Atr calculator
ATR Calculator
What is Atr calculator?
The Average True Range (ATR) is a popular technical analysis indicator that measures the volatility of a security. It is often used by traders to determine the stop loss level for a trade, or to set profit targets. An ATR calculator is a tool that helps traders calculate the ATR value for a particular security.
Formula used in Atr Calculator is:
ATR = CER * (1 – ATRm1) Where, CER – Currency Exchange Rate ATRm1 – Average True Range of the previous day
For example, let’s say the currency exchange rate for a particular security is 1.2 and the ATR value for the previous day was 0.5. The calculation for the ATR value for the current day would be: ATR = 1.2 * (1 – 0.5) = 0.6
Brief History:
The ATR indicator was developed by J. Welles Wilder Jr. and was introduced in his 1978 book, “New Concepts in Technical Trading Systems.” It is one of the most widely used indicators in technical analysis and is commonly used in conjunction with other indicators to make trading decisions.
FAQs:
What is the purpose of the ATR calculator?
The ATR calculator is used by traders to calculate the stop loss level for a trade. The ATR value represents the average price range of a security over a specific period of time. By calculating the ATR value, traders can determine the maximum amount they are willing to risk on a trade, which can help them manage their risk more effectively.
How is the ATR value used in trading?
The ATR value can be used to set stop loss levels, which is the maximum amount that a trader is willing to lose on a particular trade. By setting a stop loss level based on the ATR value, traders can limit their losses if the trade goes against them. The ATR value can also be used to set profit targets, which is the price level at which a trader wants to exit the trade.
What is a good ATR value?
There is no single ATR value that is considered “good” for all securities. The ATR value is relative to the price of the security and its volatility. Generally, a higher ATR value indicates higher volatility and a greater potential for profit or loss. Traders can compare the ATR value of a security to its price to determine whether it is a good investment opportunity.
In conclusion, the ATR calculator is a useful tool for traders to calculate the ATR value of a security and determine the stop loss level for a trade. The ATR indicator was developed by J. Welles Wilder Jr. and has become one of the most widely used indicators in technical analysis. By using the ATR value, traders can manage their risk more effectively and make more informed trading decisions.
