How to find the perfect SuperTrend Settings

The SuperTrend trading indicator is a dynamic tool that can be used in conjunction with all time frames and market conditions. This blog post will provide an overview of the indicator and how to set up your settings for optimal performance.

If you want a deeper understanding of the SuperTrend indicator, I suggest reading our article which covers every aspect: All About SuperTrend Indicator – Free Tutorial 2021 Updated.

This article explains how to find the best SuperTrend settings using graphical analysis or an automated technique to look for the finest answer for you, as well as some real-world examples.

How to find the perfect supertrend settings using backtest
You will learn how to use a free Expert Advisor to select the best SuperTrend setting through a simple backtest.
How to find the perfect supertrend settings using graphical analysis
You will also learn how to optimize the SuperTrend through simple graphical analysis, modifying the multiplier.

Before you can change the indicator settings, you must first understand what they represent and how they influence the SuperTrend. Changing your technical indicator’s settings at random and without regard to logic may render it completely useless. Unless you have a compelling reason to modify them, use your technical indicator with its default settings.

Let’s begin by noting that the 10-period SuperTrend with a multiplier of 3 performs extremely well on numerous securities in many timeframes. These SuperTrend settings are ideal for intraday and multiday trading, respectively; you may also successfully utilize the indicator with a wide range of financial instruments.

However, if we wish to make TS more efficient, we may modify the settings to reflect present market conditions.

Which setting to change?

The SuperTrend indicator has only two input options: a multiplier of 3 and 10, which is the period. The period isn’t particularly crucial; while altering the multiplier, you should expect significant changes in the indicator’s behavior.

So you can only focus on the multiplier and find settings that are more suitable for the instrument and the time frame you are using.

Insider tips: Moving too far away from the multiplier standard settings with a value of 3 completely transforms the SuperTrend indicator’s purpose.

The SuperTrend with a multiplier of 1 or 6 makes no sense; we can certainly abandon the strategy and seek another one if the indicator works in the backtest with a value of 6.

Then, I recommend that you fine-tune the multiplier setting to ensure it isn’t distorted, so you’ll only test values that approach 3. Extreme settings are great for showing how it behaves with large values, and I’ll show you some examples later, but it must be used as a statistical analysis rather than as an input.

At this point, I will show you some tips to quickly find the best SuperTrend setting with some real examples.

Multiplier Setting and SuperTrend false Signals

When we change the multiplier setting, we may either raise or lower the total number of signals as the first result. The accuracy of the other SuperTrend’s signals improves as the number of signals decreases.

We’ll illustrate this by drawing a chart with two different multipliers on it. Look at the chart below, which contains two distinct STs and their respective multipliers of 1 to 5.

Perfect supertrend settings with different multiplier

As you can see, the SuperTrend with a multiplier of 5 avoids price movement and changes the trend indication only rarely when compared to the settings with multipliers of 1 and 2. This naturally translates into fewer false signals, but it also means that trades are reduced.

So, if your Super Trend generates too many false signals, the first thing to do is increase its multiplier.

Period Setting and SuperTrend Signals

Changing the SuperTrend period has a smaller impact than the multiplier. We’ll provide you with a graph to demonstrate our point, as usual. We set two SuperTrends on this chart: one with a multiplier of 3 and a period of 10 periods, and another with a multiplier of 3 and a period of 100 periods.

Perfect supertrend settings with different period

The two lines are generally superimposed, but the SuperTrends appear identical yet have significant differences in value.

So in choosing the settings, we would focus exclusively on changing the multiplier.

Backtesting to find the best SuperTrend Settings

The best way to choose the settings of an indicator is to perform a backtest.

With a backtest, we can find the best settings; you only need to create a straightforward trading system that stops & reverses the trading signals.

When analyzing the backtest, you don’t have to take the total profit because the system is obviously not optimized.

The first thing to consider is the number of trades to understand if the number of signals is sufficient for your purpose.

Also, you will need to pay attention to the trade and the percentage of profitability

Let’s try to do a backtest with MetaTrader on UsdCad.

As we saw earlier, the SuperTrend has a multiplier as its fundamental parameter.

I would do a backtest going to analyze the multiplier from 1 to 5 with step 0.5.

As for the period, personally, I would leave the default one.

How to choose the Backtest period.

When we run a backtest, the first thing we have to decide is which period to test.

We show you some ideas based on the timeframe you need to use with your SuperTrend, but they are all modifiable choices:

  • 15 minutes: go back 1 month
  • 60 minutes: go back 3 months 
  • Daily: go back 3 years

How to find the perfect SuperTrend Settings with MetaTrader using Backtests

First of all, download this free expert advisor from the MetaTrader’s market: Click here

Click on the link “Free Download (MT4) and the and the ST will be automatically installed on your MetaTrader.

SuperTrend Backtest to find settings with metatrader

We’ve prepared a file with the SuperTrend settings and a basic back-tester with stop & reverse to help you out. Remember to download and utilize these settings, since the expert advisor we advised you to download has switched on trailing stop and other essential features for this test.

