What is ATR (Average True Range)?
ATR (Average True Range) is a core concept in currency trading.
A technical indicator created by J. Welles Wilder measuring market volatility by averaging the true price range over a specified number of periods.
Understanding ATR (Average True Range) helps you manage your risk and spot high-probability trade setups.
Why It Matters for Forex Traders
In forex trading, ATR (Average True Range) helps you protect your capital. It gives you a clear rule to follow instead of guessing.
How to Identify and Apply ATR (Average True Range)
- 1Spot and mark ATR (Average True Range) on your chart during active trading hours.
- 2Check that the overall market trend agrees with your trade idea.
- 3Always place a protective stop loss before entering any position.
Practical Forex Example
For example, on a EUR/USD trade, applying ATR (Average True Range) allows you to set clear entry and exit points before risking real money.
PRO TRADER TIP
Always test strategies involving ATR (Average True Range) on a free demo account first before trading with real capital.