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My Economy Guide, n What is an ATR indicator? How to use the “and“ ATR indicator? Landır to answer the questions with details. Let’s start to get to know the Average True Range (ATR) indicator which is an important indicator for those who want to trade in stock exchanges and learn technical analysis.
WHAT IS ATR INDICATOR?
ATR indicator , which stands for Average True Range, is an important indicator frequently used in technical analysis. The ATR clearly reflects the volatility of the market examined during technical analysis. Calculated by averaging the highest and lowest difference of each movement. Usually used in a 14-day period. However, it cannot give direction to the trend and prices.
HOW TO USE ATR
The ATR indicator is completely independent of the trend in the market. The only thing he can tell us is the volatility in the prices examined. ATR value increases in the downtrend and uptrend trend. However, if prices are horizontal, the ATR value decreases. This means that volatility has fallen and that the market has reached equilibrium, at least for now. At the same time, if the ATR is at a very low level, that is, prices are relatively stable for a certain period of time, sudden movements in prices can be expected. As we said before, the indicator, which is generally used in 14-day periods, can be used in different periods depending on the stock market and the market examined. This technique may vary according to the analyst’s experience and circumstances. Another important area of use of the ATR indicator is to determine the stop level. The price can be found by subtracting the indicator value obtained from the entered price. Some technical analysts determine stop levels by subtracting 0.5 times or 1.5 times the value obtained from the price. This situation may vary according to the risk perception and experience of the investor.Petkim shares are shown as examples above. At the top of the chart, prices are symbolized by Japanese candlesticks, while the ATR indicator is symbolized by a red line below. It can be clearly seen that value increases in price increases and decreases and value decreases while prices are horizontal.