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Trend following
What is a SuperTrend flip tracking?
SuperTrend
What it bets
While the close stays on the same side of the ATR band, the trend is still on. A close on the other side negates it.
How the rule is written
A band sits beside price, pushed out by ATR. When the close steps to the other side of the band, long and short flip, and the stop idea flips with them. A larger multiple means fewer flips and a later exit.
When it fails
In a sideways market the close punches through the band again and again. Too small a multiple, and the flips become noise.
Do not confuse it with
A Keltner channel keeps an upper band and a lower band at the same time, and the entry is the breakout. SuperTrend usually lights only one side, and it defines a break of that side as a reverse. Parabolic SAR dots accelerate as they tighten. SuperTrend's distance mainly follows volatility.