5 Ways to Win ATR Indicator Strategy Breakouts
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5 Ways to Win ATR indicator strategy breakouts will expose all little secrets needed to win with indicator trading.
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No more doubts after reading and mastering this piece.
What is ATR Indicator?
ATR (Average True Range) is a different type of indicator that measures the volatility of the financial market. This indicator shows how much an asset moves in the market.
The ATR indicator is calculated on the basis of the ‘’true ranges’’. It uses the absolute value of the current candle high minus the previous close or the absolute value of the current candle low minus the previous close or the current candle high minus the current candle low.
The ATR represents a ‘’moving average’’ of these ranges.
ATR rises when trading is high in volatility (meaning price charts are long) and ATR falls during periods when the price is less volatile (meaning price charts are short).
ATR indicator MT4, using the MetaTrader 4, the ATR default setting is 14-periods. Using higher or lower periodic settings could generate wrong signals and make a trader conclude the ATR does not work.
ATR indicator tradingview, different settings can be experimented with before making a decision on which settings work best for different time frames.
ATR indicator forex, we have analyzed the 5 ways to win ATR indicator strategy breakouts in this article. Read the following step-by-step guide below.
Ways to Win ATR Indicator Strategy Breakouts
The price of assets in the market keeps changing hence volatility increases or decreases.
Volatility could range from low volume to high volume or from high volume to low volume.
Having known the movement of volatility, therefore it is expected of a trader to easily foresee high volatility at the lowest or low volatility or low volatility at the highest or high volatility position.
How do you use the ATR strategy?
A smart ATR indicator trader will look to sell at a multi-year high by identifying the trend and taking a selling advantage at the break of the multi-year high.
How to use ATR Indicator Strategy Breakouts to Set Stop Loss
ATR acting as ATR stop indicator, ATR stop loss indicator, ATR stop loss indicator mt4, and ATR trailing stop indicator are all ways of using the ATR to set stop loss in the forex market.
The ATR trailing stop indicator mt4 is the basic ATR on the MT4 used for setting an individual’s stop loss.
Using ATR to set stop loss will never give you a tight stop loss as opposed to any other way of setting a stop loss.
Combining ATR with your key levels, when you sell trade from the supply zone (key level), you can use the ATR value on the previous candle plus spread plus high of the previous candle to set a stop loss.
Also, when buying from a demand zone level, you can use the ATR value on the previous candle meaning low of the candle minus ATR value minus spread to set stop loss for the buy trade.
How to use ATR to Set a Target Profit
How do you use ATR to set profit? For day trading, check out the ATR value on the daily time frame and use this value to target profit for your trades.
Your target profit should be less than the daily ATR value if you want to be a cautious and smart day trader. Only set otherwise target profit if you look to trade overnight,
The same way you have used the ATR to set stop loss can also be employed to set target profit and voila you hit target profit.
How to use ATR indicator to Trend Massive Trend
How to use ATR indicator for stop loss
To ride a massive trend in the forex market you must use a trailing stop on those trades.
Here is how it works,
1. Make a choice of the ATR multiples to be used; X= 2x, 3x, or more
2. If you GO LONG, minus X ATR from the highs and that’s your trailing stop loss
3. If you GO SHORT, add X ATR from the lows and that’s your trailing stop loss.
You can use as high as 5ATR as a trailing stop loss.
What is the best ATR indicator? There is no such thing as the best indicator. Use whatever indicator works for you.
How to use ATR to Determine Trend Exhaustion
Trading ATR indicator needs skills and mastery just as it is with every other indicator.
A trend will definitely end in the long run be it an uptrend or a downtrend.
How do you use ATR to determine trend exhaustion?
First, identify the current ATR value
Second, multiply the ATR value by 2
Lastly, once the market moves more than twice the ATR you are likely to see trend exhaustion.
Use this idea with support and resistance, supply zone and demand zones, and never in isolation.
How to use ATR Indicator Strategy Breakouts to determine Trend Reversal
These are the last 5 ways to win ATR indicator strategy breakouts.
It has been reiterated in this article that this strategy is not to be traded alone.
After exhaustion comes to a reversal
When an uptrend is exhausted, a reversal could be expected which is a downtrend
When buyers stay out of the market or relax their muscles, sellers take over the market.
When exhaustion moves into an area of resistance, the chances of the market reversing are high, look to sell with your mastery of candlestick pattern and breakout strategy.
What is the best period for ATR?
I use the 20-period
You can use a different period setting.
What is the best setting for ATR?
You should determine the best setting for day trading or swing trading.
You have learned how to use ATR indicator, how to read ATR indicator forex and my personal settings for the ATR indicator.
I want you to back-test my principles and forward-test using a demo account before you can decide on trading my strategy.
We look to hearing from you soon.