How to Day Trade Crypto with the Supertrend Indicator

Are you waiting for the right opportunity to trade the crypto market once it stops moving
sideways? Once the bull run resumes or there is a short-term relief rally, having the
Supertrend Indicator on hand to help you trade is always wise.

Trend-following indicators are crucial for day traders who want to ride even the smallest of
waves. In the world of technical analysis, the Supertrend Indicator is arguably the simplest
to use, especially for trading crypto. Here’s everything you need to know about using the
Supertrend Indicator to your advantage, particularly when day trading.

Top Crypto Trading Exchanges

In this guide:

1. What is the Supertrend Indicator?

2. How the Supertrend Indicator works

3. How relevant is the Supertrend Indicator to crypto trading?

4. Supertrend Indicator and the best crypto settings

5. Best crypto day trading strategies using the Supertrend Indicator

 6. How do you use SuperTrend as a stop loss?
7. Is the Supertrend indicator suitable for different crypto trading styles?
8. Is the Supertrend indicator profitable?
9. Frequently asked questions

What is the Supertrend Indicator?

The Supertrend Indicator is a popular trend-following technical analysis tool. By using it,
you can determine the possible direction of a crypto asset. Note that while the Supertrend
Indicator works for multiple crypto trading timeframes it is best suited for day trading.

How does the Supertrend indicator for crypto trading work? TradingView

The indicator is represented by a single line that changes color. And it is plotted directly on
the price chart.

Did you know? Olivier Seban — a French Trader — is the brain behind the Supertrend
indicator.

Elements of a Supertrend Indicator

Unlike other basic trend-following indicators like the Simple Moving Average (SMA) that
rely on price smoothing, the Supertrend Indicator brings additional elements into the mix.
It tracks the volatility aspect of asset movement and is a better bet than the likes of
Simple Moving Average (SMA), which offers lagging results.

The volatility aspect is determined by the Average True Range (ATR). This element of the
Supertrend Indicator represents the movement corresponding to an asset’s price in a
given time frame. Higher ATR represents high volatility and vice versa.

Besides the Average True Range (ATR), the Supertrend Indicator has what we call a
multiplier. It is a number that you multiply with the ATR to make it more or less sensitive
to minor price changes. The multiplier is what makes the Supertrend Indicator suitable for
different types of crypto trading — day trading, scalp trading, swing trading, etc. You can
also consider it an adjustment metric.

A high multiplier makes sense for long-term crypto trading, whereas a low multiplier value
makes the Supertrend Indicator suitable for day trading. As two elements are involved, the
Supertrend Indicator is better at providing more accurate trading signals compared with
other indicators.

Supertrend indicator for SOL: TradingView

In some cases, the ATR is used interchangeably with the period. The period is the time
frame across which the ATR is calculated. Both the period and multiplier form the
backbone of the Supertrend strategy.

Red line, green line

Looking at the Supertrend Indicator gives you two colors — red and green. The indicator
turning green indicates bullishness at the crypto’s counter, and the same turning red
hints at bearishness. The red and green lines can also serve as stop loss levels for short
and long trades, respectively.
Green line and red line: TradingView

As for the charting setup, the red line is considered the upper line, whereas the green line
works as the lower line in regard to the price action.

The below tweet that tracks the efficacy of the Supertrend Indicator for bitcoin trading:

How the Supertrend Indicator works

The working of the Supertrend Indicator is a lot like the Parabolic SAR. Instead of the dots,
here we have red and green lines — colored representations of one extended line. When
the price chart breaks the red line and rises, we can consider it a trend shift followed by
the appearance of a green line or a bullish phase.

Once this happens, the green line acts as a dynamic support, breaching, which can be a
sign to exit or even enter a short position. However, if the price rebounds on touching the
green line, we can expect the trend to continue.

Another crypto, another representation of the Supertrend indicator:

Looking into the new $SUI, while the chart is still fresh, here are some takeaways.

– First time supertrend indicator turned bullish on the daily

– In a clear uptrend making higher lows
– Currently touching short term support range around 56-57c (flip would be good)
pic.twitter.com/snHpT5q0zz

— Superfly (@cryptosuperfly) August 24, 2023

The opposite of this holds, too. When the price breaks the green line and drops, we can
consider a bearish trend shift. In that case, the red line appears, below which the price of
the crypto trades. The red line then works as a dynamic resistance line, above which we
can initiate fresh buys or exit a short position.

