SuperTrend as a trading indicator
The use of trend can not be underestimated if you want to be very profitable in the crypto market. The can determine the amount of profit you are going to make and failure to accurately following the trend can also tell the amount of loses that you can make in the market. That is why most indicators are solely built to determine the direction of the market trend. And understanding the trend and how it moves is another key factor for every trader that desires to be successful.
Today we will be looking an important Indicator in the crypto market called the Supertrend, which is an indicator. So, what is SuperTrend?
Supertrend indicator is a trend following indicator used in the market, to easily identify an asset main trend at a particular given time and even also helps to know when a trend is about to reverse. This indicator uses the average of the candles in the market for a particular period of time and then measures the volatility. With the Super trend a more precise value of the price can be calculated.
The Supertrend indicator serves as support when it is below the price in an bullish trend and serves as a resistance when it is above the price in an bearish trend. Once the Super trend indicator notices an aggressive trend reversal of the price of the asset, the supertrend indicator will quickly jump to it starting value of the opposite direction, when this happens you should know that a trend is about to reverse.
When there is a reduction in volatility, this can change the trend direction and this can be spotted by the Supertrend indicator. This indicator is widely used in the market and it is also available in many trading platforms
Traders normally set the Supertrend indicator to personal suit them,by adjusting the period, which in turn determines the length of period the supertrend will use in its calculation.
The Supertrend indicator has two important features, which are the:
- The Line Colour of the indicator( Green or Red)
- The Line Direction (Up or Down)
How to calculate the Supertrend Indicator
This is the formula for calculating, The Supertrend indicator. There are two important factors that affects the Super Trend Indicator which are the period and the factor.
To effectively calculate the super trend, which is based on the volatility, which the ATR (Average True Range ) has to be looked for also . But in the calculation, these three factors must be in place
- The Current candle high price
- The last candle closing price
- The Current candle bottom value.
Advantages of the Super Trend Indicator
- You can easy take advantage of the large trend movement and enjoy massive profit
- It is very easy to understand and use that means even if you are new trader you take advantage of it.
- With the help of the Super trend indicator, you can easily identifygreat movement in the market in terms of performance.
- Super trend indicator can be used to provide accurate buy and sell signals in the market.
- It is wonderful trend base indicator which help to determine long term trade.
Disadvantage of the super trend indicator
- It has a very weak performance during a ranging market, as it performance is strong in a trending market.
- You will need to combine it with other indicators for it to work highly effective.
- Sometimes it also gives false signals which can make you lose money if not carefully looked into.
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