Steemit Crypto Academy | Course 5 By @stream4u | All About SuperTrend Indicator.

Greetings @stream4u, thanks again for another great class. Before starting I would like to tell you about my personal experience with your classes. In which I must be honest, during the first reading it is often difficult for me to assimilate the new knowledge and relate it to what I have learned, however as I re-read the content it becomes easier and easier to understand, until I get to the point where it is almost obvious.

So thank you for your recommendation to read the post up to 2 or 3 times ... in my case 4 hahaha. I really believe that this is the only way that knowledge is fixed in our minds.

Let's get started

Q1. What Is A SuperTrend Indicator?

1.The SuperTrend Indicator, as its name indicates, is a trend or tendency indicator that is expressed by means of a Line that is superimposed over the candle chart which can be located both above or below the asset prices, indicating levels of support and resistance. Additionally, this indicator provides visual signals for selling and buying.

The SuperTrend Indicator focuses on prices and its location indicates the current trend. For example, if the SuperTrend line is located above the asset prices, it turns red, indicating that we are in the presence of a downtrend.

If, on the other hand, the SuperTrend line is located below the asset prices, it turns green, and indicates that we are in the presence of an uptrend.

Q2. Show how to set SuperTrend on Chart and what are its settings need to configure.

2. Due to in class, how to set the SuperTrend Indicator was taught in Tradingview, I have decided to do this work in Poloniex. The following Screenshots were taken from Poloniex on March 9, 2021, from the ETH / TRX chart, 15min. Edited by me.

1-First of all, in the options panel of the chart, Select Indicators.

2- When the window with the list of indicators is displayed, we can search for Supertrend in the list, or simply write “supertrend” in the search space. Once we have located and selected our option, we close the displayed window.

3- When closing the window we will realize that the supertrend line will appear superimposed on our chart. Now is the time to configure the parameters or settings. Click on this symbol.

4-The SuperTrend Indicator is based on two parameters or settings: the PERIOD and the MULTIPLIER, and they are usually set in the following values: number of periods: 10 and multiplier: 3.

The second parameter can be lowered if you want the indicator to react more quickly to price changes, but it can generate more false signals.

In general, the default settings work quite well, other configurations may generate inaccurate signals.

Q3. How SuperTrend Shows Buy-Sell Indications?

3. As I mentioned earlier, the behavior of this indicator is divided into two cases, for an uptrend and another for a downtrend, showing indications or signals for buying or selling respectively.

_{SuperTrend Indications. ETH / TRX Chart Taken from Tradingview on March 8th, 2021. Edited by me.}

In the case of an uptrend; When the indicators curve slides below the closing price of the asset, the indicators color (Line) turns GREEN (as does the area under the curve depending on the platform used). In addition, a BUY signal is generated.

In the case of a downtrend; When the indicator is above the closing price of the asset, the indicators color (Line) turns RED (as does the area under the curve depending on the platform used). In addition, a SELL signal is generated.

Q4. When We can place a Buy Trade with the help of SuperTrend Indicator?

4. Contrary to what you might think, it is not recommended to place the buy order just at the moment when the indicator shows you the BUY signal, and the curve turns green and is placed below the price chart. Instead, we must be patient and wait for asset prices to develop their trend. It is done in this way to avoid possible errors caused by false signals.

Once the first bullish phase of prices is overcome, at some point the curve will decelerate its upward movement and the asset price will begin to fall and approach the SuperTrend line. In this scenario the SuperTrend line works as a reliable Support that does not allow the price to fall further but will make it bounce upwards.

_{When to place a Buy order . ETH / TRX Chart from March 6th, Taken from Tradingview on March 9th, 2021. Edited by me.}

When the asset price (candles chart) goes down enough and is positioned close enough to the SuperTrend line… it is time to Buy, or at least a very good opportunity to do so.

Q5. When we can place exit/square off, sell order with the help of SuperTrend Indicator?

5. For the opposite case the same principle applies. Once the indicator shows us the SELL signal and the curve is positioned over the asset's price candles, we must be patient for the trend to develop.

Once the first phase of price downtrend is overcome, at some point the fall of the SuperTrend curve will slow down and the asset price will experience a rise approaching the Indicator's Line. In this scenario the Supertrend line works as a reliable Resistance that does not allow the price to rise further but will make it bounce down.

_{When to place a Sell order . ETH / TRX Chart from March 2nd, Taken from Tradingview on March 9th, 2021. Edited by me.}

When the asset price's (candle chart) rises high enough and is positioned close enough to the SuperTrend line (in our selected case de closing price touched the Indicator's Line)… it is time to Sell, or at least a very good opportunity to do so.

Q6. How false indications look in SuperTrend Indicator?

6. The way to detect a false indication or a false signal is when the SuperTrend shows BUY signals followed by SELL signals very quickly or in a short period of time. The opposite case also applies; when the Supertrend shows a SELL signal followed by a BUY signal in a very short period of time.

_{False Signals . ETH / TRX Chart Taken from Tradingview on March 9th, 2021. Edited by me.}

In this case, it is recommended not to take actions but to wait for the asset price trend to develop and later to buy or sell depending on whether the price is close to the SuperTrend Support Line or SuperTrend Resistance Line.

Q7. According to your view what Stoploss you will suggest?

7.In the first place, I would review the Supertrend chart and the history of its Support Line, choosing the last two that have not been affected by a false sell signal.

_{StopLoss in the presence of False Signals . ETH / TRX Chart Taken from Tradingview on March 9th, 2021. Edited by me.}

Then, as we have already learned in the previous classes, I would take my first Support as my StopLoss.

_{Another case of StopLoss . SBD/ USD Chart Taken from Tradingview on March 9th, 2021. Edited by me.}

Conclusion

I must say that I understand now why this indicator is so popular as it is very friendly for people who are just starting out. It is a very good tool for learning about market trends, as it clearly and precisely describes the distinction between bullish and bearish trends. In fact, it shows signs that are very easy to read and interpret.

In addition to this, the indicator shows us a well-marked and stable line of Support and Resistance, which are basic concepts and very useful for all kinds of operations.

In general, Supertrend helps to make good trading decisions, however it can generate false signals, but less frequently than many other indicators if you set its parameters correctly.

On the other hand, according to what I have investigated, it has a disadvantage: the Supertrend indicator is not appropriate for all situations, since it works ONLY when the market is trending. Therefore, it is better to use it for short-term analysis.