& high,
  const  double& low,
  const  double& close,
  const  long& tick_volume,
  const  long& volume,
  const  int& spread){
  int limit, i, flag, flagh, trend;
  double up, dn, medianPrice, atr;
  int counted_bars = IndicatorCounted();
  if(counted_bars < 0)  return(-1);
  if(counted_bars > 0) counted_bars--;
 limit= Bars-counted_bars;
  if( Bars < ATRMaxBars+2+ATRPeriod) ATRMaxBars= Bars-2-ATRPeriod;
  if(ATRMaxBars < =0){
  Print("Need more historical data to calculate the Supertrend");
  return 0;
 }
  for (i = ATRMaxBars; i > = 0; i--) {
 TrendUp = EMPTY_VALUE;
 TrendDown = EMPTY_VALUE;
 TrendResult = EMPTY_VALUE;
 atr =  iATR(NULL, 0, ATRPeriod, i);
 medianPrice = (High+Low)/2;
 up=medianPrice+(ATRMultiplier*atr);
 dn=medianPrice-(ATRMultiplier*atr);
 trend=1;
  if (Close > up) {
 trend=1;
  if (trend == -1) changeOfTrend = 1;
 }
  else  if (Close < dn) {
 trend=-1;
  if (trend == 1) changeOfTrend = 1;
 }
  else  if (trend==1) {
 trend=1;
 changeOfTrend = 0;
 }
  else  if (trend==-1) {
 trend=-1;
 changeOfTrend = 0;
 }
  if (trend < 0 && trend > 0) {flag=1;}
  else {flag=0;}
  if (trend > 0 && trend < 0) {flagh=1;}
  else {flagh=0;}
  if (trend > 0 && dn < dn)
 dn=dn;
  if (trend < 0 && up > up)
 up=up;
  if (flag==1)
 up=medianPrice+(ATRMultiplier*atr);
  if (flagh==1)
 dn=medianPrice-(ATRMultiplier*atr);
  if (trend==1) {
 TrendUp=dn;
  if (changeOfTrend == 1) {
 TrendUp = TrendDown;
 changeOfTrend = 0;
 }
 }
  else  if (trend==-1) {
 TrendDown=up;
  if (changeOfTrend == 1) {
 TrendDown = TrendUp;
 changeOfTrend = 0;
 }
 }
 TrendResult=trend;
 }
  ChartRedraw();
 WindowRedraw();
  return(0);
 }
 //+------------------------------------------------------------------+

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FAQs about the Supertrend Indicator

What is the Supertrend Indicator?

The Supertrend indicator is a technical tool based on the ATR that helps identify trends and trend reversals.

How does the Supertrend Indicator work?<