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  • Cheat Sheet: Average True Range (ATR) Indicator

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    The Average True Range (ATR) indicator is used to measure market volatility over a specific period. It is calculated by taking the average of the highest high and lowest low for a given period, typically 14 days. The ATR can help traders identify entry and exit levels during trends or consolidations. It signals when the market may be trending strongly or ranging based on whether the ATR is rising or falling. Traders can use multiple ATR levels to scale into and out of positions.

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    ATR Cheat Sheet.01

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    The Average True Range (ATR) indicator is used to measure market volatility over a specific period. It is calculated by taking the average of the highest high and lowest low for a given period, typically 14 days. The ATR can help traders identify entry and exit levels during trends or consolidations. It signals when the market may be trending strongly or ranging based on whether the ATR is rising or falling. Traders can use multiple ATR levels to scale into and out of positions.

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    29 views2 pages

    Cheat Sheet: Average True Range (ATR) Indicator

    Uploaded by

    john
    The Average True Range (ATR) indicator is used to measure market volatility over a specific period. It is calculated by taking the average of the highest high and lowest low for a given period, typically 14 days. The ATR can help traders identify entry and exit levels during trends or consolidations. It signals when the market may be trending strongly or ranging based on whether the ATR is rising or falling. Traders can use multiple ATR levels to scale into and out of positions.

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    © All Rights Reserved
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    of 2

    Average True Range (ATR) Indicator

    Cheat Sheet

    WHAT IS ATR?
    • The ATR is a market volatility indicator.
    • Typically calculated by taking the 14-day average of a series of trading ranges.
    • The ATR tells you the condition of the market, not direction.

    EXAMPLE:

    What ATR can help you do

    • Identify entry levels on a pullback


    • Identify stop-loss levels
    • Identify take-profit levels
    • Predict potential breakout
    • A rising or high ATR can indicate a strong trend
    • A falling or low ATR can indicate a range market
    • Predict potential trend reversal

    Click here to start your free trial with ForexSignals.com!

    The information provided within this PDF is for educational purposes only.
    HOW TO USE THE ATR
    Example of what the ATR looks like in MT4:
    (Add the ATR: Insert > Indicators > Average True Range)

    ATR Strategy (example) Understanding the market


    Entry, stop, and take profit target: Trending, consolidating, breakout:

    • A 2x ATR pullback for entry. • When the ATR rises, it can indicate that the
    market is trending.
    • A 3x ATR profit target.
    • When the ATR moves down, it can indicate
    • Always have a positive risk-to-reward that the market is consolidating.
    ratio (1.5 in this example).
    • When the ATR breaks out from the ATR
    range, it could indicate that the market may
    • Multiple ATRs can be used to scale out
    break out into trend.
    of positions: 1x ATR, 2x ATR & 3x ATR.

    * ATR should be used in conjunction with other technical indicators

    Click here to start your free trial with ForexSignals.com!

    The information provided within this PDF is for educational purposes only.

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