Click here to download the SuperTrend Settings for MT4 backtest.

how to perform a backtest with metatrader to find supertrend settings

Follow these steps to backtesting:

  • Click on “Strategy Tester” or Ctrl + R
  • Select the PZ SuperTrend EA
  • In “Expert Properties” flag on “Multiplier”
  • Insert these values: Start = 2.0 – Step = 0.1 – Stop = 4 
  • Start the backtest 
  • Analyze the backtest in “Optimization Results” tab
how to perform a backtest with metatrader to find supertrend settings

As you can see, results with a multiplier of less than 3 had a negative result and are not displayed.

As the multiplier increases, the profit factor increases, and the trades decrease.

In our example, the SuperTrend with 3.9 multipliers generated 33% fewer trades with a 50% increase in the profit factor than the standard multiplier setting 3.

We could think of using this setting because we consider the number of trades and the profit factor acceptable.

As you can see, using the SuperTrend with the classic settings, the system was struggling to break even.

Remember that we will not use this setting to open and close positions following the backtest strategy.

We have identified a profitable setting to use the SuperTrend on this instrument in this timeframe.

Once the Multiplier is set, we will use the SuperTrend in a complete strategy, knowing that the most critical setting is correct.

You can also decide to use the SuperTrend as a trend filter, knowing that the multiplier setting is better than the standard one.

Discover the perfect SuperTrend Settings by observing the chart

We like to make life easier for traders, so we’ll show you a system to correctly set the SuperTrend only using your eyes.

I will show you a simple way to choose the best SuperTrend settings.

Keep in mind that the principal goal we would like to achieve is limiting false buy and sell signals.

To limit false signals, we need to study the SuperTrend color changes visually. Take note that ST turns either green or turns red when the trend is changing.

For example, to analyze EurUsd, we apply 5 SuperTrend indicators to a stock chart showing historical closing prices.

After we change the five SuperTrends settings, increasing and decreasing the multiplier value.

Graphically we have this output:

SuperTrend setting different multiplier for stock analysis

Now we’ll search the best-performed SuperTrend settings of the last 3 months in a daily chart.

We can eliminate these settings:

supertrend setting eliminate false signals

Now we can examine the chart with only 3 ST settings and find another set with many false signals:

supertrend graphical analysis discover false signal and settings

The best performer is the ST settings with 3.5 and 4 multiplier inputs.

How to change multiplier to find best supertrend settings

We can use these settings until the volatility changes.

SuperTrend settings for trend follower trading systems

When you use the SuperTrend in a trend follower strategy, you will want to ride the trend for as long as possible.

The basic rule is that in a trend follower strategy, the more you increase the SuperTrend’s multiplier, the more you will reduce the number of signals.

The lower the SuperTrend’s multiplier the greater the false signals.

In the past few years, the markets have changed. Trend follower strategies failed to work with many financial instruments (for example, with currencies like EURUSD).

In the past few years, the markets have changed. Trend follower strategies like the SuperTrend failed to work with many financial instruments (for example, with currencies like EURUSD).

It is difficult to find financial instruments that perform really well with the SuperTrend used alone, regardless of the setting. 

Generally, we prefer to use mean reversion strategy systems that work well in modern financial markets.

Remember that trend follower strategy generally doesn’t do well with mature markets like the Large Capitalization Stocks of the S&P 500. 

When there is a large amount of “smart money” and volume, the financial instrument usually exhibits mean-reverting characteristics.

There are many stocks in the Nasdaq or other financial instruments like commodities traded with the SuperTrend indicator. 

Conclusions

I showed you how to use the SuperTrend settings and graph it properly. 

I like to use this system because is straightforward and very simple. 

We could also use more advanced tools like TradeStation or MultiCharts Backtestingsoftware to find the best performer settings.

Finally, we prefer to use the SuperTrend trading strategy with longer-term time frames (Daily, Weekly, and Monthly). 

In this way, we can limit many false signals.

SuperTrend Indicator Formula: Link

Q&A

What is a SuperTrend indicator in trading, and how is it used?

The ST turns green and the buys signal is generated.

The ST turns red and the sell signal is generated.

What is the Supertrend indicator, and how is it used?

In this tutorial, we are talking about Super Trend indicator: Link

How to use the Supertrend indicator for intra-day trading?

You can use the ST for intraday trading with a 15 minute or 60-minute chart. However, we like the higher time frame for our automated trading systems.

Does a Supertrend indicator work?

Yes, it’s a fantastic technical analysis indicator for the trend follower trading system.

Which is the best combination of indicators for swing trading?

SuperTrend and RSI is the best combination of indicator for swing trading, in our view.

Is SuperTrend an indicator best for crude oil trading?

You can easily use the ST for the crude oil trading system when the crude oil is trending.

SuperTrend is the best technical indicator to trade in the stock market?

You can use the ST with a stock screener on many trading platforms to check the trend direction.

Also, you can use this indicator for trailing stop loss using the ATR. It’s a fantastic tool for this task.

Who is Olivier Seban?

Olivier Seban is the SuperTrend indicator developer.

He is a French writer author of the bestseller “Tout le monde mérite d ‘être riche”. This is a post about him.

Do you never use a Multi Time Frame SuperTrend Indicator?

Yes, we developed a MultiTimeFrame SuperTrend Indicator to try to minimize any false signal. You can find the tutorial here.

SuperTrend in Traderpedia