On the last tip, we saw How to Use the Forex Indicator RSI on Metatrader 4. Today, we will focus in the use of the Forex Indicator ATR, part of the indicators available on MT4.
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 parameters for this indicator are:
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.
In this Daily Chart, we see the days marked in yellow like the ones who had a high volatility, closet o the 500 pips, while the blue days were of low volitility, close to the 200 pips.
To know what the ADR of a pair is allows us to understand its volatility and, that way, could define our Take Profit and set the Stop Loss.