Average True Range was developed by J. Welles Wilde is an indicator that was developed for commodities later on it started to use for securities. ATR in an indicator that is used to analyse uncertainty of market price based on historical data.
Average True Range ATR Forex Indicator for MT4:
Average True Range use moving averages to get smooth results based on 14 days data and its basic purpose is to give information about markets past uncertainty. Average True Range is also a member of oscillator family. Average True Range work on single line fluctuating curve.
Stop loss: stop loss or exit trade is way of leaving trade before loss a way to figure out where to stop loss in trade is to multiply the value ATR with 2 to get point for stop loss.
In case of buying place stop loss twice the below the entry level and for sell place stop loss twice above the entry level.
In case of day trade markets moves are usually higher than the past day after that market decline throughout the day. Rest of the day market signals low so trader develop their strategies to understand market moves.
Features of Average True Range indicator for MT4.
- Platform are: Meta Trader 4
- Use charted graph for presentation and use different colour lines.
- Timeframe: few minutes, few hours and days trading
- Currency pairs: any EUR/USD and GBP/JPY etc.
Signs of Average True Range indicator moves.
When the market is at its high uncertainty ATR move up and when uncertainty is low ATR moves down. Bars on graph indicate true range when they are small means small range and ATR will fall and when they are bigger means bigger range and ATR will rise. ATR is not common indicator but when it comes to stop it determines the position of stop so set stop two pipes or 4 pipes to ATR.
To calculate the Average True Range must first find a series of true ranges (TRs).
- Current high (H) minus the previous close.
- Current low minus the previous close.
- Current high minus the current low.
For shorter period signals are strong and for long period signals are weak.
Use of Average True Range indicator for MT4:
If we say main use of True Range indicator is when exit trade. ATR is considered as volatility indicator because it indicates previous high and lows, ATR have direct relation with high and lows of trend.
True Range indicator helps to determine the best position for their trading Stop orders and it was designed to indicate market uncertainty. Traders use ATR to determine market uncertainty higher the uncertainty higher is stop meanwhile, they manage their position in the market.
True Range indicator really does not provide signals about market direction or duration and buy and sell so, it will be better to attach additional indicator.
Average True Range indicator for MT4 major drawback is it’s not capable of finding price direction as its purpose for developing was to find out market volatility for a commodity latter for security.