Another important thing to know about the Supertrend Indicator, in regards to crypto
trading, is that it only takes the closing price of an asset into consideration. The concept
of closing price captures the day-specific consensus rather well, helping with the best ATR
value. This forms the base of the Supertrend Indicator and works in the background.

How relevant is the Supertrend Indicator to crypto trading?

The crypto market is known for its volatility, and with ATR in play, the Supertrend Indicator
takes that into account. However, if you plan on using Supertrend as a standalone
indicator to locate buy and sell signals, you can do so based on the color changes. While
we have already touched on the basics, here is a more segmented take on interpreting the
Supertrend Indicator for crypto trading.

Identifying transitions for buy and sell signals

The idea is simple. If the Supertrend line transitions from green to red, it offers a strong
sell signal. This move indicates a short-term or long-term trend shift from bullish to
bearish. Traders who are already holding positions can exit when the price breaches the
green and the red starts appearing.

Conversely, if the line transitions from red to green, there is a strong buy signal,
demonstrating a bearish to bullish trend shift. Traders planning to buy can take positions.

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Setting up stop losses using the Supertrend line

You can use the red or green line of the Supertrend indicator to set stop losses, either for a
short or a long order. The indicator is an effective tool to locate stop loss levels, even
helping initiate stop limit orders. If the asset is in an uptrend, you should place the stop
loss order immediately below the green line. This would be for a long order.

Supertrend indicator for crypto and setting stop loss: TradingView

The stop loss should be immediately higher than the red line for a short position. We
should be working with trending markets to make the best use of the Supertrend
indicator for crypto trading. Ranging markets moving sideways can return less
dependable signals. And that is when you should pair additional indicators with the
Supertrend.

The mathematics behind the Supertrend Indicator

You might wonder how the Supertrend Indicator is charted. Let us now track the
mathematics behind it. As mentioned, the Supertrend Indicator for crypto trading
comprises upper and lower lines. They are represented as follows, where the multiplier is
the user-generated number.

1. Upper Line = (High + Low) / 2 + (Multiplier × ATR)

2. Lower Line = (High + Low) / 2 – (Multiplier × ATR)
3.

Also, the high and low values correspond to the high and low values of the given period or
the length for which the ATR is calculated.

Notably, the ATR only uses the closing price and signifies the volatility exhibited in a
given timeframe. The formula for ATR is as follows:

[(Previous ATR x 13) + Current TR] / 14

Where 13 and 14 are the random periods — the timeframes within which the prices and
volatility metrics are calculated.

A longer period followed by a longer ATR length is more suitable for long-term trading
signals. Also, for long-term traders, you can choose a higher multiplier value for getting
better trading signals.

Supertrend Indicator and the best crypto settings

If you click on the “Settings” icon against the Supertrend Indicator, you will open the
section where you can play around with the ATR length and the multiplier. While you get
the Supertrend 10/3 as the default setting, you can change that depending on the type of
trading signals you seek.

Supertrend indicator settings: TradingView

A higher ATR length hints at long-term trades, whereas a higher multiplier is meant to
smooth out the volatility data to fit the same into a larger timeframe. It is the multiplier
that determines the price sensitivity of the asset. For crypto, where smaller price surges
are common, a smaller multiplier number can be handy at times.

Settings for long-term trades, including swing trading

As a long-term trader, you might find the 20-period (ATR length) and “two multiplier”
setting the best. Having 20 as the ATR length lets you in on the closing price of the
previous 20 periods. This could be 20 days for a day chart, 20 4-hour splits for a 4-hour
chart, and so on and so forth.
Supertrend Indicator for Crypto swing trading: TradingView

Also, the two multiplier setting lowers price sensitivity but not significantly, allowing
traders to capture some small price changes in an ever-changing crypto market.

Settings for day trades

If you are into day trading, a ten period and a 1.5 multiplier seem like the fitting values.
While the ten period primes the Supertrend Indicator for recent crypto price changes, the
1.5 multiplier increases the sensitivity to smaller price changes, allowing traders to
capture every chance at a successful trade.

