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freeforex2020
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The Average True Range (ATR)

The Average True Range (ATR) Developed by J. Welles Wilder, the Average True Range (ATR) is an indicator that measures volatility. As with most of his indicators, Wilder designed ATR with commodities and daily prices in mind. Commodities are frequently more volatile than stocks. They were are often subject to gaps and limit moves, which occur when a commodity opens up or down its maximum allowed move for the session. A volatility formula based only on the high-low range would fail to capture volatility from gap or limit moves. Wilder created Average True Range to capture this “missing” volatility. It is important to remember that ATR does not provide an indication of price direction, just volatility. Wilder features ATR in his 1978 book, New Concepts in Technical Trading Systems. This book also includes the Parabolic SAR, RSI and the Directional Movement Concept (ADX). Despite being developed before the computer age, Wilder's indicators have stood the test of time and remain extremely popular. True Range and forex signals Wilder started with a concept called True Range (TR), which is defined as the greatest of the following: Method 1: Current High less the current Low Method 2: Current High less the previous Close (absolute value) Method 3: Current Low less the previous Close (absolute value) Absolute values are used to ensure positive numbers. After all, Wilder was interested in measuring the distance between two points, not the direction. If the current period's high is above the prior period's high and the low is below the prior period's low, then the current period's high-low range will be used as the True Range. This is an outside day that would use Method 1 to calculate the TR. This is pretty straightforward. Methods 2 and 3 are used when there is a gap or an inside day. A gap occurs when the previous close is greater than the current high (signaling a potential gap down or limit move) or the previous close is lower than the current low (forex signals a potential gap up or limit move). Average True Range (ATR) Conclusions and free forex signals ATR is not a directional indicator, such as MACD or RSI. Instead, ATR is a unique volatility indicator that reflects the degree of interest or disinterest in a move. Strong moves, in either direction, are often accompanied by large ranges, or large True Ranges. This is especially true at the beginning of a move. Uninspiring moves can be accompanied by relatively narrow ranges. As such, ATR can be used to validate the enthusiasm behind a move or breakout. A bullish free forex signals reversal with an increase in ATR would show strong buying pressure and reinforce the forex signals reversal. A bearish support break with an increase in ATR would show strong selling pressure and reinforce the support break.

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Re: The Average True Range (ATR)

I could add the following to the above - some mistakes when working with ATR are encountered by newcomers.

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Re: The Average True Range (ATR)

I could add the following to the above - some mistakes when working with ATR are encountered by newcomers. E.g. ATR for divergence - don`t look for divergence signals (divergence and convergence) on the ATR chart, and don`t try to determine on their basis where to buy and where to sell. The Average true range doesn`t give signals for entering the market, it`s only an auxiliary tool to determine the margin. This`s one of the mistakes I made in the beginning of my study. Also, https://www.earnforex.com/position-size-calculator/ helped me to avoid many false moves. If you know how to use it, it's an excellent tool for analysis.
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