Supertrend indicator: formula, best settings for NIFTY and how to read it
What is the Supertrend indicator?
The Supertrend indicator is a trend-following line drawn on the price chart. When it sits below price and is usually coloured green, the trend reading is up. When it sits above price and is red, the trend reading is down. When price closes through the line, it flips to the other side.
It is one of the most-searched indicators among Indian traders because it is simple to read on NIFTY and BANKNIFTY charts. Under the hood it is a volatility stop: it uses the Average True Range (ATR) to keep a buffer between price and the line, so normal wiggles do not flip it.
Basic lower band = (High + Low) ÷ 2 − Multiplier × ATR(N)
Supertrend = lower band while close stays above it (up-trend), upper band while close stays below it (down-trend) (common 10, 3)
How the Supertrend formula works
The calculation has three steps.
1. A middle price
Each candle's midpoint, (high + low) ÷ 2, is the base.
2. Two ATR bands
Add multiplier × ATR to get the upper band and subtract it to get the lower band. With the common setting 10, 3, that is 3 × the 10-period ATR.
3. The ratchet
This is what makes Supertrend special. In an up-trend the lower band can only move up or stay flat; it never moves down. In a down-trend the upper band can only move down or stay flat. The line therefore trails price like a staircase until a close crosses it, and then the trend reading flips.
Illustration
NIFTY 5-minute midpoint is 24,200 and ATR(10) is 18 points. With multiplier 3, the lower band is 24,200 − 54 = 24,146. If the next candles rise, the band follows them up; if a candle closes below the current band, Supertrend flips to red and plots above price.
How to read Supertrend
- Colour and position: line below price means up-trend reading; above price means down-trend reading.
- Flat line: when the line stays flat for many candles, price is pulling back but has not broken the trailing level.
- Distance from price: a large gap means price has extended far from its volatility stop; a pullback toward the line is common.
- Flip: a close across the line. It confirms a change only after the move has already happened, so Supertrend always lags.
Treat the line as a trailing reference, not a forecast. It tells you where the current trend reading would be cancelled.
Best Supertrend settings for NIFTY 5-minute
| Setting | Behaviour | Typical use |
|---|---|---|
| 10, 3 | Default. Balanced, fewer flips | 5- and 15-minute NIFTY |
| 7, 3 | Slightly quicker ATR | 5-minute BANKNIFTY, faster swings |
| 10, 2 | Tighter band, more flips | Scalping, needs a filter |
| 10, 4 or 14, 3 | Wider, slower | Holding trends, positional |
A lower multiplier hugs price and catches turns earlier but whipsaws more. A higher multiplier stays with a trend longer but gives back more before it flips. There is no setting that avoids both problems; choose based on whether you value fewer false flips or earlier exits.
Supertrend strategy ideas (educational)
Trend filter
The simplest use: only study long setups while Supertrend is green and short setups while it is red, and let another tool time the entry.
Trailing exit
Use the line as a trailing stop for an existing position. Because it ratchets, it locks in more of a move as the trend extends.
Double Supertrend
Some traders plot a fast (10, 1 or 10, 2) and a slow (10, 3) Supertrend together. When both agree, the trend reading is stronger; when they disagree, the market is often rotating.
Supertrend with VWAP
On intraday charts, many traders pay attention only when Supertrend direction agrees with price being above or below VWAP. This removes many flips that happen while price is chopping around VWAP.
Why Supertrend whipsaws, and how traders filter it
Supertrend works well in trending sessions and poorly in sideways ones. On a range day, NIFTY may cross the line six or eight times, and each flip comes after the move has already reversed.
Filters traders use
- ADX above about 20 to 25 to confirm a trend exists.
- A higher-timeframe Supertrend (15-minute) agreeing with the 5-minute one.
- Ignoring flips inside the opening range or inside a tight narrow CPR day until price leaves it.
- Waiting for a close beyond a key level, not just beyond the line.
Combining Supertrend with volume and footprint
A flip on strong volume is different from a flip on thin volume. If a 5-minute candle closes above a red Supertrend and the footprint shows aggressive buying with positive delta through the level, buyers are genuinely in control. If the flip candle shows weak delta, or heavy selling being absorbed at the high, the flip is more likely to fail.
Watching cumulative delta alongside a green Supertrend is also useful: if price keeps riding the line up while CVD falls, the trend may be running on short covering rather than fresh buying.
Worked NIFTY example (illustration)
Illustration with plausible numbers. NIFTY opens at 24,050 and chops between 24,020 and 24,080 until 10:30. The 5-minute Supertrend (10, 3) flips three times in this period, each time a few points too late.
At 10:40 a candle closes at 24,095 above the range with the highest volume of the morning and the line flips green at 24,048. ADX rises from 16 to 24 over the next half hour. As NIFTY climbs to 24,210 by 13:00 the line steps up behind it to 24,165. A trader using it as a trailing reference would have stayed with the move until a close below that line. Trading F&O carries a high risk of loss, and this shows the indicator's behaviour, not a promised result.
Common Supertrend mistakes
- Acting on every flip during a range day.
- Lowering the multiplier to make flips earlier and then suffering many more false ones.
- Forgetting it lags: the flip comes after the turn.
- Using it without a stop size plan; the line can be far from price after a big candle.
- Optimising settings on a few trending days and expecting them to work every day.
Seeing it on the TradingMarble chart
The TradingMarble chart can plot Supertrend on NIFTY, BANKNIFTY and F&O charts with your own ATR period and multiplier. Because the footprint and VWAP sit on the same chart, you can study whether a flip happened with real participation. See features for details.
Supertrend checklist
- Is the market trending (ADX, higher timeframe) or ranging?
- Does Supertrend agree with VWAP and the 15-minute trend?
- Did the flip candle come with volume and delta?
- How far is the line from price, and is that stop size acceptable?
- What would cancel the idea?
The Supertrend indicator is a clean way to see trend and trail stops, as long as you remember it is built for trends and struggles in ranges.
Frequently asked questions
What is the best Supertrend setting for intraday?
The default 10, 3 is the most widely used Supertrend setting for 5-minute and 15-minute NIFTY charts. Some BANKNIFTY traders use 7, 3 for quicker reaction. Lower multipliers like 2 flip earlier but whipsaw more. Test one setting over many sessions instead of changing it daily.
How is Supertrend calculated?
Supertrend takes each candle's midpoint, (high + low) ÷ 2, and adds or subtracts a multiplier times ATR to make an upper and lower band. In an up-trend the lower band trails price and can only rise; in a down-trend the upper band trails and can only fall. A close across the active band flips the trend reading.
Does Supertrend repaint?
A completed Supertrend value does not repaint, because it uses closed candles. On the live, still-forming candle the line and colour can change until that candle closes. That is why traders usually wait for the candle close before treating a flip as confirmed.
Why does Supertrend give false signals?
Supertrend is a trend-following tool. In sideways markets price keeps crossing the line, causing repeated flips that arrive after each small move has already reversed. Filters such as ADX, VWAP or a higher-timeframe Supertrend help separate trending conditions from ranging ones.
Is Supertrend good for options trading?
Supertrend is applied to the underlying index chart, such as NIFTY or BANKNIFTY, to read trend direction. Option prices also depend on time decay and implied volatility, so a trend reading on the index does not translate directly into option profits. Many traders use it only as a directional context.
What is double Supertrend?
Double Supertrend means plotting two Supertrend lines with different settings, for example 10, 1 and 10, 3. When both lines are on the same side of price, the trend reading is stronger. When they disagree, price is often in a pullback or a range.