ATR Indicator

Today I wanted to learn more about the ATR indicator and how I could possibly use it to improve my results.

Apparently I can use a long range ATR (30+ days) to different between Trend Directions. When I tested this out, it pretty much showed me the same trend that a moving average would. Not much here.

I can use the ATR to determine volatility and decide Stops/Profit targets. Assuming I hold a trade for at least one day, I want to make sure my stop is at least one ATR away otherwise I may get stopped out too soon. This is the same for setting a reasonable limit. Could test this out and see how it fares.

Also stumbled across a possible strategy using ATR – might quickly implement it and see how it looks:

  • If the price closes more than one ATR above the most recent close, buy.
  • If the price closes more than one ATR below the most recent close, exit position.
  • Opposite for sell.


Posted in Indicators, Research and tagged , , .

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