Average True Range

 Average true range Was developed by Welles Wilder.
-Average True Range is a technical analysis indicator for measuring market volatility.It is based on a 14 periods  thus can be calculated on an intraday,daily,weekly or on monthly basis.Average True Range is used to develop a trading system for entry or exit signal as part of a trading strategy.
ATR is considered a volatility because it measures the distance between the series of previous highs and lows for a specific periods.Average True Range is normally displayed with a decimal to indicate the number of pips between the period highs and lows.This is a very key point to traders because when volatility increases the value of the ATR charts will also increase while as volatility decreases,the value of the ATR chart will also decline.The True Range for the ATR can be considered as;

-The difference between the current maximum and the minimum(High and Low);
- The difference between the previous closing price and the current maximum;
-The difference between the previous closing price and the current minimum;
Here is how the ATR indicator looks like;



From the candle sticks chart above,the ATR curve is indicated by the big red arrow while the average  true range is indicated by the small arrow.From the chart above,we can conclude that as volatility of the market increases,the value of the ATR chart will also increase and vice versa thus enabling the trader to know the exit and entry point of the market

Recommendation:if you are a day trader,use 1min,5min,15min and 30min time frame while if you are swing trader just use 1hour and above time frame in order for Average True Range to work for you well

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