SuperTrend

The Supertrend indicator detects the market trend on all time units in a matter of seconds! The indicator is represented by lines above and below the asset price. If a green line below the price appears when you look at the chart, the trend on the chosen time unit is bullish. If a red line appears above the price, the trend is bearish.

Here's what a chart looks like when the Supertrend indicator is added:

However, this indicator can do much more than tell you the current market trend: green lines represent support for the price over the chosen time unit, and the price could rebound on this line. Conversely, red lines represent resistance for the price, which could be rejected on this line.

It's also when these famous lines are crossed at the close of a candle that the indicator will give us a signal of trend change, which could highlight an opportunity to trade up or down.

As you can guess, if we move from a red to a green line and enter the market long, we simply need to place our Stop Loss below this line, as it gives us a support level. The opposite also works: if we go short, we'll place our Stop Loss above the red line.

Here's a more concrete example:

This example highlights all the long and short positions we could have taken by entering at the trend-changing candlestick closes and placing Stop Losses outside the lines. Signals that were not relevant are circled in white.

The performances of the trades placed are of course exaggerated, as it is very complicated to exit at the best time, but they do show that the risk/performance ratio is good. We also strongly recommend raising or lowering the Stop Loss as the price rises or falls. Once again, this indicator is not sufficient on its own, but you can integrate it into your trading or investment strategy.