Trend / Other

Learning Objectives

• Understand Supertrend as an ATR‑based trend line derived from HL2 and volatility.
• Know PSAR at a high level and how it behaves in trends vs ranges.
• Apply these lines with MA/price baselines using closed‑bar cross rules.

Supertrend

• Definition: Volatility‑based trend line using ATR and HL2.
• Inputs: high, low, close
• Factors: length (int, ATR window), multiplier (float), optional offset
• Note: In this app, length is clamped to ≤ 150 for stability.
• Behavior: Larger multiplier widens bands → fewer flips; smaller → more responsive but choppier.
• Use: Often used as the second_band (trend) vs a fast MA as first_band.

{ "type": "supertrend", "factors": { "length": 10, "multiplier": 3.0, "offset": 0 } }

Supertrend constructs upper and lower bands around a midprice (HL2) using a multiple of the average true range. The active trend line flips sides when price closes beyond the opposing band and remains on that side until an opposing flip condition occurs. Larger multiplier values reduce churn and favor persistent trends.

Presets & tuning

• Supertrend(10–14, 2.5–3.5) works well on 1m–5m. Increase multiplier in chop.
• Supertrend(7–10, 3.0) for 15m; (10–14, 2.5–3.0) for 1h.
• PSAR: Use as a confirming band; pair with EMA or HL2 for direction crosses.
• Offset: Keep 0. Non‑zero offset is not recommended for these trend lines.

PSAR — Parabolic SAR

• Definition: Stop‑and‑reverse trend marker (see Parabolic SAR).
• Inputs: high, low, close
• Factors: Not consumed by this app (PSAR runs with library defaults). Any af, af0, max_af present in Factors are ignored.
• Behavior: Works well in persistent trends; can flip frequently in chop.
• Use: As a confirmation or trailing component; in this app it’s a single line used for crosses like any band.

{ "type": "psar", "factors": { } }

Parabolic SAR estimates a trailing stop that accelerates with trend continuation. It plots above price in downtrends and below price in uptrends. While useful for trailing and confirmation, PSAR can flip frequently in sideways markets; pairing it with a baseline reduces false signals.

Signals & Execution

As with other categories, signals are based on the closed‑bar cross of two bands (e.g., Supertrend vs EMA), with orders executed at the next bar’s open. Increasing multiplier or using a slower companion baseline reduces flips in noisy markets.

Common Pitfalls

• Using small length or low multiplier values that cause frequent flips in chop.
• Using forming bars; always wait for closed candles.
• Applying offsets; keep offset at 0 for parity and to avoid look‑ahead.

References

• Parabolic SAR
• Average true range (ATR)