Supertrend Indicator: How to Use it to Trade Binary Options

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If you are looking for an easy-to-use trend-following indicator with some added features, look no further than SuperTrend. This indicator is plotted on prices and its placement indicates the current trend.

But picking trends isn’t the only use the Supertrend indicator has, you can also use it as either a support or resistance level.

In this post, I will not only teach you how the Supertrend indicator works but also how it can be used for profitable trading in binary options.

So, if you are a binary options trader and you were wondering how to trade the options market with minimal losses, then this is the post for you.

How does the Supertrend work?

When plotted on the charts, the Supertrend indicator will look just like a moving average. Except, it will keep changing color from red to green depending on if the market is trading high or low.

If the price is trading high, then the Supertrend indicator will show a green color which indicates that the asset traded is in an uptrend.

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Conversely, if the market starts trading low, then the Supertrend indicator will change to a red color which indicates a downtrend.

Supertrend indicator settings

Supertrend indicator

The super trend is based on the ATR indicator hence there are two parameters that affect the indicator.

  1. ATR period
  2. ATR multiplier

By default, the ATR period is set to 10 and if you just add the SuperTrend indicator to your chart without changing a thing, it will be plotted with period 10.

The ATR multiplier on the other hand is set to 3 by default and that’s the setting you will get if you do not change a thing on the indicator.

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If you ask me, these settings are good enough for trading but hey, you can always play around with the settings to find a Supertrend strategy that suits your style.

Some of the most common Supertrend settings include: –

  1. Supertrend 7, 3 – where 7 is the ATR period and 3 is the multiplier period
  2. Supertrend 14, 2 – where 14 is the ATR period and 2 is the multiplier period
  3. And Supertrend 10, 4 – where 10 is the ATR period and 4 is the multiplier period

How to Trade With SuperTrend

Trading with SupterTrend is super easy that even a beginner who has read this post to the end can just hop to a chart and use this information to trade.

When the Supertrend is green and the price is above it, hold on to your UP trades because ‘GREEN” means that the uptrend is intact.

On the flip side, you should hold a short position or continue trading down in binary options if the super trend indicator is red and the price continues to trade below it.

You will almost always notice an instant change in the color of the super trend when the price crosses the indicator from top to bottom or from bottom to top.

Supertrend cross and color changes also indicate trend changes. So if the trend was upward and the price crosses the indicator to the bottom, be ready for a downtrend.

In theory, you should “BUY” when the indicator turns green and “SELL” when the indicator turns “RED”.

Supertrend indicator

What is the best time frame for Supertrend?

The best time frame to trade binary options is usually daily. This is because binary options platforms only allow a maximum of 23 hours per trade.

If you are trading in Quotex, Olymp Trade, or Expert Option, try to use either of these timeframes when using Supertrends: –

1). Use 15 minutes timeframe when trading with Suprtrend

2). Use 5 minutes time frame when trading on a 15 minutes duration

3). 1-hour time frame is also ideal when using Supertrend to trade.

How does Supertrend prevent false signals?

If you want to profit from binary options with the Supertrend indicator then you must learn to set it to only give reliable signals.

But how do you set Supertrend to prevent false signals? Simple.

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All you have to do is set both the ATR period and ATR multiplier on Supertrend to smaller periods. For example, instead of using the standard periods of 10 and 3, you can change to Supertrend(5,1.5).

To further increase your chances of winning, add the RSI to your chart and set it to period 7.

Supertrend indicator

How do you trade a 15 minute chart?

Now that we have looked at how to use the Supertrend indicator and RSI to reduce false signals, let’s now look at how to trade with the Supertrend indicator in a 15 minutes time frame.

If you are trading with Quotex, follow this guide to place successful trades within a 15 minutes timeframe.

Getting started.

If you don’t have an account in Quotex, create one here. Otherwise, just log in to your account and follow these steps to begin trading.

Step #1: Add Supertrend to your chart.

You can add Supertrend by clicking the indicator tab at the bottom left corner of the platform and search to find Supertrend under indicators.

Supertrend indicator

Step #2: Change Supertrend Settings to Period 5 and 1.5

Click on the editor button as shown in the image above with number (3) to be able to change the settings.

You can also change the weight of the upper and lower moving averages making Supertrend under settings.

Step #3: Set Trading Timeframe to 15 Minutes.

The button for changing time frames in Quotex is slightly above the indicator tab.

Click on it and choose 15 minutes time frame to get the most of this strategy.

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Step #4: Add The RSI to Your Chart

Since the SuperTrens is our main indicator, the RSI will mainly be used to confirm the signals.

The RSI doesn’t just help you confirm trend reversal signals issued by Supertrend, it also helps you confirm trend continuation.

If the RSI is below the 30 levels, that’s an oversold condition and you should expect the downtrend to reverse. If the RSI is above the 70 levels, that’s an overbought condition and you should expect an uptrend to reverse.

Trading with the Supertrend and RSI signals.

Again, a green moving average on Supertrend signals an uptrend, and a red moving average on Supertrend signals a downtrend.

To trade Up on any binary options trading platform, these two conditions must be met: –

  1. The Supertrend indicator has to be GREEN and price must be at the top.
  2. The RSI must have crossed the 30 levels from below to the top

Conversely, you should trade DOWN on any binary options platform if: –

  1. The Supertrend indicator is RED and price is at the bottom.
  2. The RSI must have crossed the 70 levels from top to bottom signaling a trend reversal.

Supertrend indicator in Quotex

Can Supertrend be used on a 1 minute chart?

Yes, SuperTrend can be used on a 1-minute chart. But, you must also change the ATR to periods 5 and 1.5 respectively for even more accurate signals.

About the trading duration, feel free to use any trading time from 2 minutes to 5 minutes depending on how patient you can be.

Conclusion.

The Supertrend indicator is a reliable indicator for picking reliable signals. You can use it both for scalping and day trading; for Forex and for binary options. Whichever platform you chose to use it on, be sure to use the signals outlined in this post.

Happy trading.

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