1.1 atr in pips forex is a technical indicator that is used to measure the volatility of a currency pair. ATR stands for Average True Range and is a popular tool that traders use to determine the potential risk and reward of a trade. It is calculated by taking the average of the true range of a currency pair over a given period of time.
The true range is the difference between the high and low price of a currency pair over a given period of time. It takes into account any gaps that may occur between the closing and opening prices of the currency pair. For example, if the opening price of a currency pair is 1.2000 and the closing price is 1.2050, but the high price during that time period was 1.2100 and the low price was 1.1900, the true range would be 100 pips (1.2100-1.1900).
Once the true range has been calculated, the ATR is calculated by taking the average of the true range over a specified period of time. The most common period used is 14 days, but traders can adjust the period to suit their individual trading style.
The ATR is expressed in pips, which is the smallest unit of measurement in the forex market. This means that the ATR in pips forex will give traders an idea of how much the price of a currency pair is likely to move in a given period of time. For example, if the ATR is 50 pips, it means that on average, the price of the currency pair will move 50 pips up or down in a day.
Traders use the ATR in pips forex to determine their stop loss and take profit levels. The stop loss is the level at which the trader will exit the trade if the price moves against them, while the take profit level is the level at which the trader will exit the trade if the price moves in their favor.
By using the ATR in pips forex, traders can set their stop loss and take profit levels based on the volatility of the currency pair. If the ATR is high, it means that the currency pair is volatile and the trader may need to set a wider stop loss and take profit level to account for the potential price movements. Conversely, if the ATR is low, it means that the currency pair is less volatile and the trader may be able to set a tighter stop loss and take profit level.
Another way that traders use the ATR in pips forex is to determine their position size. Position size refers to the amount of currency that the trader will buy or sell in a trade. By using the ATR in pips forex, traders can determine the potential risk of a trade and adjust their position size accordingly. For example, if the ATR is 50 pips and the trader is willing to risk 1% of their account on the trade, they can calculate the position size that will result in a 50 pip stop loss.
In conclusion, the ATR in pips forex is an important technical indicator that traders use to measure the volatility of a currency pair. It is calculated by taking the average of the true range over a specified period of time and is expressed in pips. Traders use the ATR in pips forex to determine their stop loss and take profit levels, as well as their position size. By using the ATR in pips forex, traders can make more informed trading decisions and manage their risk more effectively.
