The Average True Range (ATR) is a technical indicator commonly used in financial analysis, particularly in the field of trading and investing that was developed by J. Welles Wilder Jr. and introduced in his book "New Concepts in Technical Trading Systems" in 1978.
The "Stop and Reverse ATR" (Average True Range) indicator is a variation of the Parabolic SAR (Stop and Reverse) indicator that incorporates the Average True Range in its calculations. The Average True Range is a measure of volatility often used in technical analysis to gauge the magnitude of price movements.
The basic concept remains the same as with the traditional Parabolic SAR indicator: it provides potential reversal points in the price direction of an asset. However, by incorporating the Average True Range, it aims to make these reversal points more adaptive to changes in market volatility.
Traders may choose to use the Stop and Reverse ATR indicator in their analysis to help identify potential entry and exit points based on both price trends and volatility levels. As with any technical indicator, it's important to use the Stop and Reverse ATR indicator in conjunction with other analytical tools and techniques to make informed trading decisions.
How to Use the Indicator?
When you attach the indicator to a chart (scroll to the bottom of the page for instructions) you will be able to adjust the settings for both the ATR indicator, the default settings are the best, but you can experiment with other settings for different symbols and market conditions.
This indicator is very simple and easy to use for all traders, you just wait until you see Buy or Sell dots appearing near the candles. We suggest that you hold the trade until you either want to make a profit or until the price reaches the ATR line.
Sometimes when you see the dots to confirm a buy or sell opportunity, set your stop loss at a level to allow the price to breathe before it reverses. Also, be aware that sometimes it will not reverse, but instead close on a stop loss at a loss.
Indicator Settings
When you attach the indicator to a chart or edit the indicator settings, you will have various adjustments you can make.
- ATR Period - The periods for the default average true range indicator.
- ATR Multiplier- The ATR multiplier is a value that is multiplied by the Average True Range to determine the sensitivity of the indicator to changes in volatility. Essentially, it adjusts how quickly the indicator reacts to price movements.
- ATR Type - Select from one of eight different moving average types.
- ATR Smooth Period - The periods for the smoothed average true range indicator.
- ATR Smooth Type - Select from one of eight different moving average types.
- Dot Distance - this is a value which adjusts where the buy and sell dots are shown on the chart, a setting of 0.1 is good for 1-minute charts and a setting of 5 is good for 1-hour charts.
Telegram Alerts
When a signal happens for a trend reversal, the indicator will send a Telegram alert directly to your PC or mobile device, this is much faster than email as it is a push notification.
Scalping Low Timeframes
The usage of this indicator is very good for scalping on low timeframes.
ATR Periods
The ATR indicator measures volatility, taking into account any gaps in the price movement and the calculation is based on 14 periods, which can be intraday, daily, weekly, or monthly.
- To measure recent volatility, use a shorter average, such as 2 to 10 periods.
- For longer-term volatility, use 20 to 50 periods.
Convert to Automated Robot
If you want to convert this to an automated trading system with additional confirmation signals and risk management, contact our development team with your project requirements.
How To Install & Remove
First, make sure you have the cTrader trading platform installed and then unzip the file and double-click on it to automatically install it onto the platform.
Any Questions?
If you have any questions or if there are any bugs, please first search our product help forum for the answer, if you cannot find it, post a new question.
Need a Broker
If you are still looking for a broker you can trust, take a look at our best cTrader broker site.
