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Supertrend as a trailing stop instead of an entry signal

I used to use Supertrend as an entry signal and I wasn't happy. It flips late, it whipsaws in ranges, and it gets you in after much of the move. Then I tried using it only to manage trades I'd already entered, and it works much better for me.

My entries come from price action. Once I'm in a trade that's working, I use the Supertrend line on M5 as a guide for a trailing stop. As long as price stays on the right side of the line, I stay in. When it closes on the wrong side, I exit. It takes away the guesswork about when to move the stop.

I don't move the stop on every tick, only when a candle closes. That prevents me from being taken out by a brief spike. And I make sure the line isn't so far away that the stop would be bigger than the original risk. If that's the case, I use structure instead.

It doesn't suit every trade. For quick scalps with a fixed target I just use the target. This is for the ones where I want to let the winners run a bit in a trending session.

The settings I use are the common ten period ATR with a multiplier of three on M5. I tried tighter multipliers to lock in more profit, but the line got too close and kept taking me out on normal pullbacks. A wider setting gives the trade room to breathe in a trending session. It does mean I give back more when the trend ends, but the winners that run make up for that in my experience. Test a few values on your own pair before settling on one.

One thing to watch is the first few candles after entry. Supertrend sometimes flips right as you enter, so the line ends up on the wrong side straight away. I do not use it for those first candles. The initial stop stays at my original price action level until the trade has moved far enough that the Supertrend line is on the correct side and closer than my original stop. Only then do I switch to trailing with it. That way it only ever tightens the risk, never widens it.