Supertrend Indicator for crypto day trading: TradingView

Settings for adaptive trades

In case you want Supertrend settings aligned with your diverse trading needs, the 14-2.5
input can be used. The 14-period ATR offers a moderate view, somewhere in between the
long-term and short-term. The 2.5 multiplier is higher than the default value of two but
lowers the market noise to a considerable extent.

Settings for scalping and intraday

Scalping is all about trading the shortest of price surges and dips. This form of trading
usually happens in the five to 15-minute timeframe. The best Supetrend Indicator setting
to scalp trade crypto has to be the 5-1.2, where the 5-period ATR responds to the swiftest
price changes, and the 1.2 multiplier makes the entire setup highly sensitive.

Supertrend Indicator for Crypto scalp trading: TradingView

Settings for volatile pairs

Trading volatile crypto pairs with the Supertrend Indicator is possible. You simply need to
set the ATR length at seven to capture the short-term trading signals while setting the
multiplier to three. This would decrease sensitivity to very short spurts, making the entire
setup short-term focussed but with an eye toward risk management.

Here is a tweet that sheds light on bitcoin’s volatility, showing the increasing certainty
around BTC as an asset:

Each mentioned strategy uses the Supertrend Indicator as a solo technical analysis tool
for crypto trading. Only relying on it can return false signals. Therefore, you are better off
pairing it with other indicators or different variations of the Supertrend line itself.
Let’s finish up this section with a fun post about the indicator:

Power of "SUPERTREND" indicator

In this thread, am going to tell a real story about a trader who found his "holy-grail" in
super trend indicator.

In his recent podcast with @VijayThk , Mr. Vijay Khant @mystock_myview shares his
trading journey.

— Prabhakar Raut (@tradewithprabhu) August 29, 2023

Best crypto day trading strategies using the Supertrend Indicator

If you want to use the Supertrend indicator to its fullest capabilities, precisely for crypto
trading, you are better off improvising. And from improvising, we mean pairing other
indicators or more of the same indicator with the Supertrend. Here is how these
strategies can help you ride downtrends and uptrends and even make use of the
sideways wave if needed.

Double Supertrend strategy

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This trading strategy combines two Supetrend lines, each with different settings. If you
plan on setting up an adaptive trade, a 20-3 and a 10-2 strategy might make sense. For
scalping or even day trading, a 10-2 and 5-1.2 strategy looks better, especially if you
want to capture the short-term price movements.

Double Supertrend Indicator strategy for crypto trading: TradingView

A better trading position would be when both the indicator lines are green, hinting at a
strengthened bullish phase. But then, if the market is trending sideways, this strategy
might also return false signals. We shall consider offsetting the false trading signals in
some of the subsequent strategies.

1-minute Supertrend strategy

The 1-minute Supertrend trading strategy is precisely meant for locating scalping trades.
The idea here is to use the 5-period and the 1.2 multiplier setting but on a 1-minute
timeframe. When the Supertrend flips from red to green in the 1-minute timeframe, you
can quickly make a trade. The green line can also act as a trailing stop loss.
1-minute Supertrend Indicator strategy for crypto trading: TradingView

You can even add the VWAP indicator for additional confirmation. If the price for the 1-
minute timeframe remains above the VWAP, especially when the Supertrend indicator
turns red to green, you might want to enter the trade. Exiting the trade or taking a short
position might make sense if the Supertrend line turns green to red and the price trades
under the VWAP.

Triple Supertrend strategy

This strategy is similar to the double supertrend but involves three supertrend lines
instead of two. Your ideal choice of settings could be 10-2, 20-3, and 30-4 — covering both
long-term and short-term processes in the process. The third Supertrend line serves as a
confirmation and helps filter out other falsies associated with a double Supertrend
strategy.
Triple Supertrend Indicator strategy for crypto trading: TradingView

For an exit, you can consider the point when any of the three lines turns red from green.

MACD Supertrend strategy

It is possible to pair another trend-following indicator with the Supertrend lines. A good
way to look at this is to check for the MACD line crossing above the signal line whenever
the Supertrend line turns green. This strategy is best used when dealing with 15-minute to
even 4-hour timeframes. Notably, higher timeframes return more accurate results
regardless of your buy or sell preferences.

