SuperTrend (10, 3)

The SuperTrend (10, 3) is a trend indicator used in Skyrexio Strategy Builder for trend strength measurement and direction identification.

Introduction

SuperTrend is a trend-following indicator that combines dynamic support and resistance levels with clear directional signals. This indicator is context-dependent - it provides LONG signals when the line is green (bullish trend) and SHORT signals when the line is red (bearish trend). SuperTrend excels at identifying trend direction and providing trailing stop levels for position management.

How SuperTrend (10, 3) Works

SuperTrend was developed by Olivier Seban and uses Average True Range (ATR) to calculate dynamic support and resistance levels that adapt to market volatility. The calculation uses the midpoint of high and low prices, adjusted by a multiplier (3) times the ATR over a specified period (10).

Key characteristics of SuperTrend:

• Dynamic support/resistance - Adapts to market volatility using ATR calculations • Visual trend identification - Green line indicates uptrend, red line indicates downtrend • Trailing stop functionality - Provides natural stop-loss levels that follow price • Volatility adaptation - Adjusts to changing market conditions automatically • Clear entry/exit signals - Color changes provide unambiguous trading signals

Market Psychology: SuperTrend reflects the market's volatility-adjusted sentiment. When price stays above the green line, it shows sustained bullish conviction. When price falls below the red line, it indicates persistent bearish pressure. The ATR-based calculation ensures the indicator adapts to changing volatility conditions.

Key Characteristics

Attribute	Details
Category	Trend Indicators
Type	Trend Following with Dynamic Levels
Primary Use	Trend identification and trailing stops
Timeframe	All timeframes supported (1m to 1M)
Confirmation	Volume, momentum indicators, price action

Strategy Applications

🟢 LONG STRATEGY (Primary Use)

SuperTrend is primarily a LONG signal when the line is green (bullish trend). Use LONG entries when price is above the green SuperTrend line, indicating a confirmed uptrend with dynamic support.

Base Entry Order (LONG)

Trigger Type: Once per bar close
Bar TF: 1H
First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: SuperTrend (10, 3)
Timeframe: 1H

Additional Entry Orders (LONG)

Additional Entry 1: SuperTrend line rising (strengthening trend)
First Condition: SuperTrend (10, 3)
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

OR

Additional Entry 2: Volume confirmation of breakout
First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: SuperTrend (10, 3)
Timeframe: 1H

AND

First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Volume Weighted Moving Average
Timeframe: 1H

Take Profit Orders (LONG)

Rule 1: Exit condition - Price approaches SuperTrend line
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: SuperTrend (10, 3)
Timeframe: 1H

OR

Rule 2: Exit condition - Overbought with momentum divergence
First Condition: RSI
Timeframe: 1H
Operator: Greater Than
Second Condition: Value
Value: 75

AND

First Condition: MACD Histogram
Timeframe: 1H
Operator: Less Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

OR

Rule 3: Exit condition - ATR expansion warning
First Condition: Average True Range (14)
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

Stop Loss Orders (LONG)

Rule 1: Stop loss - Price breaks below SuperTrend line
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: SuperTrend (10, 3)
Timeframe: 1H

OR

Rule 2: Stop loss - Volume confirms breakdown
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: SuperTrend (10, 3)
Timeframe: 1H

AND

First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Volume Weighted Moving Average
Timeframe: 1H

OR

Rule 3: Stop loss - Momentum reversal confirmed
First Condition: MACD Line
Timeframe: 1H
Operator: Cross Below
Second Condition: MACD Signal Line
Timeframe: 1H

🔴 SHORT STRATEGY (Primary Use)

SuperTrend is primarily a SHORT signal when the line is red (bearish trend). Use SHORT entries when price is below the red SuperTrend line, indicating a confirmed downtrend with dynamic resistance.

Base Entry Order (SHORT)

Trigger Type: Once per bar close
Bar TF: 1H
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: SuperTrend (10, 3)
Timeframe: 1H

Additional Entry Orders (SHORT)

Additional Entry 1: SuperTrend line falling (strengthening downtrend)
First Condition: SuperTrend (10, 3)
Timeframe: 1H
Operator: Less Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

OR

Additional Entry 2: Volume confirmation of breakdown
First Condition: Close Price
Timeframe: 1H
Operator: Less Than
Second Condition: SuperTrend (10, 3)
Timeframe: 1H

AND

First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Volume Weighted Moving Average
Timeframe: 1H

Take Profit Orders (SHORT)

Rule 1: Exit condition - Price approaches SuperTrend line
First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: SuperTrend (10, 3)
Timeframe: 1H

OR

Rule 2: Exit condition - Oversold with momentum divergence
First Condition: RSI
Timeframe: 1H
Operator: Less Than
Second Condition: Value
Value: 25

AND

First Condition: MACD Histogram
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

OR

Rule 3: Exit condition - ATR expansion warning
First Condition: Average True Range (14)
Timeframe: 1H
Operator: Greater Than
Second Condition: Simple Moving Average (20)
Timeframe: 1H

Stop Loss Orders (SHORT)

