Supertrend is a popular tool of the technical analysis used by binary options traders. Its simplicity, intuitiveness and efficiency make it in demand among both beginners and experienced market participants.
Despite the fact that this Expert Advisor is not found in all trading terminals, it has already managed to earn a good reputation in the market of digital contracts. However, searching for this tool will not be a problem for those who trade with the Pocket Option broker. After all, the indicator is already pre-installed in the trading platform of the company.
How to set up the Supertrend?
To begin with, this indicator literally follows the trend and helps to determine its direction. It is located on the chart as a solid line that changes its position and color depending on the current price fluctuations. The main task of Supertrend is to indicate to the trader what mood prevails among most market participants. Obviously, trading behavior and expectations often determines the trend.
The indicator is based on the use of two key parameters:
- ATR – Average True Range, which measures market volatility.
- Multiplier Ratio – a customizable parameter that determines the sensitivity of the indicator.
These two elements together allow you to simultaneously take into account both price movements and volatility, which makes it a universal tool for analyzing trends.
Accordingly, before starting to trade, the user needs to configure both above-mentioned parameters. The developers of the indicator offer the following basic values:
- ATR period: Typically set between 10 and 14 for medium volatility.
- Multiplier: It is recommended to use a value between 2 and 3 for an optimal balance between sensitivity and stability.
At the same time, experimenting with the parameters allows you to adapt Supertrend to individual trading strategies and peculiarities of a particular asset. For example, for short-term trends, it is better to use the minimum period and multiplier.
Regarding assets, it is better to choose one of the volatile instruments with a clear trend movement. Otherwise, the signals from the Expert Advisor will be weak and may lead to unforeseen losses.
How to trade with the Supertrend?
In fact, working with this indicator does not present any problems. You will not have to compare a complex of signals or look for complex crossovers.
The whole essence comes down to the color of the Expert Advisor and the location of the price relative to its line.
The CALL option is done when the price breaks the Supertrend line from bottom to top, confirming the beginning of the uptrend, and the color of the moving changes to green.
The PUT option is done, when the price breaks the Supertrend line from top to bottom, confirming the beginning of the downtrend, and the color of the moving changes to red.
It is recommended to set the expiration to two periods.
In general, the Supertrend indicator is a useful tool for binary options trading. It helps traders to identify trends and make informed decisions. However, successful use of the indicator requires competent analysis and compliance with the rules of risk management. After all, any indicator is not a guarantee of profit, but a part of a complex trading strategy, which should be tested and adapted to market conditions.