MACD and Supertrend Indicator: TradingView

Supertrend + EMA strategy

Exponential moving averages (EMAs) can indicate trends well and are great for confirming
trend directions. A good way to pair them with the Supertrend Indicator for crypto trading
is to place the 50-period EMA on the price chart and wait for the price to move above the
same. Once that happens and the Supertrend line turns green, you might consider entering
a long position.

EMAs and Supertrend Indicator: TradingView

Another way of looking at it is to track golden crossover-like events, where the shorter
time frame EMA crosses above the longer time frame EMA, offering a bullish signal. If the
Supertrend Indicator changes to green at this time, you can consider this a buying
opportunity. The reverse of this applies even for events like death crossover or when the
price falls below the 50-period EMA line, all while the Supertrend turns red.

Here is a thread that captures this winning strategy rather well:

This shows that the Supertrend indicator can give out reliable trading signals if you want
to buy or sell crypto. Only the interpretation changes. The concept remains the same.

Bollinger-backed Supertrend strategy

Bollinger Bands (BB) is a reliable volatility indicator. As the Supertrend indicator takes
volatility into consideration, it is expected to work really well with BB. To get started,
check if the price reaches the lower leg of the Bollinger Bands — the oversold segment —
and the Supertrend Indicator turns green; it might hint at a buying opportunity.
Bollinger Bands and Supertrend Indicator for crypto: TradingView

In the case of Bollinger squeezes, the Supertrend line’s color tells you the breakout’s
direction. If the line turns green, you can expect a price surge; if the line turns red, you can
expect a sizable correction corresponding to a falling knife pattern. Also, to make use of
Bollinger Bands, you might want to consider the 30-minute to 1-day timeframes.

Volume-driven Supertrend strategy

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Trading volume can be a great ally when it comes to confirming any strategy. If you want
to use the Supertrend Indicator for crypto trading, apart from looking at the red-to-green
line color shift, you might also want to look at a surge in trading volumes. Notably, the
volume-driven strategy works better on longer timeframes so that we can filter out the
manipulative surges in trading activity.
Volume-driven Supertrend Indicator for crypto: TradingView

A higher volume often indicates accumulation, provided it aligns with the green
Supertrend line.

Breakout strategy

If you are good with crypto trading patterns like the Flag and Pole, triangles, and more, you
can use the Supertrend indicator well. To go long, check for any time a pattern breakout
happens while the Supertrend line changes from red to green.

Supertrend Indicator for crypto and price breakout: TradingView

The inverse of this also works. Additionally, the concept of locating a breakout works even
with standard support and resistance lines.
 Head and shoulders is such a ridiculous trading pattern. Most tend to not work out, but
it does not keep people from continuing to point them out.

Remember in early summer everyone was screaming H&S!!!

Head and shoulders should be left to the shampoo companies.

Benjamin Cowen, CEO and founder of ITC Crypto: Twitter

Multi time-frame strategy

This strategy requires you to work with multiple timeframes. Using this makes sense if
you are risk-averse. To use this, you would need to work separately with multiple charts
with multiple timeframes. You can use the same Supertrend setting for each timeframe
and see if there is an alignment. For instance, if you plan to swing trade bitcoin, you can
use a day and 4-hour charts to look for strong positive momentum.

Entering a trade makes sense if both 4-hour and day charts return strong bullish trading
signals.

Supertrend and Parabolic SAR

The Parabolic SAR indicator comprises dots with a bullish set of points located under the
price action for a bullish trend. Couple this with a green Supertrend line, and you might just
be looking at a decent buying opportunity. To make the most of Parabolic SAR and
Supertrend indicators for crypto trading, you are better off using them on 30-minute to 4-
hour charts.

Supertrend Indicator for crypto and Parabolic SAR: TradingView

In addition to these strategies, the Supertrend Indicator also works well with Fibonacci
retracement levels, where the best trading zone might show up after the Fib level
retracements followed by a green Supertrend line. Also, for any of the strategies
mentioned above, we can pair the Relative Strength Index (RSI) as an additional line of
confirmation.

How do you use SuperTrend as a stop loss?

