As a trader in the foreign exchange market, you may have come across the term “true range” or “average true range” (ATR). True range is a technical indicator that measures the volatility of a currency pair, providing traders with an idea of how much a currency pair is likely to move within a given period. This information is essential in risk management, as it helps traders to determine their stop loss and take profit levels, and to identify potential trading opportunities.
The true range is calculated by taking the highest of the following three values: the difference between the current high and low prices, the difference between the current high and the previous close, or the difference between the current low and the previous close. Once the true range is calculated, an average of the true ranges over a specific period is used to create the average true range (ATR) indicator.
So, where can you find the average true range in forex?
One of the most popular trading platforms used by forex traders is MetaTrader 4 (MT4). To find the ATR indicator on MT4, simply follow these steps:
1. Open the MT4 platform and select the currency pair you want to trade.
2. Click on “Insert” on the top menu, then select “Indicators.”
3. From the list of indicators, select “Average True Range.”
4. A window will open with the ATR settings. You can adjust the period, the color of the line, and other settings to suit your trading style.
5. Once you have made your selections, click “OK,” and the ATR indicator will appear on your chart.
The ATR indicator on MT4 is represented by a line that fluctuates above and below the price chart. The higher the ATR value, the greater the volatility of the currency pair. Traders can use the ATR indicator to determine their stop loss and take profit levels, as well as to identify potential trading opportunities.
Another trading platform that offers the ATR indicator is TradingView. To find the ATR indicator on TradingView, follow these steps:
1. Open the TradingView platform and select the currency pair you want to trade.
2. Click on “Indicators” on the top menu, then select “Volatility.”
3. From the list of indicators, select “Average True Range (ATR).”
4. A window will open with the ATR settings. You can adjust the period, the color of the line, and other settings to suit your trading style.
5. Once you have made your selections, click “Apply,” and the ATR indicator will appear on your chart.
The ATR indicator on TradingView is also represented by a line that fluctuates above and below the price chart. Like on MT4, the higher the ATR value, the greater the volatility of the currency pair. Traders can use the ATR indicator on TradingView to determine their stop loss and take profit levels, as well as to identify potential trading opportunities.
In conclusion, the average true range is an important technical indicator that provides traders with an idea of the volatility of a currency pair. It is essential in risk management and can help traders to identify potential trading opportunities. The ATR indicator can be found on popular trading platforms such as MetaTrader 4 and TradingView, and can be customized to suit individual trading styles. By using the ATR indicator, traders can make informed decisions about their trades and improve their chances of success in the forex market.
