Despite simplicity, SuperTrend indicator objectively determines the situation on the market and makes your trading easier. Because it is so reliable, it is recommended as an ideal start for beginning traders who do not yet have a verified trading strategy.
Here is good news: Pocket Option Broker recently added a SuperTrend Indicator to the list of standard instruments for technical analysis. Therefore, even beginning traders can start making money on binary options right by activating simple preliminary settings.
The appearance and formula the SuperTrend Indicator
In the settings, Supertrend indicator displays directly on the price chart. In appearance, it looks like interchanging red and green candles.
You might have guessed that the first line is a resistance line, and the second is a support line.
Each line is calculated as follows:
- ST higher = (higher + lower) / 2 + m * ATR (n)
- ST lower = (higher + lower) / 2 – m * ATR (n)
The variable n indicates the number of ATR periods, and m is the volatility multiplier.
Since everything is automated, you do not need to make calculations of ST indicator: All calculations and construction are performed by the algorithms.
When you trade with ST indicator, you should specify the correct ATR period and multiplier value. By default, the platform has ATR period = 10 and multiplier value = 3, respectively. You can use preset options because they are recommended by experts for medium-term trading. However, if you want to do short- or long-term options, think about changing the pre-set options and adjust your formula.
If you enter smaller numbers for ATR and multiplier, the ST indicator will overreact to price changes, increasing market noise. If you enter higher numbers for ATR and multiplier, it will lead to a delay in signals.
Expert recommendations for ST indicator
We want to share a few basic tips for SuperTrend indicator to help you minimize risks while trading binary options. First of all, it is not recommended to buy contracts based on signals from the indicator when the chart is flat. You should remember that ST indicator is a trending indicator, which works the best during price movement. If you want, you can change the ATR calculation method from the settings. Default method is RMA, when the alternative method is SMA. The indicator is easy to use and gives an accurate reading about an ongoing trend.
Secondly, experts recommend using the timeframes of 30 minutes and above for more reliable signals. As you know such timeframes are not suitable for short-term trading.
And finally, let’s move on to the method of trading electronic contracts based on signals from an indicator. Here, in fact, everything is extremely simple:
- The CALL option must be bought when the line turns green and green the inscription “Higher” appears ;
- The PUT option is bought when the line becomes red and the red inscription “Lower” appears ;
The expiration period must be at least three bars. In other words, if you are trading on the M 30 timeframe, then the contract expiration will be 1.5 hours.
As you can see, even a beginner can apply Supertrend in practice. At the same time, the indicator gives fairly clear signals if you follow all the above recommendations. The average performance is 8 out of 10 profitable trades.
In addition, you can improve your trading efficiency by adhering to money management rules and using Martingale tactics. In fact, experienced traders insure their risks in this way.