Understanding the Supertrend Indicator and Why MT5 Traders Rely on It
Supertrend indicators are straightforward tools designed to help traders identify price trends and generate trade signals. They can be applied across any market and timeframe, making them versatile for MT5 users who value quick and clear insights.
The indicator uses a single line that changes color based on price movement: green signals an uptrend, while red indicates a downtrend.
Supertrend indicators are suitable for trading forex, stocks, crypto, and more. They work well for day traders, swing traders, and even longer-term strategies. For traders seeking a reliable platform, Dominion Markets is an excellent choice, offering tight spreads and high leverage—perfect for trend-following approaches like the Supertrend.
Let’s explore how the Supertrend works and why MT5 traders continue to rely on it.
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What is the Supertrend Indicator
The Supertrend indicator is built on two key components:
- Average True Range (ATR): Measures market volatility
- Multiplier: Determines how closely the line follows price
Combined, these elements create a dynamic line that responds to price trends. When the price crosses this line, its color changes, giving a clear trading signal:
- Green line = Buy signal
- Red line = Sell signal
This makes the Supertrend simple and intuitive. You don’t need to analyze complex charts or multiple indicators. The line updates in real time and visually reflects the current trend, keeping your chart clean and helping you focus on making informed trading decisions.
Supertrend vs. Moving Average
Supertrend vs. Moving Average
Many traders confuse the Supertrend indicator with moving averages since both track price trends—but they work quite differently.
Moving averages calculate the average price over a set number of bars. They smooth out price fluctuations but respond slowly to sudden market moves and don’t account for volatility.
Supertrend indicators, on the other hand, react faster. They incorporate price range and volatility using the ATR, allowing the line to shift quickly when the market changes direction.
This responsiveness is especially useful in fast-moving markets. For day traders or scalpers, early signals can make a big difference—you want to catch the trend near the start, not halfway through.
For instance, if EUR/USD rises above the Supertrend line, the line turns green—a buy signal. If the price falls below it, the line switches red, signaling a potential sell. This happens quicker than waiting for a moving average crossover.
Why MT5 Traders Rely on Supertrend Indicators
MT5 is a flexible trading platform with many built-in tools, yet many traders prefer to add Supertrend indicators for several reasons:
- Easy to Read
The color-coded line is simple: green for uptrend, red for downtrend. You can instantly recognize the market direction without complex analysis. - Fast Signals
The line changes color as soon as price crosses it, providing quick buy or sell signals. You don’t need to wait for multiple candles to confirm, which is crucial in rapid markets. - Customizable Settings
Adjust the ATR period or multiplier to suit your style—lower values generate more signals, higher values provide fewer but more stable signals. - Versatile Across Markets
Supertrend works on any asset—forex, stocks, crypto, indices—making it a consistent tool across all MT5 charts. - Clear, No Guesswork
The color shift itself is your signal. Green means consider buying; red means consider selling or exiting. This straightforward approach reduces hesitation and avoids confusion.
How to Add the Supertrend Indicator in MT5
How to Add the Supertrend Indicator in MT5
Adding a Supertrend indicator to MT5 is quick and easy. Just follow these steps:
- Open your MT5 platform.
- Navigate to the chart of the asset you want to trade.
- Click on ‘Insert’ in the top menu.
- Select ‘Indicators’ > ‘Custom’.
- Find and select ‘Supertrend’ from the list.
- Set your preferred ATR period and multiplier.
- Click OK, and the indicator will appear on your chart.
For more tools like this, see our article on top MT5 indicators, which lists other useful tools that complement the Supertrend indicator.
How the Supertrend Indicator Works
The Supertrend line is based on simple calculations:
- Upper Line = Median Price + (ATR × Multiplier)
- Lower Line = Median Price – (ATR × Multiplier)
- Median Price = (High + Low) ÷ 2
Only one line is visible at a time:
- When prices are rising, the lower line is displayed.
- When prices fall, the indicator switches to the upper line.
The line’s movement is restricted to maintain trend clarity:
- The lower line cannot move downward.
- The upper line cannot move upward.
This prevents the indicator from constantly shifting during minor price fluctuations, so you only see a trend change when there’s clear market momentum. It reduces noise and helps you focus on stronger trading signals.
For more guidance on technical tools, check out our article on best forex indicators, which highlights top options that work well alongside Supertrend to improve your strategy.
