ATR Technical Indicator
Category : Uncategorized
Each trader defines his own set of tools for analyzing a financial asset. These can be combinations of both technical and fundamental analysis, which, in synergy, are able to be united into a single trading system and demonstrate a stable result from the fix api trading.
The most popular are technical approaches in the form of patterns, technical figures, and indicators. Today, at the trader’s disposal a number of indicators has been developed that demonstrate the trend direction and display signals to enter the market. But there are very few technical indicators that point to the exit point from the market. But the Average True Range indicator was developed exactly for this purpose.
Average True Range (ATR) is a volatility indicator indicating the average movement of quotations for a certain time interval. This helps the fix api trader to understand the maximum possible volatility on the instrument and set the stop loss level, which will be greater than this parameter in points. Thus, if a trader opened a deal to buy EURUSD at a price of 1.1640, and the value of the ATR indicator is 30 points, then the stop loss should be placed below the opening price by at least 30 points.
Advantages of this technical indicator:
- It allows you to determine the exit point from the transaction;
- It can be used as a trailing stop;
- It is suitable for use in every trading strategy;
- It does not pile up the graph, because you can implement it in a text format;
- It is a built-in indicator in the fix api MT4 trading terminal.