We discussed earlier how the Supertrend line can be used as a stop loss level for long and
short trades. For a long trade, you can place a static stop loss immediately below the
green line, and for a short trade, the same can surface immediately above the red line.
However, that isn’t all you can do with this indicator.
Stop loss management using Supertrend: TradingView

When the price moves in a particular direction — upwards for a long trade — the
Supertrend line keeps moving with it. Therefore, you can adjust your stop loss accordingly
by using the moving Supertrend line as a trailing stop loss instrument. This approach
allows you to lock in quick profits and safeguards you against potential reversals.

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Here is a quick thread on the importance of risk management, among other things:

The path to a successful trading career:

Learn Technical Analysis:

Understanding and analyzing price charts and indicators to identify trends, patterns,
and potential trading opportunities.
 Learn Risk Management:

Develop a comprehensive risk management plan that includes…

— Mr. Anderson (@TrueCrypto28) August 23, 2023

The Supertrend Indicator allows you to play around with the period and multiplier with a
lower number, leading to tighter stop-loss levels. Therefore, playing around with the
settings to balance sensitivity is also possible if you are trading only for quick profits or
have a lower risk tolerance.

The ability to set up flexible stop loss levels makes it useful for grid trading, locating and
trading arbitrage opportunities, and more.

Is the Supertrend indicator suitable for different crypto trading styles?

Even though the Supertrend indicator is useful for day trading, it can also work for
intraday trades, scalping, or even longish swing trades. Changing the settings is a good
way to go about the same. Another applaudable aspect of the Supertrend Indicator is its
ability to support the following trading traits, making it an all-purpose indicator of sorts:

1. Position sizing based on risk tolerance

2. Ability to work with multiple indicators
3. Supports backtesting
4. Easy to understand sans complex settings

Is the Supertrend indicator profitable?

The profitability of the Supertrend Indicator regarding crypto trading depends on which
additional indicators and technical analysis you use it with. Even though it is easy to read
and meant for shorter timeframes, like any other indicator, even the Supertrend is
fallible. Trading signals projected should be tested multiple times and taken with a grain
of salt. Also, like any other trend-following indicator, the Supertrend works best in trending
markets.

Frequently asked questions

Which Supertrend Indicator is the best?

The best Supertrend Indicator is the one that aligns with your goals and trading styles. For
instance, if you plan to day trade, a 10-2 Supertrend Indicator, with 10 as the period and 2
as the multiplier, makes sense. The best Supertrend Indicator for scalping is the 5-1.2 one,
with five being the period and 1.2 being the multiplier.

Is Supertrend a good indicator?

The Supertrend is a reliable indicator, especially if you are into crypto trading. It works well
as it takes volatility into consideration and even combines the same with trend
identification. This indicator also helps you size your positions by locating flexible stop-
loss levels. However, like any other technical analysis tool, you should pair it with other
indicators.

What is Supertrend 7 3?

>The Supertrend 7 3 is a specific indicator setting where 7 stands for the period
associated with the calculation and 3 stands for the multiplier. As the period is shorter
and the multiplier is on the higher side, it is safe to infer that this is a setting meant for
adaptive trading where the price sensitivity is on the lower side. The idea is to use it for
short-term trades.

What is the success rate of Supertrend?

The success rate of the Supertrend Indicator is subjective and dependent on the
timeframes, market conditions, and trading skills. While it is hard to quantify the success
rate, it takes trends and volatility into account, making it one of the best tools for technical
analysis. The overall breadth of the market can also impact the success of the Supertrend
Indicator.

What is the 1-minute Supertrend strategy?

The 1-minute Supertrend strategy is the one seasoned traders use for scalping. The idea
here is to use the indicator on a 1-minute chart. The preferred setting, in this case, is 5
period and 1.2 multiplier — a setting that focuses on a very short-term trading horizon and
is highly sensitive to short price spurts.

Is SuperTrend leading or lagging?

Based on how it is calculated, Supertrend is a lagging indicator. It takes the closing prices
of the candles over a given timeframe, which is also defined by the period and the ATR
length. As it follows historical price moves, it is more of a trend identifier and doesn’t
directly predict prices. For a comprehensive market analysis, you might want to pair it with
other technical indicators.

What is the double SuperTrend strategy?

The double SuperTrend strategy is all about using two Supertrend indicators with different
settings. The idea is to track each indicator for bullish and bearish signs. If both the
Supertrend lines are green, it might be a good time to enter a buying position. The same
holds even for exiting price action and initiating short trades.

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