Next: Supertrend Example in Trading Currency Pairs
Supertrend Example in Trading Currency Pairs
Let’s take EUR/USD as an example. Suppose it’s trending upward, trading at 1.0850, with a high of 1.0900 and a low of 1.0800, giving a median price of 1.0850.
Assume the ATR is 0.0020 and the multiplier is 3.
Lower Supertrend = 1.0850 – (0.0020 × 3) = 1.0790
Since EUR/USD is above 1.0790, the trend is up, and the Supertrend line is green.
Now imagine the price drops to 1.0730, with a median of 1.0750.
Lower Supertrend = 1.0750 – (0.0020 × 3) = 1.0690
However, the lower line cannot move downward, so it remains at 1.0790. Since the current price is now below this line, the indicator flips red.
Upper Supertrend = 1.0750 + (0.0020 × 3) = 1.0810
The trend is now down, signaling a potential sell.
For traders in pairs like EUR/USD or GBP/JPY, acting quickly on these trend signals is crucial. A reliable platform like Dominion Markets offers tight spreads, high leverage, and fast execution—perfect for trend-based strategies. It also supports additional chart tools, such as support and resistance indicators, to help refine entry and exit points around key levels.
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-Lesser Risk as lot size is minimal
-Higher returns (approx. 5% to 10% monthly)
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-Instant Support
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*Copy Trading is free but we charge some percentage of profit as fees.*
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How to Trade with Supertrend Indicators
Fibonacci Retracement and Supertrend Strategy
Step-by-Step Guide:
- Add the Supertrend indicator to your MT5 chart.
- Wait for the line to change color:
- Green = Buy
- Red = Sell
- Use confirmation tools like RSI, Stochastic, or ADX to validate the trend.
- Set a stop-loss to manage risk.
- Exit the trade when the Supertrend flips again.
This approach works on any timeframe: use 1–15 minute charts for short-term trades, and 1-hour to daily charts for swing trades.
Optimal Supertrend Settings
Default settings:
- ATR Period: 10
- Multiplier: 3
These are effective across most markets.
- For more signals, lower the values.
- For fewer, stronger signals, increase them.
Experiment to find what best fits your strategy.
Should You Use Supertrend Alone?
Supertrend works well in trending markets but can generate false signals during sideways price action. That’s why traders often pair it with other tools:
| Tool | Purpose |
|---|---|
| RSI | Confirms market momentum |
| Stochastic | Identifies overbought or oversold conditions |
| ADX | Measures trend strength |
| Parabolic SAR | Provides backup trend signals |
| Candlestick Patterns | Confirms reversals |
Even using one of these alongside Supertrend can filter out poor signals.
Reliability of Supertrend
Supertrend indicators excel in trending markets, giving clear entry and exit points. While they won’t catch every peak or bottom, they help you ride the majority of a trend. In sideways markets, confirmation tools are essential.
Beginners love Supertrend because it’s:
- Simple to read
- Quick to act on
- Minimal setup required
- Provides built-in alerts
Even new MT5 users can learn fast by starting with Supertrend, but basic platform knowledge is still recommended.
Final Thoughts
Supertrend indicators are favored by MT5 traders for their simplicity and effectiveness. They don’t predict everything, but they clearly highlight trends.
Used correctly—with complementary tools and solid risk management—they can significantly improve trading decisions.
Why Choose Dominion Markets
Dominion Markets is ideal for traders relying on Supertrend indicators. It offers:
- Tight spreads
- Fast execution
- High leverage
These features provide the speed and cost-efficiency needed for short-term trend strategies on forex majors or minors, supporting precise, real-time trading decisions.
Start Your Trading Journey Today
Get high-accuracy trading signals delivered directly to your Telegram. Subscribe to specialized packages tailored for the world’s top markets:
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Free Forex Signals Subscribe via Telegram
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Open Account
Not profitable? Don’t worry! Join our copy trading system where we provide lower risk returns. Benefits of Joining Us:
-Lesser Risk as lot size is minimal
-Higher returns (approx. 5% to 10% monthly)
-Easy Deposit and Withdrawal with USDT using crypto wallets
-Lesser Drawdown
-Instant Support
-Invest Now and get guaranteed returns with us. DM us for more info❤️
-Start Now
*Copy Trading is free but we charge some percentage of profit as fees.*
Full VIP signals performance report for September 22–26, 2025:
