SuperTrend indicator: how it works and how it is calculated

SuperTrend explained — the ATR band calculation, the two-box reversal rule most implementations get wrong, and how to read the flip on a live crypto chart.

SuperTrend is free on Basis — the button opens a live crypto chart with it already applied. No account, no trial and no limit on how many indicators you add.

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What it measures

SuperTrend draws a single line that sits below price in an uptrend and above it in a downtrend, flipping sides only when price closes through the active band. It is a trend-following stop, not a forecast: it tells you which side of the market you are currently on and where that reading would be invalidated.

Because the band is derived from Average True Range, it widens in volatile conditions and tightens in quiet ones, so the same settings behave differently on a calm range and a violent expansion without being re-tuned.

How it is calculated

These are the steps Basis performs, verified against the published definition.

1
Compute ATR over the chosen period using Wilder’s smoothing.
2
For each bar, take the midpoint of the high and low, then form a raw upper band at midpoint + multiplier × ATR and a raw lower band at midpoint − multiplier × ATR.
3
Ratchet the bands toward price: keep the previous upper band unless the raw band is tighter or the previous close broke above it, and keep the previous lower band unless the raw band is tighter or the previous close broke below it.
4
Flip the direction to up when the close crosses above the active upper band, and to down when it crosses below the active lower band.
5
Plot the lower band while the direction is up, and the upper band while it is down.

Settings

Setting	Default	Range
ATR Length	10	1 – 500
Multiplier	3	0.1 – 20

The default period of 10 with a multiplier of 3 is a swing-trading setting. Lower the multiplier to react sooner and accept more flips; raise it to sit through pullbacks and accept a later exit. Changing the ATR period changes how quickly the band adapts to a volatility change, which matters far more on crypto than on equities.

How to read it

The line is a trailing invalidation level, not an entry signal. Price closing through it is the event; price touching it is not.
A flip after a long run is a change of regime. A flip after two or three bars is usually noise the settings were too tight to absorb.
The distance between price and the line is a rough measure of how extended the move is, in ATR terms.
On a range-bound market SuperTrend will flip repeatedly and lose money on every flip. That is the indicator working correctly on the wrong market.

Where it misleads

The ratchet is where implementations go wrong, and the failure is invisible: a broken SuperTrend still draws a plausible line and still produces sensible-looking numbers. The rule is that a band may only move *toward* price unless the previous close broke through it, at which point it resets. An implementation that takes a maximum on the upper band instead of a minimum widens it away from price and produces an indicator that almost never flips. Basis shipped exactly that bug, and it survived more than a thousand automated checks because every one of them asked whether the output was finite and correctly shaped rather than whether it was right. Measured against the published definition it agreed on barely half of all bars and made six direction changes across ten years of daily data where the correct calculation makes seventy-six. It is now verified bar-for-bar against an independent implementation.

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Average True Range ADX / DMI Parabolic SAR

Updated 2026-08-22 · Educational reference, not financial advice.