Rule 1: Stop loss - Price breaks above SuperTrend line
First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: SuperTrend (10, 3)
Timeframe: 1H

OR

Rule 2: Stop loss - Volume confirms breakout
First Condition: Close Price
Timeframe: 1H
Operator: Greater Than
Second Condition: SuperTrend (10, 3)
Timeframe: 1H

AND

First Condition: Volume
Timeframe: 1H
Operator: Greater Than
Second Condition: Volume Weighted Moving Average
Timeframe: 1H

OR

Rule 3: Stop loss - Momentum reversal confirmed
First Condition: MACD Line
Timeframe: 1H
Operator: Cross Above
Second Condition: MACD Signal Line
Timeframe: 1H

Advanced Strategy Combinations

Multi-Timeframe SuperTrend Analysis

Setup

Higher Timeframe Confirmation:

• Daily: SuperTrend direction (overall trend bias)

• 4H: SuperTrend confirmation + volume analysis

• 1H: SuperTrend execution signals + momentum confirmation

Execution

LONG: Daily/4H green SuperTrend + 1H breakout above green line SHORT: Daily/4H red SuperTrend + 1H breakdown below red line Filter: Align all timeframes for highest probability trades

SuperTrend Breakout Strategy

Setup Process:

1. Identify SuperTrend color change (red to green or green to red)

2. Wait for price to break above/below SuperTrend line

3. Confirm with volume and momentum indicators

4. Use SuperTrend line as trailing stop

Execution:

• Base Order: Price breakout above/below SuperTrend line

• Additional: Volume confirmation and momentum alignment

• Take Profit: Momentum divergence or extreme RSI readings

• Stop Loss: SuperTrend line acts as dynamic trailing stop

Risk Management Guidelines

Position Sizing

Strategy Type	Position Size	Conditions
LONG Strategy	Standard	Price above green SuperTrend line
SHORT Strategy	Standard	Price below red SuperTrend line
High Volume	Increase confidence	Volume confirms breakout/breakdown
Low Volume	Reduce size	Wait for volume confirmation

SuperTrend Reliability Factors

High Reliability

✅ Clear SuperTrend color change ✅ Volume confirms price breakout ✅ Multi-timeframe alignment ✅ Momentum indicators support direction

Low Reliability

❌ Choppy price action around SuperTrend line ❌ Low volume on breakout ❌ Conflicting timeframe signals ❌ Extreme ATR expansion (high volatility)

Best Practices

For LONG Strategies

1. Wait for green line - Only enter LONG when SuperTrend is green (bullish)

2. Volume confirmation - Ensure breakouts above SuperTrend have volume support

3. Use as trailing stop - Let SuperTrend line act as dynamic stop-loss level

4. Multi-timeframe check - Confirm higher timeframes support the trend

For SHORT Strategies

1. Wait for red line - Only enter SHORT when SuperTrend is red (bearish)

2. Volume confirmation - Ensure breakdowns below SuperTrend have volume support

3. Use as trailing stop - Let SuperTrend line act as dynamic stop-loss level

4. Momentum alignment - Confirm with MACD or RSI for stronger signals

Common Mistakes to Avoid

• Fighting the trend - Trading against SuperTrend direction

• Ignoring volume - Entering without volume confirmation

• Tight stops - Not using SuperTrend line as natural stop level

• Whipsaw trading - Trading every minor SuperTrend touch in ranging markets

Market Conditions Analysis

Market Type	LONG Strategy Effectiveness	SHORT Strategy Effectiveness
Strong Uptrend	🟢 High (green SuperTrend)	🔴 Low (against trend)
Strong Downtrend	🔴 Low (against trend)	🟢 High (red SuperTrend)
Ranging	🟡 Medium (whipsaws possible)	🟡 Medium (whipsaws possible)
High Volatility	🟡 Medium (wider stops needed)	🟡 Medium (wider stops needed)
Trending with Volume	🟢 Very High (ideal conditions)	🟢 Very High (ideal conditions)

Related Indicators

Indicator	Relationship	Link
Average True Range	Used in SuperTrend calculation	Average True Range (14)
Parabolic SAR	Similar trend-following approach	Parabolic SAR (0.02, 0.2)
Moving Averages	Complementary trend identification	Moving Averages
ADX	Trend strength confirmation	Average Directional Index (14)

Conclusion

SuperTrend is a context-dependent indicator that provides clear directional signals with built-in risk management. Its primary strength lies in combining trend identification with dynamic support/resistance levels, making it ideal for both trend following and position management.

Key Takeaways

• PRIMARY USE: Trend following with dynamic stops (LONG when green, SHORT when red)

• SECONDARY USE: Trailing stop-loss management for existing positions

• ALWAYS: Confirm breakouts with volume and momentum indicators

• REMEMBER: SuperTrend works best in trending markets, can whipsaw in ranging conditions

Success with SuperTrend requires patience to wait for clear trend signals and discipline to use the indicator line as a trailing stop. The combination of trend identification and risk management makes it one of the most practical indicators for systematic trading.

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