Supertrend indicator explained
Updated 11 October 2026
Supertrend is a trend-following line drawn on the price chart. It sits below price while the trend is up and above price while the trend is down. It is very popular on Indian charting platforms, especially for intraday charts.
It is built from two things: the midpoint of each candle and the Average True Range (ATR), a measure of how much price typically moves. The common default settings are ATR period 10 and multiplier 3.
Step 1: True range and ATR
True range (TR) for a candle is the largest of:
- high − low
- high − previous close (as a positive number)
- low − previous close (as a positive number)
ATR is the average of TR over the chosen period, usually smoothed the way Wilder smoothed RSI. A larger ATR means a more volatile stock.
Step 2: Basic bands
- Midpoint = (high + low) ÷ 2
- Basic upper band = midpoint + multiplier × ATR
- Basic lower band = midpoint − multiplier × ATR
Step 3: Final bands and the trend
The bands are allowed to move only in one direction while a trend lasts:
- In an uptrend, the Supertrend line is the lower band. Each new lower band is used only if it is higher than the previous one; otherwise the line stays where it was.
- In a downtrend, the line is the upper band, and it can only move lower.
- When a candle closes on the other side of the line, the trend flips and the line jumps to the opposite band.
This one-way rule is what gives Supertrend its staircase shape.
Worked example
Settings: multiplier 3. Stock ABC is in an uptrend on the daily chart.
Day 1
- High ₹520, low ₹500, so midpoint = ₹510. ATR = ₹8.
- Basic lower band = 510 − 3 × 8 = 510 − 24 = ₹486
- Basic upper band = 510 + 24 = ₹534
- Supertrend line = ₹486 (below price).
Day 2
- High ₹530, low ₹512, midpoint = ₹521. ATR = ₹8.40.
- Basic lower band = 521 − 3 × 8.40 = 521 − 25.20 = ₹495.80
- ₹495.80 is higher than ₹486, so the line moves up to ₹495.80.
Day 3
- High ₹518, low ₹498, midpoint = ₹508. ATR = ₹9.
- Basic lower band = 508 − 27 = ₹481
- ₹481 is lower than ₹495.80, so the line stays at ₹495.80.
If on a later day Stock ABC closes below ₹495.80, the trend flips to down and the line jumps to that day's upper band, above price. Notice that higher volatility (ATR rising from ₹8 to ₹9) pushes the bands further away from price.
How Supertrend is commonly read
- Colour and side. Most platforms colour the line green when it is below price and red when above. That colour is just the current state of the calculation.
- As a trailing level. Because the line only moves one way, some people use it as a reference for a trailing stop-loss. It is a mechanical level, not a protected price; gaps can open well beyond it.
- Settings. A smaller multiplier (say 2) keeps the line closer and flips more often. A larger one (say 4) flips less but gives back more before it does.
Limits you should know
- It lags. A flip needs a close beyond the line, so it always comes after the move has started.
- Sideways markets. In a range, price crosses the line again and again, producing many flips that reverse quickly.
- Gaps. NSE stocks can open far from the previous close on news. The line does nothing to limit that.
- Repainting on the live candle. Until the candle closes, the line and its colour can change.
- Settings are not magic. Tuning 10 and 3 to fit past data tends to work worse on future data.
The risk side
Supertrend is widely shared in intraday and options "systems". Remember the base rate: SEBI's studies (SEBI study, 2023 and 2025) found about 9 in 10 individual F&O traders lost money in FY22 and FY25. Work out your position size from the distance to your exit level, so a flip that goes against you costs an amount you have already accepted.
Quick recap
- Bands = midpoint ± multiplier × ATR; default 10 and 3.
- The line follows the lower band in an uptrend and the upper band in a downtrend, moving only one way.
- It flips when a candle closes on the other side.
- It lags and whipsaws in ranges; it describes the trend, it does not forecast it.
Questions people ask
- What are the default Supertrend settings?
- Most platforms use an ATR period of 10 and a multiplier of 3. These are conventions, not optimal values.
- Why does Supertrend change colour?
- The colour shows which band is active. It turns when a candle closes on the other side of the line, which flips the calculated trend.
- Does Supertrend repaint?
- On the live candle the value and colour can change until the candle closes. Once a candle has closed, its Supertrend value is fixed.
- Is Supertrend good for intraday trading?
- It is used on intraday charts, but short timeframes produce many flips in sideways sessions. It describes the trend after the fact and cannot predict moves.