How does the binary option trading using the ATR indicator

ATR : A Unique Volatility Indicator
Average True Range (ATR) is really a technical analysis indicator that works like a measure of volatility.

It was eventually introduced — together with many other technical analysis tools — by Welles Wilder in her book, “New Concepts in Technical Trading Systems. ” As of now, ATR is probably the most widely used technical analysis indicators that withstood the test of their time created its way into many trading platforms.


How can it work?

Though it might not seem adore it the thought behind the indicator is simple. Currency exchange rates always fluctuate. High volatility is definitely the reasons millions of traders all over the planet just love the Forex market. With volatility come trading opportunities. The direction of the longer term trend is, in fact, important but knowing the trend is nearly to start is already extremely helpful.

Greater than that, for certain strategies it isn't even essential to know about the exact direction from the trend if volatility is high enough. There are various methods to estimate market volatility and ATR is utilizing part of them.

To comprehend how ATR works It's essential to check out the idea of the true range first. In step with Wilder, the true range is that the greatest of the listed :

1. Current High less the current Low,
2. Current High less the previous Close,
3. Current Low less the previous Close.

Absolute values are employed for the final two bullets to ensure positive numbers.


Average True Range is really a moving average from the true ranges mentioned above. Naturally, a 14-period moving average is designed. The total indicator is represented by just one line. When volatility is requried to be made by the rise, the ATR graph will go up. Alternatively, when the industry is stable, the line will gravitate towards the bottom.

How you can got wind of?

Putting together the ATR indicator inside the IQ Option platform is straightforward.
Simply click the “Indicators” button inside the bottom left corner from the screen. Then choose ATR coming from the collection of possible indicators.

Then click the “Apply” button. The indicator will appear inside the bottom section of the screen, right below the value chart.


Average True Range is ready for use.

How to include in trading?

The indicator can be utilized from the investor to work out optimal entry and exit points.
Periods of low volatility usually intermingle with periods of high volatility, when the industry is unstable, thus creating numerous trading opportunities. Knowing once the period of low volatility (and hence limited trading options) is going to end is really a strategic advantage traders could be expected to make use of.


The longer the ATR period a lot more accurate the indicator will become, compromising a small portion trading signals instead. And vice versa, by shortening the amount of periods you possibly can receive more signals but chances are a few of them will certainly be false at least not as accurate as desired.

Also learn:

A crucial notice. ATR uses absolute values rather than a percentage change. Indicators of various companies and in many cases a similar company on seperate timeframes are not adequately compared with one another.

Conclusion

Average True Range Isn't an indicator that could demonstrate the longer term trend direction or provide complete information about how the value chart is predicted to behave. Nevertheless, ATR is usually an indicator that's unique in its own way because it helps to track down volatility of the value action.

Combined with trend-following and momentum-type technical analysis tools ATR may be a decent instrument with good potential.Source : Binary option strategy

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