Forex ATP indicator: a detailed description of where to download, Forex strategies on Average True Range
ATP indicator (ATR stands for average true range) is a technical tool called "Average True Range" that is used to measure the level of volatility (volatility) of a financial instrument. It was originally created for commodity futures, since at that time, commodities and commodities in the US market showed greater volatility than stocks or other assets.
ATR was created by J. Wells Wilder and was first introduced to the general public in a book entitled "New Concepts of Technical Trading Systems" in 1978. Many traders liked the technical tool and today it is actively used in trading on the Forex market, entering the standard set of the MetaTrader4 trading terminal.
ATR is a type of moving average of the asset price maneuvers, which in the standard version is built for a period of 14 days, but the parameters can be changed in accordance with the terms of trade and the chosen strategy.
Features of using a technical tool
ATP indicator is an oscillator that determines the true average range, volatility. The description of the tool is quite simple, as is its use in work. But this does not negate the effectiveness.
The ATR is calculated based on:
- Differences between high and low prices at a particular moment
- Differences between the closing price of the previous level and the current maximum value level
- Differences between the current minimum price and the price of the previous bar closing
Thus, ATR captures the range of changes in the value of an asset for a specific time period. Also, to a certain extent, it determines the rate of change of quotes.
So, if the indicator curve is directed upwards, then they are actively buying at the market, if downward, they are actively selling. If the ATR moves dynamically, then the range of the candles increases.
Extreme ATP values (upper or lower sector of the price chart) can signal a potential trend reversal and can be compared with overbought / oversold zones of any of the oscillators. But keep in mind that Average true range does not show the duration or direction of movement, but only the level of volatility.
In trade, it is worth considering the following signals:
- Low APR - trade is weak and the price moves in a small range
- High level - trading is active, quotes fluctuate in a wide range
- The indicator line is almost straight - perhaps there will soon be a “jerk” in one direction or another
- The higher the indicator, the greater the likelihood of a change in trend (this rule works and vice versa)
Experienced traders are advised to use ATR in combination with various overlays and other technical tools. In this case, it is necessary to take into account the differences in numbers: due to the fact that the ATP indicator calculates based on absolute numbers, depending on the price of the analyzed asset, the values can be different. So, if we take the simplest example with stocks, then for an action of 30 cents the indicator will give one figures, for a stock worth $ 1 - completely different.
Effective work with the indicator
Most often, ATR is installed with standard settings - period 14, it is installed by default. Thanks to the Asia-Pacific, one can not only monitor volatility and make forecasts, but also track divergence signals. The indicator is relevant as part of a wide variety of trading systems and strategies.
So, if the price forms new highs on the chart with a decrease in the ATR line (or lows and the line rises) - most likely, divergence appears on the market. That is, traders lose interest in the movement and are not sure about the continuation of the trend. But if the price creates new highs and the Asia-Pacific Region demonstrates the same thing, it means that trading participants are confident in the continuation of the current trend and are actively trading.
If you set indicator filtering, you can eliminate all non-trend price fluctuations. In this case, transactions are opened in the direction of movement of the asset after the price has crossed the mid-range line, which is calculated by adding the two values (top and bottom), and then dividing the result in half. After the middle of the range is obtained, the obtained numerical value is registered in the indicator window and added to the window.
With this trading strategy, immediately after the opening of the transaction, a stop loss is set near local extremes on the price chart, and take profit - at the support and resistance levels. It is permissible to use a trailing stop, after calculating the volatility of the traded asset. Thanks to the use of the ATR indicator, the trader can clearly determine and analyze the current volatility of the asset, correctly determine the size of positions, etc.
Strategies Using the ATR Indicator
1) Strategy "4 indicators" - works on the basis of ATR, CCI, moving average and Williams Percent Range, which are in the standard set of MT4. Thanks to the system, it is possible to close deals at the bottom and close at the top, taking a good profit. The system for the euro / dollar currency pair works on minute and hourly charts.
2) The breakdown system "BAT ATR + Fibo" - is built on the Fibonacci levels and the Bat ATR indicator, suitable for all currency pairs, trading is conducted on the M15 timeframe and above. Trading is carried out with pending orders, the system gives good buy and sell signals, sets the rules for setting stop loss and take profit, requires constant monitoring from the side of the trader.
3) The Antiflet strategy is quite stable, tests show a large number of profitable transactions. The system works on the Asia-Pacific, MACD and the moving average, created for the euro / dollar pair, it gives good signals for entering / exiting the market, it implies a low risk.
There are also strategies on this site, but then only a brief description:
4) A strategy based on ATP 14 and EMA 14, with an addition with i-FractalsEx fractals - suitable for all currency pairs, works on the M30 timeframe, makes it possible to use powerful bearish and bullish trends, fixing the moments of uniform market fluctuations that are about to change a sharp drop or rise.
5) The system on ATR and ADX is a stable and profitable strategy that provides income in the long term. The trader has the opportunity to analyze the market situation from the point of view of the direction and strength of the trend, as well as from the position of achieving a state of oversold / overbought.