Indicators help predict market performance and potential future price corrections.
There have been several Forex indicators over the years. However, the Super trend indicator is one of the most famous indicators in the Forex market today.
Super Trend Forex Indicator
Traders use indicators to determine whether to enter or exit a trade based on profitability. Super trends are one of the key techniques for traders to make precise entry and exit choices. In trending markets, the Super Trend indicator reveals price direction.
Subsequently, it is one of the few indicators that can help investors make accurate trading decisions, such as buying or selling.
How do super trends work?
The Forex Indicator is based on two key fundamental characteristics. values-period is the first and the multiplier is the second.
Additionally, the indicator depends on the average true range, which is crucial for determining the value of market volatility for price ranges in a specific time frame.
First, it’s best to compute a series of true range values, and then divide the result by the number of cycles represented by n. To calculate a moving average, you must first obtain the TR values for the series.
Then, it should be divided by the number of cycles represented by n. This method helps to calculate a moving average of the natural range. Supertrend is represented by simple red and green lines.
But what do these changing colours mean?
The Super trend indicator attempts to represent the current price trend and the direction of the trend.
When the Super Trend Indicator is green and below the price, the price is said to be in an uptrend.
Likewise, a downtrend is valid if the super trend signal is red above the price.
Most traders have found a way to use it as an entry signal generator.
You buy when the Super Trend Indicator is below the price and the indicator colour turns green. When the super trend indicator exceeds the price, you sell and the super trend indicator turns red.
After entering a trade using the same Forex indicator, how do I exit a trade?
If you are not a trader who uses set stop loss and profit targets, you can use a super trendline trailing stop.
When the super trend signal turns green and goes below the price, it’s time to start a long trade with a stop loss below the supertrend line.
The line will eventually cross the price and you can exit the long position entirely.
If you enter a short position when the supertrend turns red, you can use the supertrend line to trail your stop.
If you have been trading for a long time, you know that we cannot accept every trade for every entry signal generated by the Super Trend Indicator. Using the Super trend indicator to find trend directions is fine, but using it as an entry signal generator can go wrong.