Wealthy Living

How to Master the Average True Range Indicator

What is the Average True Range?

While the Average True Range (ATR) was originally developed in the 1970s to measure volatility and risk in the commodities market, all trading systems of all asset classes should be focused on risk management.

So traders in the forex market, stock, options, commodities or crypto markets should integrate the indicator in their trading strategy.

This is also true whether the trader is day-trading intraday, swing trading or trend trading for longer-term investments.

The ATR Average True Range Formula

The average true range is an oscillator whose calculation involves intricate mathematical formulae.

Fortunately, our trading platforms will handle these for us with a couple of clicks.

But it is important to understand the ideas behind the calculations and what the indicator is telling us.

How to Use the Average True Range Indicator

Setting Stop-Losses

Getting stopped out of a trade that then goes on to exceed its original profit target is one of the frustrations of trading.

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