Price closes beyond it. A close beyond the line flips it.

Supertrend

Q: A larger multiplier gives:

Fewer, later signals. It filters noise.

An ATR-based trend line that flips when price closes beyond it.

Supertrend plots a line above or below price based on the average true range (ATR). The line is below price in an uptrend and above in a downtrend, and it flips when price closes beyond it.

It is popular because it is simple and gives clear trailing levels. Settings are the ATR period (commonly 10) and the multiplier (commonly 3).

Like other trend tools it whipsaws in ranges. A larger multiplier gives fewer but later signals.

Key takeaways

ATR-based trailing trend line
Flips when price closes beyond it
Larger multiplier = fewer, later signals

Quiz

Supertrend uses which volatility measure? Answer: ATR. It is based on ATR.
The line flips when: Answer: Price closes beyond it. A close beyond the line flips it.
A larger multiplier gives: Answer: Fewer, later signals. It filters noise.

Educational content, not financial advice.