Average True Range

ATR Definition

Binary options trading has become a popular way of making money online. It involves predicting the direction of the price of an asset in a short period of time. To make accurate predictions, traders use technical indicators to analyze the market. In this blog post, we will discuss the Average True Range (ATR) indicator and how it can be used in binary options trading.

What is the Average True Range Indicator?

The Average True Range (ATR) is a technical indicator that measures volatility in the market. It was developed by J. Welles Wilder Jr. and was introduced in his book "New Concepts in Technical Trading Systems" in 1978. The ATR indicator measures the size of price movements, regardless of their direction. It is calculated by taking the average of the true range over a specified period of time. The true range is the greatest of the following: the distance between the current high and the current low, the distance between the previous close and the current high, or the distance between the previous close and the current low.

How to Use the Average True Range Indicator in Binary Options Trading

The ATR indicator can be used in binary options trading to determine the level of volatility and the potential range of price movements. A high ATR reading indicates high volatility, while a low ATR reading indicates low volatility. Traders can use the ATR indicator to set the stop loss and take profit levels for their trades. ATR can also be used to determine the size of the position to take on a particular trade. If the ATR reading is high, traders may want to reduce their position size to avoid excessive risk. On the other hand, if the ATR reading is low, traders can increase their position size to take advantage of potential price movements.

Advantages of Using the Average True Range Indicator

One of the key advantages of using the ATR indicator in binary options trading is that it helps traders to manage their risk. By setting stop loss and take profit levels based on the ATR reading, traders can limit their losses and maximize their profits. The ATR indicator also provides valuable information about market volatility, which can help traders to make better trading decisions.

How to apply ATR to a chart on Finteria platform

• Access Finteria Trader from your Account Menu or go to Finteria Trader straight

• Switch to Candlestick chart

• Click on f(x) button on top of your Candlestick chart and search for ATR, then choose Average True Range from the search list, ATR will be applied to your chart immediately

Conclusion

The Average True Range (ATR) indicator is a powerful tool for binary options traders. It helps to measure market volatility and provides valuable information about potential price movements. By using the ATR indicator, traders can manage their risk effectively and make better trading decisions. However, it is important to note that no indicator is perfect, and traders should always use multiple indicators and analysis techniques to make accurate predictions.