On our last tip, we showed you How to Use the Forex Indicator RSI on Metatrader 4. Today, we will focus on the use of the Forex Indicator ATR, part of the indicators available on MT4. This indicator has been used as a component of numerous other indicators and trading systems ever since it was introduced by Welles Wilder in his book “New concepts in technical trading systems”
True Range is the greatest of the following three values:
- difference between the current maximum and minimum (high and low);
- difference between the previous closing price and the current maximum;
- difference between the previous closing price and the current minimum.
The Technical Analysis Forex Indicator, ATR (Average True Range), allows us to calcúlate the ADR (Average Daily Range) or daily Pips average in a pair.
How to add the Forex Indicator ATR on Metatrader 4:
The first step is to go to the ‘Navigator‘ window and locate the ‘Indicators‘ option.
Once there We expand Indicators > Oscillators > and click Average True Range.
The parameters for this indicator are:
You can also set up levels:
As well as Scale:
In order to calculate the pips movement for the day (that is, the difference between the maximum and the minimum value), we use 1 period as the value.
To know what the ADR of a pair allows us to understand its volatility and, that way, could define our Take Profit and set the Stop Loss.